Emkay Global Financial is optimistic about Go Fashion and has recommended buying the stock with a target price of Rs 1350 in its research report dated July 12, 2024.
Emkay Global Financial’s Report on Go Fashion:
We visited several Go Colors (GO) stores in Mumbai to support our belief in the bottom-wear category and its total addressable market (TAM). Our confidence in the category grew as we observed customers bringing in their tops to find the perfect color match. GO’s expanding range, with over 50 styles, offers excellent cross-selling and up-selling opportunities. This focus on categories like Activewear, Denims, Girls, and Plus sizes is reflected in the healthy average of about 2.3 units per bill.
We were impressed by the traction GO receives in both premium locations (Lokhandwala/Linking Road) and more affordable areas (Borivali/Dadar), showing that it appeals to customers across different income levels. To match changing consumer preferences, the stock allocation to non-core categories in stores has increased to over 70%. Improving demand trends and store expansion give us confidence in expecting around 30% PAT (Profit After Tax) growth from FY24 to FY27. The stock is currently trading at attractive valuations, and further optimization of working capital and reduction of pledges could act as potential catalysts. We maintain our BUY recommendation.
Outlook:
We expect GO to achieve about 30% PAT growth over FY24-27. We reiterate our BUY rating with a target price of Rs 1,350 per share (30x Jun-25E EBITDA).
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