Summary

Pearl Global Industries Limited - Q3 FY 2026 Earnings Call Summary Friday, February 07, 2026 11:00 AM

Event Participants

Executives

3 Pallab Banerjee (Managing Director), Sanjay Gandhi (Group Chief Financial Officer), Shishir Gahoi (Head of Investor Relations)

Analysts

7 Bharat (Dalal & Broacha), Kaustubh Pawaskar (ICICIdirect), Kishore Kumar (Unifi Capital), Manjubhashini A (ASK Wealth Advisory), Prateek Poddar (Bandhan AMC), Sahil Sharma (Dalmus Capital Management), Sani Vishe (Axis Securities)

Financials & KPIs

Geographic & Segment Commentary

• India: Operating at an annualized run rate of ₹1,100 crores with capacity ready for ₹1,600+ crores. Profitability improved via cost restructuring despite absorbing temporary U.S. tariff discounts. Management expects significant volume growth from FY27 following the India-U.S. trade deal and FTAs with the UK and EU.
• Bangladesh: Consolidated previous year’s 30% growth with a steady order book and smooth operations post-regime change. Capacity expansion of 6 million pieces and a new laundry facility are on track for Q2 FY27. Two major marquee customers were recently added to the Dhaka portfolio.
• Vietnam: Delivered strong momentum with over 15% growth, benefiting from North American brands consolidating business with the Hanoi operations. The segment utilizes high levels of automation and robotics to mitigate recent minimum wage hikes.
• Indonesia & Guatemala: Indonesia is undergoing a volume ramp-up following a factory relocation, with double-digit EBITDA margins targeted for FY27. Guatemala remains a small nearshore strategic hub; management is focused on reaching breakeven in FY27 by leveraging its 0% tariff status to the U.S.

Company-Specific & Strategic Commentary

• Trade Agreements: Recent India-U.S. bilateral deal reduced apparel tariffs from 50% to 18%, removing a major competitive disadvantage. Combined with UK and EU FTAs, Pearl Global is now positioned to access a $250 billion market under favorable terms.
• Asset Light & Multi-Location: The company leverages a “build-to-ship” model via Hong Kong and 5 manufacturing nations to optimize tax and tariff exposure. This multi-country presence allows Pearl to shift production based on shifting geopolitical and trade advantages.
• Capacity Expansion: Committed ₹110 crores for Bangladesh apparel units and ₹90 crores for sustainable laundry facilities. In India, the Bihar facility expansion is complete and currently in the commercialization/hiring phase.
• Sustainability: Solar power installation is complete across all 5 Indian plants to meet ESG requirements for European and U.S. retailers.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

U.S. Tariff Impact & Recovery

• Question: What was the impact of the U.S. tariff and will it be reversed? (Kaustubh Pawaskar)
• Answer: 9M FY26 impact was ₹31 crores. Shipments filed after Feb 7, 2026, will not attract the 25% penalty. Management is negotiating with customers to reverse discounts previously tied to tariff burdens (Sanjay Gandhi/Pallab Banerjee).

India Capacity & Scaling

• Question: How soon can India reach ₹1,600 crores and improve margins? (Prateek Poddar)
• Answer: Capacity is already installed; scaling depends on hiring/training and order flow from FTAs. Significant margin expansion is expected in the next 2 years as India moves from metro hubs to lower-cost regions like Bihar (Pallab Banerjee).

Bangladesh Market Dynamics

• Question: Does the improvement in India’s trade status hurt Bangladesh? (Sani Vishe)
• Answer: No, Bangladesh remains highly competitive with a mature $50B export infrastructure. While India will catch up, Bangladesh’s specialized denim and scale advantages are not easily displaced in the near term (Pallab Banerjee).

Global Margin Structure

• Question: Why do segmental margins in Vietnam/Bangladesh look lower than expected? (Manjubhashini A)
• Answer: The “build-to-ship” model invoices through Hong Kong. Segmental reports only show local entity profits; consolidated geography margins (Entity + HK) are much healthier (Sanjay Gandhi).

Key Takeaway

Pearl Global Industries Limited reported a resilient 9M FY26 with revenue growing 13.2% to ₹3,711 crores and PAT up 14%, despite a ₹31 crore hit from temporary U.S. tariff penalties. The company is at a strategic inflection point as the reduction of U.S. tariffs to 18% and the implementation of UK/EU FTAs remove longstanding competitive disadvantages for its Indian operations, which are currently under-utilized but capable of generating ₹1,600+ crores in revenue. Management is focused on ramping up its new Bihar facility and expanding Bangladesh capacity by 6 million pieces by Q2 FY27. While short-term margins were squeezed by ₹42 crores in one-off tariff and ramp-up costs, the company expects to hit double-digit EBITDA margins in FY27 as these headwinds subside. With a diversified manufacturing footprint across five nations, Pearl Global is positioned to capture a larger share of the $250 billion western apparel market through its flexible, multi-location sourcing model.