Buy Go Fashion; target of Rs 1350: Emkay Global Financial

Emkay Global Financial's research report on Go Fashion

We visited multiple Go Colors (GO) stores across Mumbai to validate our thesis around the bottom-wear category and its TAM. Our conviction on category relevance got strengthened when we saw customers walking in with their tops to find their perfect color match. GO’s expanding portfolio (>50 styles) enables a strong cross/up-selling opportunity and TAM expansion with focus on Active/Denims/Girls/Plus categories, reflecting in healthy units per bill of ~2.3. We were pleasantly surprised with the kind of traction GO receives in both premium locations (Lokhandwala/Linking Road) and mass hubs (Borivali/ Dadar), suggesting that its consumers are across income brackets. In line with evolving consumer preferences, the stock allocation to non-core categories has now increased to >70% in its stores. Demand trends (SSG) and store expansion are also improving, providing confidence on ~30% PAT CAGR over FY24-27E. The stock is currently trading at attractive valuations and further WC optimization/pledge reduction should be potential triggers. We maintain BUY.

Outlook

We expect GO to register ~30% PAT growth over FY24-27E. We retain BUY with TP of Rs1,350/sh (30x Jun-25E EBITDA).