Apparel manufacturer Gokaldas Exports Ltd intends to raise ₹600 crore through a qualified institutional placement (QIP) of up to 7,741,935 equity shares, with an indicative price of ₹775 each, as per a term sheet reviewed by Mint.
The QIP, which opened on Thursday with a floor price set at ₹789.99 per equity share, has garnered nearly double the subscriptions, attracting significant interest from major investors, according to four individuals familiar with the matter.
Among the investors showing interest in Gokaldas Exports’s QIP are SBI Mutual Fund, Fidelity Investments, Nippon India Mutual Fund, Goldman Sachs, Birla Mutual Fund, Tata AIG, and ICICI Prudential Mutual Fund, said the sources, speaking anonymously.
The QIP is expected to result in a dilution of up to 12.2% of Gokaldas Exports’s pre-issue outstanding equity share capital, as indicated by the term sheet. The lock-in period is set at 120 days, and IIFL Securities Ltd is serving as the sole book running lead manager.
Gokaldas Exports disclosed in a regulatory filing on April 18 that a meeting of the fundraise committee is scheduled for April 23 to consider and approve the issue price.
The company plans to utilize the funds raised for repaying or prepaying certain borrowings and settling debts incurred from investments in its wholly owned subsidiary, Sri Susamyuta Knits. A portion of the funds will also go toward financing the acquisition of Matrix Clothing and Matrix Design and Industries by repaying debts owed to these entities. Additionally, the proceeds will bolster long-term cash reserves to support strategic investments, acquisitions, and other growth opportunities. Some funds will also be allocated for general corporate purposes.
Despite the rising inflation and central bank efforts to curb it through interest rate hikes, there has been a notable increase in buying interest from international retailers, particularly in key markets such as the US and Europe. Major players like Target and Walmart have resumed their demand for home textiles, although demand for garments has been subdued due to inflationary pressures, resulting in large clothing brands reducing their purchases as they deal with high-cost clothing inventory, analysts explained.
Arihant Capital Markets noted in a report dated April 9 that Gokaldas’s exports declined by 1.9% year-on-year to ₹508.9 crore as of the March quarter. However, exports saw a nearly 3% increase sequentially. Textile companies showed a mixed performance in the December quarter, with revenue declines for Arvind, Himatsingka Seide, and KPR Mill, while Gokaldas Exports and Welspun Living experienced revenue growth.
“We are expecting a positive momentum for us in the calendar year 2024 and expect sequential growth to pick up slowly over the next few quarters,” said Sivaramakrishnan Ganapathi, vice chairman and managing director of Gokaldas Exports, during its Q3FY24 earnings call.
In the nine months of FY24, Gokaldas Exports generated ₹141 crore in cash from operations and covered capital expenditures of about ₹102 crore.
The garment manufacturer and exporter is backed by Florintree Advisors, a private equity firm led by former Blackstone executive Mathew Cyriac, who serves as the chairman and non-executive director of Gokaldas Exports.
