Goldman Sachs-Backed Gokaldas Exports Surges 10% After Trump’s 27% Tariff on Indian Exports
Introduction
Shares of Gokaldas Exports, a leading Indian textile company backed by Goldman Sachs and Vanguard, surged nearly 10% after former U.S. President Donald Trump announced a 27% tariff on Indian exports to the United States. Despite the increased duty, Indian textile manufacturers stand to benefit as competing nations—Vietnam, Sri Lanka, Bangladesh, and China—face even higher tariffs. This shift could enhance India’s position in the U.S. textile market.
Stock Performance: Sharp Rise in Gokaldas Exports
During Thursday’s trading session, Gokaldas Exports’ stock surged to an intra-day high of ₹914, a 9.1% increase from its previous closing price of ₹837.70. The stock later settled at ₹889.30. Over the past five years, the stock has generated an astonishing 2,500% return, reflecting the company’s growth trajectory.
| Price Movement | Figures |
|---|---|
| Current Price | ₹894 |
| Intra-day High | ₹914 |
| Previous Close | ₹837.70 |
| 5-Year Return | 2,500% |
What Prompted the Surge?
The U.S. has imposed steep tariffs on textile imports from key Asian countries, altering global trade dynamics. The breakdown of tariffs is as follows:
| Country | Tariff Rate |
|---|---|
| China | 54% (including a 20% duty reinstated in January) |
| Vietnam | 46% |
| Sri Lanka | 44% |
| Bangladesh | 37% |
| India | 27% |
With India facing the lowest tariff among these countries, American textile importers might increasingly favor Indian manufacturers like Gokaldas Exports.
Key Insight: In FY24, 76% of Gokaldas Exports’ total revenue came from the U.S. market. The new tariffs could make Indian textiles a more attractive alternative for American buyers, boosting the company’s sales and profit margins.
India’s Rising Competitive Edge in the Textile Industry
Several factors are driving the global shift towards Indian textile manufacturers:
- Lower Labor Costs:
- India: ~$200/month
- Vietnam: ~$300/month
- Geopolitical Tensions:
- Trade sanctions against China are forcing brands to explore alternatives.
- Political instability in Bangladesh is making Indian manufacturers more attractive.
- Diversification Strategies by U.S. Importers:
- With higher tariffs on China, Vietnam, and Sri Lanka, buyers are looking to diversify their supply chains, favoring India.
Financial Performance of Gokaldas Exports
The company reported ₹988 crore in revenue for Q3 FY25, a 79% decrease from ₹552 crore in Q3 FY24. However, net profit rose 67% to ₹50 crore, indicating strong operational efficiency.
| Financial Metric | Q3 FY25 | Q3 FY24 | YoY Change |
|---|---|---|---|
| Revenue | ₹988 Cr. | ₹552 Cr. | +79% |
| Net Profit | ₹50 Cr. | ₹30 Cr. | +67% |
Despite rising costs due to capacity expansion, Gokaldas Exports aims to improve EBITDA margins by 1% over the next 18 months.
Expansion Plans: Increasing Production Capacity
Gokaldas Exports is investing in three new manufacturing facilities to scale operations:
- Madhya Pradesh: 1,100 machines
- Karnataka: 750 machines
- Ranchi (leased unit): Operational by FY26
The new Madhya Pradesh plant is already nearing full capacity utilization, positioning the company for higher output.
Stock and Financial Ratios Overview
Here’s a breakdown of key financial metrics:
| Metric | Value |
|---|---|
| Market Cap | ₹6,390 Cr. |
| Stock P/E | 42.7 |
| Book Value | ₹273 |
| ROCE (Return on Capital Employed) | 10.8% |
| ROE (Return on Equity) | 10.3% |
| Debt-to-Equity Ratio | 0.30 |
| Pledged Shares | 22.4% |
| EPS (Earnings Per Share) | ₹21.8 |
| Industry P/E | 31.5 |
Shareholding Pattern
The company has a well-diversified ownership structure:
| Investor Type | Stake (%) |
|---|---|
| Promoters | 9.38% |
| Foreign Institutional Investors (FIIs) | 26.54% |
| Domestic Institutional Investors (DIIs) | 37.01% |
| Retail Investors | 27.08% |
| Goldman Sachs | 6.8% |
| Vanguard | 2.38% |
What’s Next for Gokaldas Exports?
- Short-Term Gains: Indian textile firms may benefit from increased demand due to lower tariffs compared to competitors.
- Long-Term Outlook: If U.S. trade policies remain favorable, India could emerge as the top textile supplier to the U.S. market.
- Stock Performance: Investors should monitor margin growth, export demand, and tariff policy changes before making investment decisions.
Q&A Section: Key Takeaways
1. Why did Gokaldas Exports’ stock rise by nearly 10%?
- The U.S. imposed a 27% tariff on Indian exports, which is lower than tariffs on competitors like China (54%) and Vietnam (46%). This makes Indian textiles more attractive to U.S. buyers.
2. How has the stock performed in the past five years?
- Gokaldas Exports has surged by over 2,500%, making it one of the best-performing textile stocks in India.
3. What is the impact of U.S. tariffs on the textile industry?
- Higher tariffs on Vietnam, Sri Lanka, Bangladesh, and China mean Indian textile firms can capture a larger market share in the U.S.
4. What are the company’s expansion plans?
- Three new production units in Madhya Pradesh, Karnataka, and Ranchi to boost output.
5. What is the current valuation of Gokaldas Exports?
- Market Cap: ₹6,390 Cr.
- Stock P/E: 42.7
- Book Value: ₹273
6. How much of the company is owned by Goldman Sachs and Vanguard?
- Goldman Sachs holds 6.8%, while Vanguard owns 2.38% of Gokaldas Exports.
Conclusion
Despite higher tariffs on Indian exports, Gokaldas Exports is well-positioned to gain from the shift in global trade dynamics. With competitive pricing, expansion plans, and a strong foothold in the U.S. market, the company could see sustained growth in the coming years. Investors should keep an eye on global trade policies and operational efficiency as key indicators of future performance.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.