The agency has reaffirmed its short-term rating on the company’s bank facilities at ‘Crisil A1’.
Crisil Ratings stated that the upgrade reflects steady and sustained improvement in the business and financial profile of Gokaldas group in the past fiscal.
The group’s revenues grew by nearly 81% YoY during nine months period ending 31-Dec-2024 and would continue to grow at over 10-15% in the current fiscal supported by a healthy order book and consistent scaling up in both GEL’s standalone business as well as in the acquired entities.
However, profitability witnessed a decline in fiscal 2025 owing to higher employee costs associated with scaling up and stabilization of Madhya Pradesh plant and followed by increase in operating expenses in Atraco's Kenya operation due to appreciation in the Kenyan Shilling against USD.
Moreover, in the current fiscal, the profitability may not see a major improvement given the uncertainty with regards to increased landed price for the US customers and pass on associated with US reciprocal tariff. Hence, this would remain a key monitorable.
The group’s working capital management is quite efficient with gross current asset (GCA) days of less than 130 in the past two years and would be sustained at similar levels over the medium term. This also helps with low reliance on bank debt for working capital requirements.
Financial risk profile of the group is expected to remain strong with a comfortable capital structure. The inflow of funds from qualified institutional placement (QIP) helps the group to maintain strong liquidity. Cash and liquid investments likely to remain around Rs 350 crore by end of fiscal 25.
The ratings continues to reflect the established market position of GEL and its long track record in the apparel industry.
These strengths are partially offset by the limited size of operations and exposure to intense competition and fluctuations in foreign exchange (forex) rates.
Gokaldas Exports manufactures and exports readymade garments for men, women, and children, and caters to several leading international fashion brands and retailers. The company has more than 30 manufacturing facilities in and around Bangalore.
The scrip rose 0.15% to currently trade at Rs 1000.20 on the BSE.