Gokaldas Exports Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Gokaldas Exports reported a 7% YoY increase in total income to INR1,003 crores for Q2 FY26, driven by strong 14% growth in India operations. However, Africa operations declined 24% YoY due to AGOA uncertainty, and overall EBITDA remained flat with PBT declining due to higher finance and depreciation costs. The company is navigating penal tariffs on Indian exports to the U.S. by sharing the burden with customers and suppliers, impacting Q2 by INR12-15 crores, but maintains a strong order book and expects Africa revenue to exceed USD 50 million in H2 FY26.

Highlights

  • Total income of INR1,003 crores, a growth of 7% over the previous year.

  • India operations registered a strong growth of 14% year-on-year against a 2% decline in Indian apparel exports.

  • Company has a strong order book visibility for both India and Africa business.

  • U.K. and EU imports continued to show higher growth of 8% and 9% respectively in the period January to August 2025.

  • Africa revenue is expected to exceed USD 50 million in H2 FY26.

Concerns

  • Africa operations declined by 24% year-on-year due to lower volumes resulting from delayed order placements amidst uncertainty surrounding AGOA rollover.

  • EBITDA reported flat Y-o-Y growth at INR84 crores, and PBT declined on account of higher finance and depreciation costs.

  • Penal tariff on India (50%) impacted Q2 by INR12-15 crores, with potential for higher impact if it continues through Q3.

  • Anticipated 4-6% price increases in the U.S. from Spring '26 could lead to some degree of demand contraction.

Key financials

2 periods

Headline

  • Total Income
    ₹1,003 Cr
    YoY +7%
  • EBITDA
    ₹84 Cr
    YoY 0%

Q2

  • Consolidated Volume
    12.97 million pieces
  • Avg Realization
    ₹700
  • Consolidated Depreciation
    ₹43 Cr

What they filed

Q1 FY27: revenue up 17.9%, net profit up 43.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue632 625 655 638 688 +9%672 +8%695 +6%752 +18%
EBITDA59 65 69 62 66 +12%56 −14%96 +39%92 +48%
Net profit53 49 53 48 53 +0%39 −20%63 +19%69 +44%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • India Operations
    14% Revenue Growth
  • Africa Operations
    -24% Revenue Growth₹148 Cr Q2 Sales (Atraco)₹192 Cr Q2 Sales (Atraco LY)-4.5% Q2 EBITDA Margin (Atraco)
  • Consolidated (Q2)
    12.97 million pieces Volume₹700 Realization
  • Consolidated (H1)
    25.58 million pieces Volume₹697 Realization

Capital allocation

high confidence
  • Capex ₹150 Cr
    • New capacity additions (3 new facilities in India) ₹50 Cr
    • Kenya capacity expansion ₹20 Cr
    • Modernization and upgrade ₹35 Cr
    Out of INR110 crores, the INR75 crores is for the new capacity additions. There are 3 new facilities. One is in Madhya Pradesh in Bhopal Unit-2, which the work is in progress. The other one, is a new plant coming up in Bangalore and one more unit in Jharkhand. All -- these put together in India, we have invested close to INR50 crores for the new capacity additions. And about INR20 crores is the investment which we have made in Kenya for capacity expansion, We are ramping up the capacity to take care of the incremental flow of orders. So about INR70 crores INR75 crores is total we have invested, another INR 5 crores is in Matrix for any additional capex for the existing capacity expansion. So totally INR75 crores for capacity expansion, balance INR35 crores is for the modernization and upgrade. Now with reference to H2, whatever we have already committed, especially for the new units which are in the final stage of completion, we shall ensure the same is completed.. Our investment focus is more in Kenya because of the incremental order flow anticipated. That's the plan for now, but we will be spending it very judiciously. Depending upon further visibility about tariff and other factors, we shall increase our capex plan. That said, if the tariff is rationalized in India, we will continue to push for more growth. We don't have any constraint on getting business from our customers. So there is we seem to be in that position where we can get more orders. At the moment, we have held back on incremental capex in India, barring whatever is happening on the textile side, on the fabric side. But once the tariff resolution happens, we should be back on looking for growth avenues here too. So when you look at FY 2028, I think we should be looking at a capex in the region of about INR150-odd crores to sustain our growth.

Guidance & targets

Revenue

  • Africa Revenue Revenue · H2 FY26 · Medium confidence exceed USD 50 million
    So I believe for next half, that is Q3 plus Q4, our Africa revenue should exceed USD 50 million. I'm saying exceed. So this is the base level, and we could do better than that.

    — S. Ganapathi

  • Africa Revenue Growth Revenue · next FY · Medium confidence stronger growth
    And I can see that we may well, well exceed that $50 million top line in H2. And that would set the stage for a stronger growth in next FY.

    — S. Ganapathi

  • Top Line Revenue · FY27 · Medium confidence INR4,500 crores
    So if we are at that level, I think we should be looking at a top line of about 4,500 or thereabouts.

    — S. Ganapathi

Market Share

  • International Revenue Contribution (Africa) Market Share · years ahead · Medium confidence as much as 30%

    From 20-22% today

    So currently, Africa could be about 20-odd percent, 22%. But in my assessment, if we look at the years ahead, we would see international revenue probably grow faster than India and would contribute to as much as 30%, just given the traction that we are seeing across the different geographies.

    — S. Ganapathi

  • U.K. + Europe Revenue Contribution Market Share · in 1 year · Medium confidence 17-19%

    From 13-14% today

    I am sensing our U.K. plus Europe, which was at about 13%, 14% can grow, and it will grow by, say, in 1 year, it may grow by another 4%, 5% in terms of overall contribution.

    — S. Ganapathi

  • U.S. Business Contribution to Revenue Market Share · High confidence 60% or under

    From 70% today

    So our aim is to bring the U.S. side of business to currently from -- it is about 70%. We will like to bring it to about 60% or under.

    — S. Ganapathi

  • U.K. + EU Revenue Contribution Market Share · foreseeable future · Medium confidence 20%

    From 13-14% today

    The U.K. plus EU contribution to our revenue, which is currently at about 13%, 14% will probably approach 20% in the foreseeable future.

    — S. Ganapathi

Capex

  • Capex Capex · FY28 · Medium confidence INR150 crores
    So when you look at FY 2028, I think we should be looking at a capex in the region of about INR150-odd crores to sustain our growth.

    — S. Ganapathi

Profitability

  • EBITDA Margin Profitability · FY27 (assuming 20% tariff) · High confidence over 12%
    It will be over 12% EBITDA margin.

    — S. Ganapathi

What to watch in Q3 FY26

Resolution of U.S. Penal Tariff on India

Q3 FY26
Current 50% tariff in effect, impacting Q2 by INR12-15 crores.
Target Resolution or reduction of tariff.

Why it matters

Direct impact on Indian business margins and competitiveness.

The company, like the rest of the industry, is hopeful of an early resolution of the tariff impact and could see ourselves tiding through this without much ramifications.

Risks & concerns

  • Penal Tariff on Indian Exports to U.S.

    high

    50% tariff on Indian apparel by U.S. impacting business momentum and margins, with INR12-15 crores impact in Q2 and potential for higher impact in Q3.

    Management acknowledged

  • AGOA Rollover Uncertainty

    medium

    Uncertainty around African Growth and Opportunity Act (AGOA) expiration caused 24% YoY decline in Africa operations in Q2, though sentiment has since reversed.

    Management acknowledged

  • Demand Contraction in U.S.

    medium

    Anticipated 4-6% price increases from Spring '26 in the U.S. market could lead to some degree of consumer demand contraction.

    Management acknowledged

Q&A highlights

8 direct
Tariff impact on Indian business and burden sharing Direct
So at a 50% tariff, there is practically no business possible. And that's why most customers came to us, had a long discussion, and we had a lot of bilateral discussions with customers on how do we split the tariff. So the 20% of tariff, which is generally applicable to most countries... ours is 50%. So there's a tariff delta of 30%.

Clarifies the severe impact of the 50% tariff, the negotiation strategy with customers (burden sharing up to 15% by Gokaldas), and the INR12-15 crores impact on Q2.

Asked by Kishore Kumar

Retail demand in the U.S. and potential price increases Direct
Going forward, I think from early '26, you would see price increases, and that could have some bearing on demand. Demand is very price sensitive. And if there is a 4% to 6% price increase, which is passed on to the consumers, which is most likely to happen, I think there could be some degree of demand contraction.

Provides management's outlook on U.S. consumer demand, anticipating potential contraction due to price increases starting Spring '26, which could affect future order flows.

Asked by Kishore Kumar

Africa order book and future revenue Direct
So I believe for next half, that is Q3 plus Q4, our Africa revenue should exceed USD 50 million. I'm saying exceed. So this is the base level, and we could do better than that.

Gives a clear quantitative target for Africa revenue in H2 FY26, indicating a strong recovery and growth despite Q2's decline.

Asked by Prerna Jhunjhunwala

Geographical mix diversification Direct
I am sensing our U.K. plus Europe, which was at about 13%, 14% can grow, and it will grow by, say, in 1 year, it may grow by another 4%, 5% in terms of overall contribution.

Highlights the company's strategy to diversify away from U.S. dependency by growing U.K. and Europe business, with specific growth expectations.

Asked by Prerna Jhunjhunwala

Capex plan and new capacities Direct
Out of INR110 crores, the INR75 crores is for the new capacity additions. There are 3 new facilities. One is in Madhya Pradesh in Bhopal Unit-2, which the work is in progress. The other one, is a new plant coming up in Bangalore and one more unit in Jharkhand.

Details the allocation of H1 capex, specifying new facility locations and the focus on capacity expansion, which is crucial for future growth.

Asked by Prerna Jhunjhunwala

Q3 margin outlook if penal tariff continues Direct
But all things considered, Q3, if the 50% tariff continues through Q3, the performance at the bottom line level may be top line may grow will grow over Q2 levels, but bottom line may show a lower performance than Q2 level.

Provides a cautious outlook for Q3 profitability if the penal tariffs persist, indicating potential margin pressure despite revenue growth.

Asked by Kaustubh Pawaskar

FY27 EBITDA margin post-tariff resolution Direct
It will be over 12% EBITDA margin.

Gives a long-term margin target under normalized tariff conditions, providing insight into the company's profitability potential.

Asked by Bijal Shah

Depreciation increase Direct
Primarily on account of the fresh leases whenever -- there are 2 new leases we have taken for the new facilities, whatever we have now going ahead in this quarter, the current new installations, whatever is happening, some of the new leases are also coming in. That is where the lease assets are capitalized, point number one. And second, some of the existing leases for -- the lease agreement for the existing properties got renewed in this financial year for a fresh 5 years.

Explains the reasons behind the increase in depreciation, linking it to new facilities and renewed lease agreements, which impacts profitability.

Asked by Chirag Jain

3 min read 7 chapters

Detailed narrative

Q2 FY26 Performance Overview

Gokaldas Exports reported a total income of INR1,003 crores in Q2 FY26, marking a 7% year-on-year growth. India operations demonstrated robust performance with a 14% YoY growth, significantly outperforming the 2% decline in overall Indian apparel exports. However, Africa operations faced headwinds, declining by 24% YoY, primarily due to uncertainties surrounding the AGOA rollover. Consolidated Q2 volumes were 12.97 million pieces at an average realization of INR 700.

Impact of U.S. Penal Tariffs

The imposition of a 50% penal tariff by the U.S. on Indian apparel significantly impacted Q2, resulting in a INR12-15 crores hit. The company mitigated this by engaging in bilateral discussions with customers to share the tariff burden, with Gokaldas absorbing up to 15% and passing some to its supply chain. Management expressed hope for an early resolution of these tariffs, which are currently making business at 50% tariff practically unviable. If the 50% tariff continues through Q3, the bottom line may show a lower performance than Q2.

Africa Operations Recovery and Outlook

Despite a 24% decline in Q2 due to AGOA uncertainty, the sentiment for Africa has reversed. Management anticipates Africa revenue to exceed USD 50 million in H2 FY26, driven by a low reciprocal tariff of 10% and strong conviction for AGOA renewal. The region is expected to contribute as much as 30% to international revenue in the years ahead, up from the current 20-22%. The company has also added new customers in Africa, contributing to the positive outlook for stronger growth in the next fiscal year.

Geographical Diversification Strategy

Gokaldas Exports is actively diversifying its revenue base, with a focus on the U.K. and European markets. The U.K. and EU currently contribute 13-14% of revenue and are expected to grow by another 4-5% within a year, potentially reaching 20% in the foreseeable future. The company aims to reduce its U.S. business contribution from the current 70% to 60% or under, leveraging new trade deals like the India-U.K. FTA, which offers a 12% duty advantage over China.

Capex and Capacity Expansion

The company spent INR110 crores on capex in H1 FY26, with INR75 crores allocated to new capacity additions across three facilities in Bhopal, Bangalore, and Jharkhand, and INR20 crores for Kenya expansion. An additional INR35 crores was for modernization and upgrades. These new facilities are in ramp-up stages, expected to take over a year to reach full potential, and the company projects a capex of INR150 crores by FY28 to sustain growth.

Profitability and Margin Outlook

Q2 EBITDA remained flat YoY at INR84 crores, while PBT declined due to higher finance and depreciation costs, partly attributed to new capex and Ind AS treatment of capitalized lease assets. Consolidated depreciation for Q2 was INR43 crores (INR23 crores normal, INR20 crores Ind AS). If penal tariffs persist in Q3, bottom-line performance may be lower than Q2 despite potential top-line growth. However, under normalized tariff conditions (20% tariff), the company targets an EBITDA margin of over 12% in FY27, with a top line of approximately INR4,500 crores at 90-95% capacity utilization.

U.S. Retail Demand and Pricing

While U.S. retail sales showed a robust 7% growth in Jan-Jul 2025, management anticipates potential demand contraction from Spring '26. This is due to expected price increases of 4-6% being passed on to consumers, which could impact purchasing behavior. Retailers are factoring this into their order placements, but the company maintains a strong order book due to existing relationships and sophisticated product offerings, which helps secure business.

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