Everytime you exports products you have to pay duties to Government of India.
Government uses duties to discourage exports. For example let us say we had bad rainfall and agricultural output comes down. Duties are used to prevent exports of whatever little is produced as this will lead to bigger shortages in India causing price rise or inflation.
Government wants to encourage textle exports not discourage the same. So the duty drawback is the government giving back or refunding duties to a textile exporter the he/ she has already paid. So these drawbacks are here to stay.
Question was asked in similar lines to Gokaldas management during Q2 concall. Management indicated that it will get priced into customers to what ever extent possible as it will be industry wise phenomenon and also depends on regional competitiveness compared to other countries like Bangladesh. Govt of India may extend the RoSCTL benefits beyond Fy24. Below is the transcript snippet from the Gokaldas concall:
Any guidance/updates post the quarterly earnings for Dec’23 ? There seems to be a momentum loss as far as growth is concerned. Any new information/updates/analysis will be highly appreciated! Thanks!
i had pointed this out in May 2023.[quote=“Aarti, post:69, topic:82007, full:true”]
Valuation seems little on higher side given sales and margins have stagnated. also price has moved up more than 6 times in 3 years.
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I tried to contact co. representatives to get more clarity on the ‘No growth Issue’ But they won’t reveal anything more than what is mentioned in the presentation.
If we look at picture from a broader point of view.
The sales of other biggies like Welspun,Trident etc. is also hovering in the same range since last many qtrs.
Their growth no’s looks good bcz their sales were horribly impacted last year, whereas Faze 3 was able to maintain their Rev. no’s.
Now when the industry headwinds turn into tailwinds in FY25 then we will the full impact of Op. lev coming into play.
Similar commentary given by PDS wherein they are expecting some growth to resume from Q4 onwards. But what is interesting to note is that PDS has onboarded Target as one of its client and it is expecting massive ramp up in revenue coming from Target. Target is one of the top 3 clients for Faze three in terms of revenue. Not sure if this development of Target with PDS is going to have any impact on Faze three’s business.
Anybody still tracking this ?
Q4 topline growth is good. I think highest revenue achieved till now.
But margins shrunk to ~11% on consolidated basis and 10% on standalone basis.
Even if we discount the one time expense of 4 Cr, margins are still under 13%.
Drop of around 4% when compared to last few quarters.
Management commentary is good but they have indicated some margin pressure in the near term till their new products reach break even levels.
It is expensive at PE of 20. It is commodity business and margins will be lower… there is too much competition.
Even PDS margins will be low going forward.
Fy24 was a slow one for the whole industry. They have everything in place now all they need is demand push. Margins hv been impacted as majority of capex is completed now.
For fy25 they should be able to do 20% growth.
At 20 P.e it is definitely not expensive rather near about fair valuations.
In case the demand comes back strongly their margins will claw back & then 20 P.e will also look cheap.
