Target: ₹1,127
CMP: ₹889
Go Fashion (India) (Go Colors) is a market leader in the fast-growing Indian women’s bottom-wear segment which is valued at ₹13,500 crore in 2020 and is growing at 12 per cent CAGR fastest in the industry. Its early-mover advantage, coupled with a sharp D2C strategy and wide product range (50+ styles, 120 colours), has helped it secure an 8 per cent market share by FY20.
The company’s EBO-led model remains its core growth driver, backed by capital-efficient unit economics-with about 44 per cent post-tax RoCE, and a payback period of 18-24 months. As of FY25, Go Colors operates 776 EBOs across 180 cities. The company targets entry into 20-25 new cities annually, aiming for presence in over 250 cities by FY28, underpinned by ~100 store additions per year.
We model 16 per cent revenue CAGR over FY25-28E, with about 135bp pre-IndAS EBITDA margin expansion to 18.2 per cent. Expect EBITDA/PAT to clock 19/20 per cent CAGR, over FY25-28E. Strong operational cash flows are expected to result in cumulative OCF/FCFF of ₹370/250 crore.
We value the stock at 45x FY27E EPS to arrive at our TP of ₹1,127. We initiate coverage on the stock with a Buy rating.
Published on June 3, 2025
