Gul Ahmed obtains stay order against gas disconnection
Ibn-e-Ameer
Islamabad: Gul Ahmed Textile Mills (GATM) has obtained a Court stay order against disconnection of gas supplies by Sui Southern Gas company limited (SSGC). The disconnection of gas supply to Gul Ahmed could affect its sale. Gul Ahmed has also several shops and retail outlets across the country. It is also capturing the world market to sell its brands.
Due to the stay order, SSGC has not disconnected the gas and continues supplying it to Gul Ahmed.
Sources told Newztodays.com that SSGC had made effort to disconnect the gas connection of Gul Ahmed.
However, the company had obtained a stay order against the disconnection of the gas supply.
Despite a strong brand name in retail textile and highly ranked management, GATM has been an under-loved stock, according to Khadim Ali Shah Bukhari Securities. Interloop, Nishat Mills, and Kohinoor Textile Mills all trade at a significant discount.
There are popular brands of Gul Ahmed like Gul Ahmed lawn, summer collection 2021, dresses, and bedsheets in the market. It also offers different brands for kids, men, and women on account of winter and summer seasons collections.
Does Gul Ahmed Export?
Gul Ahmed is also in the business of supplying high-quality textile products to around 500 retail giants in the entire world. It has also been exporting apparel to European Union markets. It has received an encouraging response from apparel giants who work across the world.
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This was primarily due to the export business’s inconsistent historical performance (50 percent of revenues came from export).
We believe this will change in the future for the reasons listed below, and now is a good time to invest in GATM, the report reveals.
To begin with, the stock has increased by 100% in the last 12 months due to a 394 percent increase in earnings in 9MFY21. This indicates that the stock has lost value.
Second, it believed that the earnings growth is sustainable because the company is expanding capacity and has excess demand to meet.
It is benefiting from the government’s growth-stimulating incentives (such as access to cheap credit, exchange rate depreciation).
GATM is investing Rs 5.0 billion to expand capacity in all of its segments: spinning, weaving, and home textiles. During FY22, this capacity expansion will be phased in.
GATM has a price-to-sales ratio of 0.23x and a price-to-earnings ratio of 4.7x for FY22, versus an industry average of 0.57x and 6.8x, respectively. The stock has a 5% dividend yield.
Read More: SSGC Ltd suspends gas supply to all industries
Pakistan has experienced a fashion revolution of late and those who have understood the structural trend have positioned themselves as leading fashion houses.
Gul Ahmed has marked its presence in Pakistan’s fashion world and hence has one of the largest retail chains in Pakistan under the brand name ‘IDEAS’.
The retail stores have a wide range of products from clothing to home accessories. It caters to both men and women and children of all ages.
It also has breadth in terms of office wear, semi-formal, and casuals. The company currently has more than 100 stores spread across 45 different cities.
It also has three wholly-owned subsidiaries operating in UAE, UK, and USA for distribution and trading of textile products. The retail sector continues to grow One of the factors contributing to the fashion revolution is rising urbanization in Pakistan.
Furthermore, 2/3rd of the population (145mn people) is below the age of 30 and more fashion-conscious ‘aggressive advertising through social media. Thus rising spending from this segment is providing another pillar of structural growth. These trends are leading to smaller newer cities investing in the construction of shopping malls to cater for the growth.
