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Target: ₹1,410
CMP: ₹1,184.50
Go Fashion is the leader (value market share of 8 per cent) in India’s highly unorganised women’s bottom-wear segment (pegged at ₹13,500 crore) and the first to launch an exclusive branded portfolio in the space.
Led by increasing preference for modular clothing and high pace of formalisation, the organised women’s bottom-wear category (pegged at ₹3,100 crore) is estimated to grow at a CAGR of 24.3 per cent (faster than organised women’s wear CAGR of 19 per cent) over FY20-25. The size of the opportunity apart, on-ground execution is a critical element for success in fashion retail.
While identifying the category rightly was half the job done, Go Fashion decided to exclusively focus on it and aced the execution aspect by: providing a well-diversified range of quality products at affordable prices; and building a pan-India EBO-focussed distribution model with impressive store economics (high sales per sq ft of ₹18,000-20,000 and store level EBITDA margin of 30-31 per cent).
An in-place execution template, lack of formidable competition and the company’s focus on newer growth drivers (online channel and new product extensions) provide assurance on the future runway for growth.
We initiate coverage with a DCF-based target price of ₹1,410.
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