Buy Go Fashion; target of Rs 950: Emkay Global Financial

Emkay Global Financial's research report on Go Fashion

GO’s Q4 EBITDA was 7-10% better than estimates, largely led by higher growth in the LFS channel and better gross-margin on higher credit note. Revenue grew ~13%, led by 24% growth in LFS while EBO grew 11% (SSG: 2.1%). EBO SSG was driven by gain in realizations (flat volume). Despite the beat, our EBITDA/TP estimates are cut by ~5% on muted demand trends (flat SSG in Apr25) and management commentary of stable EBITDA margin. After a huge round of store optimization (pruned ~6% network in FY25), store additions are expected to inch up, with outlook of 30/120 openings in Q1/FY26. Notably, GO also shared plans to pilot core/functional products in women top-wear/men’s t-shirts categories, in 25 of its larger stores (1,500-2,000sqft). GO expects the new categories too to follow the core principles of high throughput, strong margins, and quick paybacks.

Outlook

We maintain a conservative stance for now and will keenly watch this space. Valuations at 40x/35x FY26/27E EPS are reasonable and growth rebound offers re-rating potential. We maintain BUY and cut our TP by 5% to Rs950 (25x Mar-27 EBITDA).

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