Gokaldas downgraded to SELL – Citi

Citigroup Research has downgraded Gokaldas Exports Ltd to SELL. Earnings estimates of Gokaldas Exports have also been revised downwards.

Significant slowdown in India’s garment exports, rupee appreciation is the key concern said the report. 10%-19% downward revisions to FY08E-10E earnings to factor in this slowdown and stock’s 25% run-up over last 3 months. Target price reduced to Rs237 based on 10x FY09E PE – implies 6% downside.

Given the stock’s low free float (30%), we expect Blackstone’s 20% open offer at Rs275/share to provide near-term support. Investors can tender their shares in the open offer.