Gokaldas Exports Limited Q1 FY27 Earnings Conference Call Summary

Conference Call Date: August 12, 2026

Financial Performance Highlights

  • Consolidated Revenue: Grew 21% year-on-year (YoY)
  • Consolidated EBITDA: Increased 17% YoY
  • India Operations Revenue: Grew 16% YoY
  • India Operations EBITDA: Increased 14% YoY
  • Africa Operations Revenue: Delivered exceptional 45% YoY growth

Operational Performance and Business Updates

Geographic Performance:

  • India business growth of 16% YoY occurred while Indian apparel exports as a whole declined 12% YoY during the same period
  • Africa growth supported by renewal of AGOA (African Growth and Opportunity Act)
  • Growth was broad-based across geographies and customer base rather than from any single customer or market

Cost Environment Challenges:

  • Wages rose across both India and Kenya, reflecting local market inflation
  • Higher oil prices increased cost of shipping fabric and trims
  • Elevated fuel and logistics costs due to oil price increases
  • Container availability constraints and shipping delays disrupted material flow
  • Company optimized overhead and grew on operating leverage to limit financial impact

Automation and Productivity:

  • Continued investment in automation delivering measurable gains in productivity
  • Improved consistency in product quality through automation

BTPL Merger Update:

  • Merger process on track and expected to conclude in Q3 FY27
  • Business showing consistent improvement in operating metrics
  • Unit has secured nominations from multiple brands for fabric sourcing
  • Has started exporting fabrics
  • Operating at capacity of 50 lakh meters per month
  • Expected to grow by another 30% in the near future
  • Increasing capacity utilization, investment in product mix, and rising average realization expected to help margin growth
  • Q1 FY27 fabric sales: Approximately ₹170 crores
  • Q1 FY27 operational EBITDA: Negative 7.5-8% range
  • Targeting mid- to high single-digit EBITDA margin by merger time
  • Targeting PBT positive by Q4 FY27

Customer Development:

  • Recorded growth across all major accounts
  • Onboarded 1 new customer during Q1 with operations expected to commence in Q2

Demand Environment Analysis

United States Market:

  • End consumer demand showed strong growth through first 6 months of CY26
  • Pace of growth softened in June 2026
  • May 2026 marked first month of positive import growth since beginning of CY26

EU and UK Markets:

  • Apparel imports declined steadily for first 5 months of FY26
  • Management views this as reflecting shift in mix toward lower value apparel and continued inventory destocking by retailers rather than genuine contraction in underlying retail demand

Trade Policy Developments

US Section 301 Tariffs:

  • Places India on equal footing with competing sourcing destinations
  • Preserves advantage over China and Vietnam (both subject to 12.5% tariff)
  • Removes structural disadvantage from customer sourcing decisions
  • Expected to strengthen customer confidence and support higher order placement

India-UK Free Trade Agreement:

  • Implementation brings India to parity with Bangladesh and Vietnam in UK market
  • Provides duty advantage over China
  • Expected to support business growth in UK market

Risk Factors Identified

  • Renewed engagement between US and Iran resulting in shipping reroutes and elevated freight costs
  • Inflationary pressure in US market that may affect retail demand over time
  • Potential changes to RoSCTL (Rebate of State and Central Taxes and Levies) scheme in India
  • Logistics disruptions
  • US retail demand volatility
  • Tariff volatility

Capacity Expansion and Capital Expenditure

Existing Capacity Utilization:

  • Africa: 80-85% capacity utilization
  • India South factories: Full capacity utilization
  • India Central factories: 85% capacity utilization

Current Expansion Projects:

  • Bhopal Phase 2: Second unit ramping up, expected to reach high/near full capacity utilization by Q4 FY27 in terms of manpower ramp-up
  • Karnataka facility: Completely on track and progressing
  • Madhya Pradesh facility: On track and progressing well
  • Additional 500-700 machines being added in Karnataka and Ranchi in existing factories

Future Expansion Plans:

  • Planning to add 2,000-3,000 machines by end of CY26
  • New machines expected to contribute to FY29 and beyond revenue
  • Each 1,000 machines brings incremental revenue of ₹175-200 crores
  • Two new facilities planned (one each in Karnataka and Ranchi) with total investment of ₹100 crores
  • New facilities expected to yield revenue of ₹350 crores collectively in steady state
  • Total current expansion projects (Bhopal Phase 2 + Karnataka + Ranchi) expected to deliver approximately ₹275 crores additional revenue

Capex Guidance:

  • FY27 capex: ₹80 crores
  • FY27 capex allocation: ₹70-75 crores for new facilities in Jharkhand and Karnataka

Financial Guidance and Outlook

Revenue Guidance:

  • Maintaining earlier guidance of 15%+ growth for FY27
  • Expect to perform better than 15% growth
  • Strong order book visibility across customer base
  • Q2 revenue expected to be similar to Q1 despite being seasonally weak quarter
  • Spring '27 (executed in Q3 FY27) showing good revenue traction

Africa Revenue Targets:

  • Previous target: $120 million for FY27 vs $80 million in FY26
  • Current visibility: $112-115 million
  • Still pushing to achieve $120 million target
  • Quarterly run rate target: $30 million

Margin Outlook:

  • Expect EBITDA margins to be higher than current levels
  • Factors supporting margins: Business growth, product mix improvement, operational efficiencies, rupee depreciation benefit
  • BTPL expected to contribute positively with mid- to high single-digit EBITDA margins post-merger

Effective Tax Rate (ETR):

  • Q1 FY27 ETR: Elevated at approximately 25%
  • Full-year FY27 ETR guidance: 20-22%
  • Expected improvement due to contribution from international operations

Cost Management Details

Wage Inflation Impact:

  • Q1 India business saw salary/wage cost increase of ₹20 crores YoY
  • Haryana: 35% minimum wage increase (Gurgaon/Manesar facilities)
  • Karnataka: 5% minimum wage increase (CPI-linked)
  • Company pays above minimum wage, so actual increase lower than statutory minimum increase

Other Expense Increases:

  • Utilities cost increased substantially (gas, fuel, chemicals): ₹5-6 crores impact in Q1
  • Inbound and outbound logistics cost increase
  • Expected partial neutralization in H2 if situation improves

Raw Material Cost Pass-through:

  • Fabric costs are passed through to customers
  • Poly bag, cartons, fuel costs created surprise in Q1 as not factored into pricing
  • Going forward, factoring these costs into new order pricing

Product and Market Segmentation

Geographic Revenue Mix:

  • UK: Approximately 4-4.5% of total revenue

Fabric Type Mix:

  • Cotton: Approximately 65%
  • Polyester, nylon, spandex: Approximately 30%
  • Mix varies quarterly (Q1/Q2 have more man-made fiber garments due to outerwear focus)

Production Details:

  • Q1 and Q2 typically focus on autumn/winter wear and outerwear products
  • Outerwear garments have higher content (150-250 minutes) compared to spring/summer garments (22-25 minutes for shirts)
  • Volume metrics can be misleading due to product mix variations

Customer Strategy:

  • Focusing on larger UK players (e.g., Marks & Spencer)
  • Margin-conscious approach to business selection
  • Continuing customer diversification efforts

Additional Business Initiatives

European FTA Prospects:

  • Eagerly looking forward to European FTA
  • Expected by second half of 2027
  • Would provide duty-free access to large market
  • Already ramping up relationships with European customers

Bangladesh Operations:

  • Currently doing subcontracting work
  • May consider expansion if conditions become favorable

Lease Facilities:

  • Open to leasing facilities if good options available
  • Mindful of potential defects or inadequacies in leased facilities

Management Commentary and Closing Remarks

Management expressed confidence in handling external headwinds including possible changes to RoSCTL, logistics disruptions, US retail demand volatility, and tariff changes. The company highlighted its management depth, business capability, and investments to manage these challenges. Focus remains on BTPL performance improvement and readiness to handle business volatility while maintaining strong customer relationships.