Gokaldas Exports - A Compelling Strategic Acquisition: Systematix

"BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Gokaldas Exports Ltd. has announced that it would acquire UAE-based Atraco Group for $55 million, to be funded through a mix of equity and debt. The company is looking to fund the equity investment of $15 million through internal accruals and expects to raise $40 million debt through bank borrowings, which are already in place. This translates into a debt/equity of ~0.35 times at the close of deal. Gokaldas Exports expects to drive synergies across geographies, customers and products through its manufacturing prowess and an experienced management team. Management has guided 150-200 basis points margin improvement over the next two-three years. While we expect the deal to be earnings accretive from FY24E, we have not considered any synergy benefits for that year. We estimate Atraco to generate 8% compound annual growth rate in revenue over FY23-25E, forecasting its Ebitda margin to improve by 200 basis points over FY23-25E. Our estimates factor in synergies from raw material sourcing, customer crosspollination, and operating leverage. Consolidation of Atraco’s P&L with that of Gokaldas Exports throws up a 36%/35% increase in our consolidated revenue and 30%/35% increase in our Ebitda FY24/FY25 estimates, respectively. Our FY24E/FY25E EPS shows 25%/36% increase, as higher depreciation and interest expenses are partly offset by lower tax rate. Post a muted H1 FY24, management expects volumes to pick up H2 FY24 onwards. Atraco currently operates at 88-89% capacity, which management expects to expand by CY25, likely generating incremental revenue of $20 million. Gokaldas Exports expects margins to improve on stable raw material, lower logistics and freight costs, better product mix and superior productivity. Our revised target price of Rs 892 (Rs 592 earlier) is based on 21 times FY25 price/earning (earlier 19 times P/E). Retain 'Buy'. Key risk:recovery in demand may take longer than expected, inflationary and recessionary pressures may persist in the near term, duty benefits for Kenya for U.S. market is due to renewal by December 2025..Click on the attachment to read the full report:.Nitin Spinners - Capacity Enhancement To Support Long-Term Growth Story: ICICI Direct.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Gokaldas Exports - A Compelling Strategic Acquisition: Systematix

The company has announced that it would acquire UAE-based Atraco Group for $55 mn, to be funded rough a mix of equity and debt.

NDTV Profit

NDTV Profit

Follow Us

DOWNLOAD THE APP

Gokaldas Exports - A Compelling Strategic Acquisition: Systematix

The company has announced that it would acquire UAE-based Atraco Group for $55 mn, to be funded rough a mix of equity and debt.

Choose a plan

Follow Us

DOWNLOAD THE APP