This Women's Apparels Company Was Rated 'Stable' By Crisil, Its Stock Gets A Buy

Last month through a filing on the stock exchange, Go Fashion (India) Limited announced that it was given a stable rating for long term by the CRISIL Ratings Limited. The details are given below.

As per the disclosure, "Please note that CRISIL Ratings Limited has upgraded the following ratings for the Company: Long Term Rating from 'CRISIL A-/Stable' to 'CRISIL A/Stable'; Short Term Rating from 'CRISIL A2+' to 'CRISIL A1'"

The filing also had the attached copy of the letter issued by CRISIL Ratings Limited to the Go Fashion (India) Limited and it stated, "The rating outstanding on the above bank facilities during April 01, 2022, to February 13, 2023, was CRISIL A/Stable/CRISIL A1. This letter will remain valid till March 31, 2023. After this date, please insist for a new rating letter (dated later than March 31, 2023)."

Now, Emkay Global one of the leading stock broking firms has suggested investors to buy shares of Go Fashion (India) Limited. It believes that the stock price will potentially grow by upto 30.9% to a target price of Rs 1,220 per share.

Go Fashion (India) Limited is a retail firm offering women's apparels, especially bottom wear. The company sells leggings, jeggings, palazzo, pants, tops, t-shirts, and diaper shorts in India.

Its market capitalisation is Rs 5,103.85 crore. It has 604 exclusive brand outlets (EBOS), and 1,713 large format outlets (LFS) spread out across 137 cities present pan-India. The sales mix channel for 9MFY23 was 73% from EBOs, 20.9% from LFS, 3.1% from multi brand outlets (MBOs) and 2.9% via online.

Emkay Global is bullish on the company and it resets on three pillars ": Accelerated gains for branded women bottom wear (WBW) - we expect it to garner CAGR of 14% over FY25-35E vs. 11% for the overall WBW. This will be supported by new innovations, brand investments and distribution expansion.; We expect GO to enhance its share by roughly 500 basis points over FY25-35E. Our detailed analysis of total dressable market within the top-300 cities highlights potential of 1,600 EBOs by Dec-2030 (vs. 604 EBOs currently). We see little competitive risk with entry of new players, as GO's first-mover advantage leads to superior store-level RoIC of ~35% (vs.

According to the brokerage, the company's earnings would double. "We expect the high double-digit revenue growth to continue for several years beyond FY26. We also expect GO to be far more immune to an unfavorable macro, as distribution-led share gains are relatively easier to attain for an incumbent leader. The stock has corrected by ~35% from its Oct-22 peak, and we now see value in context of the future growth potential. We value GO at 30x FY25E EBITDA, implied from a 2-stage growth model. We initiate coverage on GO with target price of Rs 1,220/share.

The stock price of Go Fashion (India) Limited is up by 0.68% to Rs 945 per share on intraday basis. Its 52-week high is at Rs 1,450 per share and 52-week low is at Rs 861.90 per share, while in one year the stock has grown up by 8.67%.

Disclaimer:

The stocks have been picked from the brokerage report of Emkay Global. Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.