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Multiple levers for earnings recovery

GEXP reported a healthy set of numbers, with revenue growing 13.0% YoY to INR11,128mn, broadly in line with estimates driven by steady growth in India and a recovery in Africa. EBITDA grew 62.2% YoY to INR1,048mn, with margins expanding to 9.4% on gross margin improvement and better performance in Africa. Volumes grew 9% YoY to 14.2mn pieces, while realizations increased by 4% to INR726/pc. Management expects stronger growth from H2FY27, supported by a healthy order book, currency benefits and withdrawal of customer discounts. Despite cautious US retailer inventory trends, management expects holiday-season sales to drive higher orders for next year. GEXP has also secured two new customers in Africa, with contributions expected from FY28. BTPL’s merger is expected to complete by Q3FY27, wherein EBITDA breakeven is expected in Q3, and PBT breakeven by Q4FY27.

Going ahead, management remains focused on driving volume growth, improving capacity utilization, capitalizing on FTA opportunities and realizing BTPL integration synergies. BTPL merger is also expected to lower the effective tax rate through utilization of accumulated losses. Accordingly, we have revised our FY27/28/29 EPS estimates upward by 13%/10%/2%. We expect GEXP’s revenue/EBITDA/PAT to grow 18.5%/32.5%/61.7% over FY26-29E, with EBITDA margins reaching 12.5%, led by volume growth of 16.1%. Maintain ‘BUY’ with a TP of INR 1,000, valuing the company at 20x Sep’28E PE.

Revenue grew 13.0% YoY, driven by a recovery in Africa operations:

Revenue stood at INR11,128mn, growing 13.0% YoY. India operations reported 10.0% YoY revenue growth, where volume growth was accompanied by realization growth. While Africa operations delivered a robust 32.0% YoY increase, the revenue declined sequentially due to seasonality

Volumes recovered as US tariff pressures are easing:

Consolidated volumes grew 9% YoY to 14.2mn pieces. India volumes stood at 10.3mn pieces, registering 6% YoY growth (13% QoQ), while Africa volumes reached 3.9mn pieces, witnessing a robust 18% YoY increase, supported by the extension of AGOA. The management indicated that the current order book gives strong revenue visibility for H2FY27.

Robust EBITDA growth with margins recovering to 9.4%:

EBITDA grew 62.2% YoY to INR1,048mn, primarily driven by a recovery in Africa operations and a 600bps expansion in gross margins. The recovery was more prominent in Africa operations as the the company had an EBITDA loss of INR160mn in the previous year. The company expects further improvement in margins in Q3 and Q4 supported by exchange rate benefits and withdrawal of tariff related discounts.

H1FY27 financial performance: Revenue stood at INR22,663mn up 16.8% YoY. Gross margin stood at 53.1% expanding 235bps. EBITDA stood at INR2,173mn growing 34.2% YoY with EBITDA margins expanding by 124bps. PAT grew 72.6% YoY to INR855mn. Volumes stood at 28.4mn pieces increasing by 11% led by a 28% increase in Africa volumes. Realization per piece stood at INR727 (vs INR697 in Q2FY26)

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