Buy Go Fashion India; target of Rs 1490: Anand Rathi

Anand Rathi is bullish on Go Fashion India has recommended buy rating on the stock with a target price of Rs 1490 in its research report dated October 27, 2024.

Broker Research

October 28, 2024 / 15:07 IST

Buy

26 Aug, 2025 12:21

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Anand Rathi's research report on Go Fashion India

Despite the challenging retail environment Go Fashion’s Q2 revenue grew 10.4% y/y, in line with ARe, led by 0.5% SSSG. A better gross margin (240bps y/y to 63.1%) translated to a 53bp y/y EBITDA margin expansion (in line with our estimate) driven by a better product mix and low-cost inventory. The expansion would have been higher were SSSG better. Management lowered its FY25/FY26 net store addition guidance to 100/+120, fewer than the earlier 120-150 for FY25. It is optimizing its stores by closing smaller ones (<200 sq. ft.) in markets where larger stores (300- 500 sq.ft.) are also present. This would have a minimal revenue impact as sales are likely to shift to the larger stores. Continual stock optimization led to better working capital and healthy cashflow. Net cash reserves were higher (Rs2.4bn; Rs2bn at end-FY24). Management expects 15-20% y/y revenue growth in Q3 led by low/mid-single digit SSSG. Our FY25e/ 26e revenue/EBITDA are ~1.6% lower on average due to the reduced store expansion guidance. Promoter pledge release and SSSG betterment are key ahead.

Outlook

We retain our Buy, at a higher 12-mth TP of Rs1,490, 20x FY27e EV/EBITDA (earlier Rs1,366, 22x FY26e EV/EBITDA).

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