Gokaldas Exports on India-EU trade deal — Top key takeaways

Gokaldas Exports, a key textile player in India and a major exporter to the US and the European Union, welcomed the Free Trade Agreement between India and the European Union, stating that it is a positive step for Indian textile and apparel players.

In an interaction with CNBC-TV18 on Tuesday, January 27, Gokaldas Exports' Vice Chairman and Managing Director Sivaramakrishnan Ganapathi said that the step is significant as both the US and European Union are big markets for Indian textile players.

Here are some of the key takeaways from the management interaction:

Exposure To The European Union

Currently, Gokaldas Exports continues to derive a major revenue share from the US market. Its exposure to the European Union stands between 16% to 17% of its annual topline.

Over the next 12 months, Ganapathi is confident that the figure will increase to between 19% to 20% of the overall topline.

Capacity, Capex and Margins

The entire Gokaldas Export capacity is currently operating at full potential, according to its Vice Chairman and MD.

Although he intends to go slow on the capex front, considering the 50% tariffs on US exports still continuing, he plans on making further investments in the European Union, once the deal begins to fructify in 2027.

As a result of this FTA, Gokaldas Exports also expects margins to improve on exports to the geography.

Impact Of US Tariffs

Despite the 50% tariffs on exports to the US, Gokaldas Exports' order book pipeline for the US is strong till the first quarter of financial year 2027, according to Ganapathi, who also went on to add that orders are coming in for the second quarter as well.

While the company's order book may not have seen a significant impact, margins at the EBITDA level are taking a hit.

Margins for US exports have now fallen to low-single-digits due to the US tariffs, while the overall margins are expected to remain in the "high-single-digit" range.

Gokaldas Exports is yet to declare its results for the December quarter, which will be the first full quarter for the company with the 50% tariff on US exports.

Under the India-EU FTA, India's exports of marine products, chemicals, textiles, footwear, consumer goods, base metals and sporting goods will have "zero tariffs."

Shares of Gokaldas Exports fell 7.5% during last Friday's sell-off, and have halved from their recent 52-week high of ₹1,060.