Synopsis: Gokaldas Exports stands to benefit from the India–EU FTA, with EU revenue expected to rise to 19–20%. Full-capacity operations, strong global demand, and zero-duty access under the FTA could boost margins and long-term growth.
This company is a leading apparel manufacturer in designing, manufacturing, and exporting a diverse range of apparel products for all seasons and exports to a number of the world’s most prestigious fashion brands and retailers in more than 50 countries is now in the spotlight after it expects its share to increase to nearly 19–20% over the next 12 months.
With a market capitalisation of Rs. 3,976 cr, the shares of Gokaldas Exports Ltd are currently trading at Rs. 549 per share, down from its previous close of Rs. 557.75 per share. The stock has fallen 41% over the past year, 38% in the last six months, and 28% in the past month.
The apparel sector is a key contributor to India’s economy, known for its diverse product range, skilled workforce, and global competitiveness. It plays a major role in exports, employment, and manufacturing, catering to fashion brands and retailers worldwide.
With initiatives like the India–EU FTA, the industry is set to gain from reduced tariffs, improved market access, and stronger global demand, boosting revenues and profitability for Indian apparel exporters.
Key Takeaways
Gokaldas Exports is seeing a growing opportunity in Europe, with the EU currently contributing around 16–17% of its total revenue. Management expects this share to increase to nearly 19–20% over the next 12 months, supported by improving demand and the anticipated benefits of the India–EU Free Trade Agreement (FTA).
The proposed FTA is viewed as a major structural positive for the company and the broader Indian textile industry. Once implemented, the agreement is expected to allow zero-duty access for Indian textile and apparel exports into the EU, significantly enhancing competitiveness and supporting long-term growth.
Operationally, the company is running at full capacity, reflecting strong demand despite global trade uncertainties. While capital expenditure linked to the US supply chain remains cautious due to elevated US tariffs of around 50%, management is likely to redirect future investments toward the EU market from 2027, when the FTA benefits are expected to fully materialise.
On the US front, order visibility remains healthy through Q1FY27, with advance bookings already in place for Q2FY27. However, margins on US exports have come under pressure, with EBITDA margins slipping to low single-digit levels due to higher tariffs.
In contrast, Europe is expected to offer margin upside once the FTA comes into effect. Improved profitability from EU exports is likely to help the company sustain overall margins in the high single-digit range, partially offsetting pressure from US-related operations.
About the company
Gokaldas Exports Limited is a leading Indian apparel manufacturer exporting to top global fashion brands across 50+ countries. With state-of-the-art facilities, a workforce of over 54,000, and an annual capacity of 87 million pieces, the company has a strong global manufacturing and design presence.
The company reported a ROCE of 10.6% and a ROE of 8.16%, with a debt-to-equity ratio of 0.46, indicating moderate leverage. Over the past five years, it has delivered compounded profit growth of 73%, while the stock price CAGR stood at 44% during the same period.
Sales of the company increased from Rs. 956 cr in Q1FY26 to Rs. 984 cr in Q2FY26. Operating profit fell to Rs. 65 cr from Rs. 97 cr. Net profit significantly fell from Rs. 41 cr to Rs. 8 cr over the same period.
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