The company, which derives about 75% of its standalone revenue from the U.S. and counts Walmart, Gap, and JCPenney among its clients, expects quarterly core profit margins to improve to the early double digits from 9.7% in the third quarter of fiscal 2026.
However, Gokaldas did not specify an exact timeline, saying the benefits would materialise sometime after the second quarter of fiscal 2027.
The company’s margins took a hit since the tariffs were imposed, as it offered discounts and absorbed part of the additional costs tied to the higher U.S. tariffs to preserve client relationships.
India’s $38 billion textile export sector has been struggling with elevated U.S. tariffs that were significantly steeper than those imposed on competing countries such as Bangladesh and Vietnam. After a trade deal earlier this month, India now faces an 18% tariff, down from 50% previously.
“It’s better than where we were and it allows the business to make progress,” Managing Director Sivaramakrishnan Ganapathi told Reuters.
However, Ganapathi cautioned that uncertainty persists after the U.S. Supreme court rejected President Donald Trump’s tariffs measures. “It’s good that India reached at least an understanding with the U.S before the court scrapped it,” he added.
Gokaldas produces about 90 million garments annually, with exports to the U.S., Canada, the UK and France accounting for the bulk of its 38.64 billion Indian rupees ($424.81 million) in revenue from operations in fiscal 2025.