Buy Go Fashion; target of Rs 1127: Motilal Oswal

Motilal Oswal's research report on Go Fashion

Go Fashion (GOCOLORS), operating under the brand 'Go Colors', is a pioneer and category leader in the women’s bottom wear market, holding an 8% share of the organized market. Leveraging its first-mover advantage, GOCOLORS has successfully established a direct-to-consumer (D2C) brand, offering a wide range of products through 776 exclusive brand outlets (EBOs) across 180 cities. Positioned as a core wardrobe essential, bottom wear addresses functional, repeat-use needs and is less susceptible to fashion cycles compared to top wear. Its year-round relevance supports steady demand and operational stability, enabling companies to exercise strong pricing discipline. Valued at INR135b in 2020, this segment is the fastest-growing sub-category (~12% CAGR) within the apparel market. It remains highly fragmented and unorganized, with organized retail penetration likely to be only ~38% in 2025.

Outlook

Following the recent correction, the stock currently trades at 34x FY27E EPS. We value the stock at 45x FY27E EPS to arrive at our TP of INR 1,127. We initiate coverage on the stock with a BUY rating.