Pearl Global Ind Q3 FY26 earnings call
In brief
Q3 FY26 revenue up 14.4% YoY to INR 1,170 cr (5-yr Q3 high); India-U.S. tariff cut to 18% from 50%; 12-14% CAGR held
- Management's tone
- Confident
- What was said
- Leaned positive
- Guidance
- Guidance held
- Analyst pushback
- Low
- Stock, next session
- −2.09% (Nifty 50 +0.68%)
- Q3 FY26 revenue at INR 1,170 cr (+14.4% YoY), the highest in 5 years, with adjusted EBITDA margin at 8.3% (9% ex tariff and ramp-up costs) and PAT at INR 52 cr (+6.8% YoY).
- India-U.S. bilateral trade deal cuts tariff to 18% from 50%; India-EU FTA and India-UK FTA (signed July 2025) open a ~$250 bn addressable market across EU, U.S., Japan, U.K. and Australia.
- India business operating at INR 1,100 cr annualised run rate with capacity ready to scale to INR 1,500-1,600 cr as U.S., U.K. and EU trade deals become operational from 2027.
- Bangladesh capacity expansion of 6 million pieces targeted for completion by Q2 FY27; INR 66 cr committed of INR 110 cr allocated; 2 new marquee customers added in Dhaka.
- 12-14% revenue CAGR guidance maintained for FY26; ICRA upgraded long-term rating to A+ stable (from BBB stable in 2021) and short-term to A1+.
An AI read of the company's transcript · the filing
The numbers
The quarter, Q3 FY26
| This quarter | A year ago | Last quarter | Margin | |
|---|---|---|---|---|
| Revenue | ₹1,170 cr | +14.4% | −10.9% | |
| EBITDA (excl. other income) | ₹95.6 cr | +4.6% | −21.1% | 8.2% (8.9% a year ago) |
| Net profit | ₹53.3 cr | −5.3% | −27.4% | 4.6% (5.5% a year ago) |
| EPS (₹) | ₹11.57 | −7.6% | −27.5% |
From the company's filed results for the quarter ended 31 Dec 2025 (consolidated), not from the call. EBITDA here excludes other income, so it can differ from the figure management quotes.
What moved the numbers, as management explained it
- U.S. tariff cost of INR 31 cr (9M FY26) and incremental ramp-up cost of INR 11 cr (9M FY26) for new Bihar and Guatemala facilities depressed reported EBITDA; adjusted EBITDA margin would be 10.1% vs reported 9% for 9M. (one-off)
- High value-added product sales growth in Vietnam and Indonesia drove 9M revenue up 13.2% YoY to INR 3,711 cr.
- Bangladesh consolidated 30%+ prior year growth; Vietnam 15%+ growth supported consolidated volume growth across mature locations.
- Cost restructuring in India lifted standalone 9M EBITDA margin by 220 bps YoY to 5.5%; Q3 standalone EBITDA margin improved 140 bps to 5.1% (7.2% ex INR 5 cr tariff cost).
- 9M PAT grew 14% YoY to INR 189 cr even after absorbing the tariff and ramp-up drag; Q3 standalone PAT of INR 14 cr benefited from lower cost base.
The numbers management led with
- Tariff-related cost absorbed: INR 31 crores in 9M FY26 (adj EBITDA bridge)
- New facility ramp-up cost: INR 11 crores in 9M FY26
- India revenue current run-rate: INR 1,100 crores annualized
- India in-house capacity ready: INR 1,500-1,600 crores revenue potential
- Bangladesh capacity expansion: ~6 million pieces incremental, completion Q2 FY27
- Long-term credit rating upgrade: ICRA BBB stable (2021) to ICRA A+ stable (2026); short-term to ICRA A1+
Guidance
Guidance on this call
| What | For | What management said | Filed |
|---|---|---|---|
| Consolidated revenue CAGR | FY26 | 12-14% revenue CAGR at a group level maintained for FY26 | 11.5%, below the range |
| India revenue scaling potential | FY27 | India capacity ready to scale revenue from INR 1,100 cr run rate to INR 1,500-1,600 cr as FTAs become operational from 2027 | — |
| Bangladesh capacity addition | Q2 FY27 | 6 million piece capacity expansion in Bangladesh targeted for completion by Q2 FY27 | — |
| Double-digit EBITDA margin at standalone and group level | FY27 | Target is to move to double-digit EBITDA at standalone and group level next financial year | — |
| Indonesia EBITDA margin | FY27 | EBITDA margin in Indonesia to be double digit in the next year and year after | — |
| Guatemala breakeven | FY27 | Guatemala losses to reduce substantially or reach breakeven in the next financial year (FY27) | — |
Filed figures are summed from the company's own quarterly results for the whole period (EBITDA excludes other income); where one sits against what was guided is arithmetic, not a judgement.
What changed since the Fri 8 Aug 2025 call
| What | On the Fri 8 Aug 2025 call | On this call |
|---|---|---|
| U.S. tariff on Indian exports (achieved) | India faces 50% U.S. tariff (25% reciprocal from Aug 7, 25% penalty from Aug 27); ~15% of group top line in realignment scope | India-U.S. bilateral trade deal reduces tariff to 18% from 50%, effective on filings after 7th February |
| India-EU FTA (achieved) | Pivot India operations to serve Japan, Australia, U.K. and EU markets via India-U.K. FTA (priority) | India-European Union Free Trade Agreement signed; expected to be implemented in 2027 |
| India-UK FTA (achieved) | Pivot India operations to serve Japan, Australia, U.K. and EU markets via India-U.K. FTA (priority) | India-U.K. FTA, which was signed in July 2025; expected to be operational within this financial year |
| Group growth guidance (restated) | 12-14% volume CAGR guidance maintained; H1 close and start of H2 will provide more clarity (FY26) | 12% to 14% revenue CAGR at a group level maintained; reiterated 12-14% for top-line |
| Realisation guide (not repeated) | INR 625-650 full-year realisation guide held; Q1 was structurally higher due to Vietnam mix and outerwear seasonality (FY26) | Not mentioned |
| Effective tax rate (not repeated) | Effective tax rate: ~15% for FY26; BEPS norms not yet applicable to Pearl Group (below threshold) (FY26) | Not mentioned |
| Bangladesh capacity expansion (raised) | Bangladesh 5-6 million piece capacity expansion on track via capex committed in Q4 FY25 (FY26) | Lift the capacity by about another 6 million pieces in Bangladesh; construction targeted for completion by Q2 FY27 |
| Bihar machine installation (raised) | Bihar 500/800 machines installed, 300 in phased ramp (FY26) | Bihar, we have planned for 900 machines; as of now, 500 already installed and bulk production started |
The business
By business
India
Operating at INR 1,100 cr annualised run rate with capacity for INR 1,500-1,600 cr; 22-24% of group revenue; 9M standalone EBITDA margin improved 220 bps YoY to 5.5% (7.3% ex tariff of INR 14 cr) on cost restructuring.
Annualised revenue run rate INR 1,100 cr · Capacity ready INR 1,500-1,600 cr · Group revenue share 22-24% · 9M standalone EBITDA margin 5.5% (+220 bps YoY) · 9M standalone EBITDA margin ex tariff INR 14 cr: 7.3% · 9M standalone PAT INR 55 cr (+72.6% YoY)
Outlook: Volume growth from 2027 as U.S., U.K. and EU trade deals become operational; standalone double-digit EBITDA margin targeted next financial year
Bangladesh
Mature operation consolidated 30%+ growth from prior year; 2 new marquee customers added in Dhaka; 6 million piece capacity expansion in progress for completion by Q2 FY27.
Capacity addition 6 million pieces · Capex allocated INR 110 cr · Capex committed INR 66 cr
Outlook: Significant contribution from new factory expected in FY28; 5-6 month ramp-up post-commercialisation
Indonesia
In ramp-up phase after new factory commissioned; capacity scaled from $15-16 mn currently; EBITDA margin currently single digit.
Outlook: Double-digit EBITDA margin expected next year and year after as capacity utilisation improves
Vietnam
Hanoi operations at optimum utilisation; 15%+ volume growth; consolidated some of the fastest-growing specialty brands of North America; manageable annual wage hikes.
Volume growth 15%+
Outlook: Confident of continued growth; absorbing wage hikes via automation and robotics
Guatemala
New operation with losses reducing; U.S. has now waived the 10% baseline tariff, restoring 0-tariff status; small production centre focused on nearshore U.S.
U.S. tariff restored to 0%
Outlook: Targeting breakeven next financial year (FY27); controlled capex pending profitability
Balance sheet, capex and funding
- Bangladesh apparel manufacturing capex of INR 110 cr allocated, INR 66 cr committed; construction targeted for completion by Q2 FY27.
- Sustainable laundry capacity capex of INR 90 cr allocated, INR 51 cr committed; construction targeted for completion by Q2 FY27.
- Bihar capacity expansion capex fully incurred and commercialised; 500 of 900 planned machines installed, balance ramping up.
- Other replacement/efficiency capex of INR 25 cr allocated, INR 14 cr committed; solar power installation completed across all 5 India plants.
- ICRA long-term credit rating upgraded to A+ stable (from BBB stable in 2021); short-term upgraded to A1+, reflecting improved liquidity and resilience.
- Payable days at 45-50 days, backed by letters of credit; net working capital days at 35-40 days, described as lowest among peers.
The industry, as management sees it
Management views the global apparel sourcing landscape as undergoing structural rebalancing in India's favour — India-US deal cutting tariff from 50% to 18%, India-EU and India-UK FTAs now concluded, putting India on near-parity with Bangladesh/Vietnam after years of disadvantage. Consumer sentiment in US described as 'low or decreasing' per surveys, though numbers haven't yet reflected this. Geopolitical volatility and tariff changes continue to favour manufacturers with multi-country, multi-market footprints.
Risks management named
- US consumer demand risk if 20% tariff pass-through translates into volume contraction
- Vietnam wage hikes need to be offset by automation/robotics investments
- India raw-material variety (beyond cotton) needs diversification to compete with Bangladesh/Vietnam
- Guatemala near-term profitability puzzle due to scarce regional raw material
- Bangladesh competitive intensity as India/Vietnam FTAs erode LDC-era advantages
- Customer concentration risk in Bangladesh denim sourcing among EU/UK retailers
Q&A
Q&A was wide-ranging but notably collegial — nine analysts covered geography mix, capacity readiness for trade-deal tailwinds, ramp-up cost trajectory and segmental reporting nuances. The deepest analytical probing came on Guatemala's path to profitability, Vietnam/Bangladesh competitive intensity post-FTA, and the mechanics of tariff-discount reversal with US customers. Management was unusually forthcoming with specific numbers (India INR 1,600 cr capacity, INR 31 cr tariff hit, INR 42 cr total one-offs) and clear forward markers (double-digit group EBITDA target FY27, India ramp from FY27).
Not answered directly
- Tariff discount accounting treatment (deferred to offline detail)
- Margin trajectory question cut off by moderator
Asked for a number, answered without one
- Tariff discount split between revenue reduction and other expenses: Said it is a combination of both depending on contracts; deferred the split detail to be shared offline.
- Q4 tariff cost tailwind vs Q3: Said quarterly impact is calibrated; full-year FY27 should see improvement on operational efficiency and setting of operations, but did not quantify the Q4 number.
- Volume growth in Vietnam and Indonesia (Y-o-Y): Said Vietnam is experiencing more than 15% growth; Indonesia declined to give a specific volume number, only said significant growth this year and meaningful bottom-line growth next year.
Every question, with its answer
1. Ramp-up costs
Kishore Kumar, Unifi Capital
Question. On the ramp-up cost of INR 9 crores for Q3, is it for the Bihar facility or the Guatemala facility? Will it continue in coming quarters?
Answer, Sanjay Gandhi, Group CFO. It's an incremental ramp-up cost, largely for Bihar with some part for Guatemala. We expect this cost to go down substantially from next financial year onwards — some reduction in Q4 FY26 but a substantial drop from FY27 onwards.
Follow-up. Can you give a sense on the capacity addition from these facilities?
Answer. Bihar: planned for 900 machines; 500 already installed; hiring and training underway; bulk production started; should hit higher utilisation over the next few months.
2. US demand and tariff pass-through
Kishore Kumar, Unifi Capital
Question. On US demand sentiment — average tariff is now ~20% across major apparel exporting countries. What proportion has been passed on to end consumers? Any variation between high-end fashion and general clothing? How is customer inventory shaping up?
Answer, Pallab Banerjee, Managing Director. Price-ticket increases in the US have been done surgically — not across all products/retailers. Certain products where retailers see pricing power have seen price increases; core products in wait-and-watch mode. Customers maintaining overall buying budget but slightly decreasing buying volumes to offset higher per-piece prices. We have not seen full 20% pass-through from any retailer; brand/supplier cost-sharing becoming a norm. Consumer sentiment is described as low/decreasing by agencies but numbers haven't shown so far — most participants are cautious.
Follow-up. With 2-3% inflation, if brands pass 7-8% cost to consumers, will it impact demand?
Answer. Full 20% pass-through not observed; retailers absorbing some part via efficiency; the 20% increase in cost of goods would translate into 30-50% price impact depending on retailer — wait and watch.
Partly answered.
3. Customer additions and wallet share
Kishore Kumar, Unifi Capital
Question. With ~10 million pieces of incremental capacity coming up in Bangladesh and India in FY27, how are you placed in terms of new customer additions or wallet-share increase with existing customers for these incremental facilities?
Answer, Pallab Banerjee, Managing Director. We've consciously diversified from near-complete US dependence 4 years back to all 5 major markets. The $240-250 bn apparel opportunity across these markets is large. We are constantly targeting growing retailers/brands gaining market share; recently added a marquee retailer to the mix. Will continue adding customers and gaining wallet share.
4. Bangladesh capacity ramp-up
Bharat, Dalal & Broacha
Question. Bangladesh capacity coming up by 2Q FY27 — when can we expect full ramp-up?
Answer, Pallab Banerjee, Managing Director. Bangladesh is a mature market — ramp-up is smoother and easier than India. Construction should be ready in 2027; should be able to ramp it up in FY28. The washing project in Bangladesh should ramp faster.
Follow-up. Capacity addition next year takes total to ~112 million pieces — how long does typical ramp-up to optimum utilisation take?
Answer. Once factory and machines ready, hire and train people. Fresh workers need training; experienced workers faster. Efficiency grows over 6 months to a year from low base. Bihar will be slower (new location) vs Dhaka (mature market).
5. Operational losses geography
Bharat, Dalal & Broacha
Question. Do we expect operational losses in mature regions too, or is it only a Bihar phenomenon?
Answer, Pallab Banerjee, Managing Director. Operational losses are just a ramp-up phenomenon this quarter — not prolonged for most operations. Guatemala (new country) took more than a year to get a handle. Dhaka/Vietnam are mature — much faster returns.
6. Margin trajectory
Bharat, Dalal & Broacha
Question. On our margins — trying to understand the trajectory (question cut off by moderator before response).
Answer, Moderator, Moderator. Question interrupted by moderator; not answered on the call.
Not answered directly.
7. Capacity readiness for trade-deal opportunity
Kaustubh Pawaskar, ICICIdirect
Question. With US trade deal and EU/UK FTA, do we have enough production capacity to cater to opening demand? Especially in India — do you need more capacity and what is your capex plan?
Answer, Pallab Banerjee, Managing Director. We have a continuous growth plan compounding at 12-15% and continuous capacity addition is built into the model. In India we already have capacity ready for INR 1,600 cr vs current INR 1,100 cr business — only need people and minor machine additions. For other geographies, will continue to update. Have 2 partner factories ready in India not counted in INR 1,600 cr capacity. In Bangladesh/Vietnam we leverage partner factories ahead of own plants. 12-14% top-line CAGR plan continues.
Follow-up. The 12-15% growth — does it factor in trade deals or is it incremental?
Answer. Specifically for India, yes — EU deal implementation in 2027, UK FTA in March/April 2026, US bilateral already operational. We lost the 2026 jump due to deal delays but readiness is in place. Total impact will be much higher.
8. Forward US tariff impact on margins
Kaustubh Pawaskar, ICICIdirect
Question. On US tariff impact — Q3 impact ~INR 31 cr; tariff reduced to 25%, with 18% from mid-March. Q4 will have some retrospective impact. From Q1, should we expect it to 0? Or will there still be some margin hit given negotiations?
Answer, Pallab Banerjee, Managing Director. India was at 50% disadvantage vs Bangladesh/Vietnam/Indonesia (no 25% penalty and LDC advantages in EU/UK). With penalty tariff waived, India bottom line benefits immediately. For competitiveness, India will have 1-2% advantage vs competing countries (18% vs 20%/25%). Brands will negotiate from all vendors. Strategic investments by marquee retailers in Indian facilities mean they want to continue using them. India needs to grow fabric variety — better investments coming.
Partly answered.
9. India margin recovery timeline
Prateek Poddar, Bandhan AMC
Question. India looks like the segment dragging growth, with the 3 FTAs (UK/EU/US) signed — how soon can you ramp India and get India margins back to company level? How soon can India reach INR 1,600 cr?
Answer, Pallab Banerjee, Managing Director. Two issues for India: trade-deal disadvantages + lack of raw material variety (apart from cotton). Budget has positive moves on diversifying fibre base — should resolve soon at country level. Pearl had a drag because investments were in metros (Gurgaon, Chennai, Bangalore) — now expanding to lower-cost, better-workforce locations. Started both journeys at country and Pearl level. Next 2 years should see huge improvement. Order books showing positive movement.
Follow-up. Other segment in segmental format is Guatemala? Sequentially PBT losses have increased — is it seasonality or something else?
Answer. Confirmed Guatemala is the 'Other' segment. Every quarter is different in apparel — Northern market winter seasons are bigger, outerwear/jackets peak in Q1 and Q4. Look at corresponding quarter YoY.
Partly answered.
10. Guatemala path to profitability
Prateek Poddar, Bandhan AMC
Question. Path to profitability for Guatemala — when will it stop dragging financials?
Answer, Sanjay Gandhi, Group CFO. Working very aggressively; charting a plan where Guatemala losses should reduce substantially in FY27 or reach breakeven in next financial year itself; thereafter, strategy is to contribute to bottom line. Complete focus on stemming losses and reaching breakeven, confident in FY27.
Follow-up. So with top-line growth of 12-15% and margin expansion from India/Guatemala, you will see margin expansion in adjusted EBITDA — fair?
Answer. Yes, fair understanding.
11. Bangladesh profitability YoY
Prateek Poddar, Bandhan AMC
Question. Bangladesh — saw some dip in profitability on YoY basis (not material). Any comments?
Answer, Sanjay Gandhi, Group CFO. Segmental report: part of revenue is on build-to-ship-to model as per contractual terms — invoicing happens from Hong Kong entity. So Bangladesh profit shown excludes some profit that flows to other entity. When we combine, Bangladesh is faring stable and expected to continue improving. Inter-segmental eliminations relate to intercompany transactions.
Follow-up. Are India and Guatemala the only countries below company average in margins — or even Indonesia?
Answer. Indonesia is also below capacity utilisation and margin profile of 2-3 years back. Ramp-up of capacity and improvement in gross/EBITDA margin expected to deliver next year and year after. EBITDA still in single digits; expect double-digit next year and year after.
12. Bangladesh strategy amid India tailwinds
Sani Vishe, Axis Securities
Question. India on cusp of golden area for textiles and Pearl well placed. But Bangladesh losing competitive advantage and facing domestic raw-material challenges. How does that affect Bangladesh strategy? How to handle possible risks?
Answer, Pallab Banerjee, Managing Director. India had export disadvantages vs export-oriented Vietnam/Bangladesh which have built superior infrastructure over 15 years. Bangladesh has ~$50 bn garment exports vs India's ~$15-16 bn — clear catch-up needed. India BTAs/FTAs + labour law/ease-of-doing-business improvements will help compete. Bangladesh political: party changes historically cause disturbance for a few months to a year but garment industry unaffected. Yarn manufacturer strike — call-off expected; we don't buy local yarn, mostly imported for price competitiveness. Investment in Bangladesh spinning facing financial issues; government giving incentives. Investment continuing from our side and customer side.
Follow-up. On pricing — do you assume taking some hit to be competitive against India after duty removal?
Answer. Bangladesh is more competitive than India today as export economy. India needs to catch up. Risk: many EU/UK retailers have 90-100% Bangladesh exposure — China+1 era benefited Bangladesh/Vietnam, India could not benefit. Now in better shape. No immediate Bangladesh impact but yes competition will come.
13. Vietnam wage hike impact
Shradha, Asian Market Securities
Question. Vietnam had minimum wage hike from 1 January. How has that affected Vietnam operations and margins?
Answer, Pallab Banerjee, Managing Director. Vietnam has predictable annual wage hikes. To compensate, continuous effort on efficiency, automation, robotics. Pearl continues to invest in automation and machinery upgradation. Don't see major challenge — Vietnam wage hike is predictable and planned for.
Follow-up. Will that reflect gradually — near-term margin pressure in Vietnam sequentially?
Answer. Predictability is high in Vietnam — that's why US customers go there first. We plan for annual cost increases. No major challenge expected.
14. Payable days and working capital
Shradha, Asian Market Securities
Question. Payable days seem almost double of peers — why are payable days so high?
Answer, Sanjay Gandhi, Group CFO. Payable days ~45-50 days, in line with credit terms with suppliers, many backed by letters of credit. Net working capital days 35-40 — among the lowest vs peers in India or internationally. Look at net working capital cycle for real efficiency.
Follow-up. How have you been able to negotiate better terms vs competition?
Answer. Long-term relationships with suppliers across Bangladesh/Vietnam procurement; stability; volume growth over time. Never delayed payment to suppliers, employees, statutory. Symbiotic relationships have built confidence. Will continue best practices.
15. US tariff reversal and discount withdrawal
Vishal Mehta, IIFL Capital
Question. On US tariff reduction — joint statement for 18% and executive order withdrawing tariffs with shipments post 7 Feb attracting lower duties. Will discounts to US customers get automatically withdrawn?
Answer, Sanjay Gandhi, Group CFO. Confirmed with forwarder/customs agent that filings after 7 February will not attract 25% penalty. Shipments already sailed will carry that pricing. Going forward, we will get credit for extra tariff presumed but withdrawn from 7 Feb. Engaging with customers for necessary PO amendments. Nitty-gritty under discussion but expectation is withdrawal.
Follow-up. Will there be a further need for second-round negotiations or will discounts be reversed?
Answer. Not on existing orders. For fresh orders, retailers will want competitive pricing globally. With India at 2% additional advantage, level playing field restored.
16. Tariff discount accounting treatment
Vishal Mehta, IIFL Capital
Question. Tariff discounts till now — were they set off against revenue/realisations or booked as separate expense?
Answer, Sanjay Gandhi, Group CFO. Combination of both. Part is revenue reduction; part is in other expenses. Depends on contract drafting with customer. Will share details offline.
Not answered directly.
17. EU presence and sustainability readiness
Vishal Mehta, IIFL Capital
Question. Current EU presence? How are we ranked on sustainability — EU is conscious of this?
Answer, Pallab Banerjee, Managing Director. Substantial EU presence via Bangladesh operations. EU-based customers ~17%+ moving toward 20% of total EU imports. Most production is EU ready. ESG investments ongoing — water, solar, renewable energy, waste management. Of 8 owned India factories, 4 already EU-approved; balance 4 getting approved now.
18. Geographic revenue targets
Sahil Sharma, Dalmus Capital Management
Question. Targeting INR 1,500-1,600 cr from India — can you share revenue target from other geographies?
Answer, Sanjay Gandhi, Group CFO. Maintaining 12-14% group revenue CAGR guidance. India number is from capacity readiness perspective — INR 1,600 cr in-house capacity ready vs INR 1,100 cr run-rate; FTA provides opportunity to accelerate. At group level, 12-14% over next 2-3 years — always striving to beat.
Follow-up. With EU and UK FTAs, will India see margin expansion as we have to provide lower discounts shipping to EU/UK?
Answer. Indian vendor had 10% additional EU/UK tariff disadvantage, now 12% from 1 Jan after GSP ended. Will reverse when UK FTA kicks in (~April) and EU FTA (~Jan 2027). Customers/Indian players have renewed interest to secure business. Customer may negotiate 12% reduction for landed parity. Pearl has choice across Bangladesh/Vietnam/India — will choose best advantage for us and customer.
19. Vietnam and Indonesia volume growth
Sahil Sharma, Dalmus Capital Management
Question. Color on volumes from Vietnam and Indonesia and how they have changed YoY?
Answer, Pallab Banerjee, Managing Director. Vietnam experiencing >15% growth currently. Indonesia: in ramp-up after shifting factory 2 years back — capacity had come down from $30+ mn to $15-16 mn range. Significant growth this year; growth plus bottom-line growth significantly higher next year onwards.
20. Vietnam segmental margin interpretation
Manjubhashini A, ASK Wealth Advisory
Question. Vietnam growth looks healthy at ~66% from segmental data, but margins aren't as positive. Any particular reason?
Answer, Sanjay Gandhi, Group CFO. Revenue from Vietnam is bifurcated between 2 countries because of build-to-ship model — invoicing through Hong Kong entity. Segmental revenue is only entity revenue; intersegmental adjustment happens below. PBT reported is local entity PBT. Need to combine Vietnam + Hong Kong margin to arrive at Vietnam division total margin. Same applies to Bangladesh and Indonesia.
Follow-up. So don't look at segmental margin standalone — look at India vs all other geographies for profitability movement?
Answer. Correct. Intercompany eliminations needed for complete view. India, via stand-alone accounts, gives direct view.
21. One-off cost tailwind to margins
Manjubhashini A, ASK Wealth Advisory
Question. For 9M, one-off tariff-related plus ramp-up costs accumulated to INR 42-odd crores. Ramp-up to reduce in Q4 but FY27 onwards nil. So INR 30-35 cr tailwind to margins in Q4 vs Q3?
Answer, Sanjay Gandhi, Group CFO. 9-month number; quarterly impact is calibrated. Will flow through P&L when comparing full year next year vs current. Definite improvement from operational efficiency and operation setting.
Follow-up. Looking to increase margin expectations from group level — aspiration of double-digit EBITDA margin in India, also reflecting at group level. With trade negotiations behind us, would you look to increase this number?
Answer. Target is to move to double-digit EBITDA at stand-alone and group level. Working towards it. With FTAs and trade barriers going out + one-offs cooling down, well positioned to achieve double-digit in next financial year. Directionally confident.
What was said
Topic by topic, in the order it was spoken
Q3 and 9M FY26 Consolidated Performance Overview · Pallab Banerjee (MD) and Sanjay Gandhi (Group CFO)
- 9M FY26 consolidated revenue INR 3,711 cr (+13.2% YoY), driven by high value-added product growth in Vietnam and Indonesia
- 9M FY26 adjusted EBITDA INR 333 cr (+14% YoY) at 9% margin; adjusted margin 10.1% excluding INR 31 cr tariff impact and INR 11 cr ramp-up costs
- 9M FY26 PAT INR 189 cr (+14% YoY)
- Q3 FY26 revenue INR 1,170 cr (+14.4% YoY) — highest Q3 revenue in 5 years for Pearl Group
- Q3 FY26 adjusted EBITDA INR 97 cr (+4.4% YoY) at 8.3% margin (9% adjusted); Q3 PAT INR 52 cr (+6.8%)
Industry & Trade Deal Tailwinds · Pallab Banerjee (MD)
- India-US bilateral trade deal cuts tariff from 50% to 18%, materially improving Indian textile export competitiveness for US buyers
- India signed EU FTA and UK FTA (July 2025); EU implementation expected in 2027, UK FTA expected operational by March/April 2026
- India has now concluded BTAs/FTAs with all five major apparel markets — EU, US, Japan, UK, Australia — combined market size ~$250 bn
- Bangladesh, Vietnam enjoy zero/advantageous tariff access into EU, UK, Canada, Australia; Guatemala has 0% US tariff (now waived even the 10% baseline) and is nearshore for US
- Pearl Global positioned across 5 manufacturing countries and 5 major markets to maneuver evolving geopolitics
Geographic Outlook: India, Bangladesh, Indonesia, Vietnam, Guatemala · Pallab Banerjee (MD)
- India: Current annualized run-rate ~INR 1,100 cr; in-house capacity ready for INR 1,500-1,600 cr; ~22-24% of group revenue; expects higher volumes and sourcing from India from FY27
- Bangladesh: Consolidated last year's 30%+ growth; capacity expansion adding 6 million pieces by Q2 FY27; two major new customers added in Dhaka; smooth operations since regime change
- Indonesia: Undergoing ramp-up post-new factory commissioning; confident of top-line and bottom-line growth
- Vietnam: Country had slight degrowth in garment exports, but Pearl's operations strengthened; Hanoi at optimum utilisation; growth ~15%+ with North American specialty brands consolidating
- Guatemala: Continued focus on efficiency and reducing losses; US waiver of 10% baseline tariff reverts to 0% access; loss reduction expected in FY27
Stand-alone Financials & Margin Bridge · Sanjay Gandhi (Group CFO)
- 9M FY26 stand-alone revenue INR 777 cr; adjusted EBITDA INR 43 cr (+64% YoY); margin 5.5% (7.3% ex-INR 14 cr tariff cost); PAT INR 55 cr (+72.6%)
- Q3 FY26 stand-alone revenue INR 246 cr (+4.6% YoY); adjusted EBITDA INR 12.6 cr; margin 5.1% (7.2% ex-INR 5 cr tariff cost); PAT INR 14 cr
- Stand-alone margin improvement driven mainly by cost restructuring
Capex & Capacity Build-out · Sanjay Gandhi (Group CFO)
- Bangladesh apparel manufacturing unit: INR 110 cr allocated, INR 66 cr committed, targeted completion Q2 FY27
- India Bihar expansion: capex fully incurred; commercialization in progress with bulk production underway (500 of 900 machines installed)
- Sustainable laundry facility: INR 90 cr allocated, INR 51 cr committed, targeted completion Q2 FY27
- Solar power installation completed across all 5 India plants; power generation started
- Other replacement/efficiency capex: INR 25 cr allocated, INR 14 cr committed
Other Highlights: Awards, Credit Rating, Outlook · Sanjay Gandhi (Group CFO)
- Founder & Chairman Dr Deepak Kumar Seth honoured with Global Leadership Award for FY '23-'24 and FY '24-'25 at AEPC Excellence Honors by Hon'ble Vice President of India
- Long-term credit rating upgraded from ICRA BBB stable (2021) to ICRA A+ stable (2026); short-term rating at ICRA A1+ — reflecting robust liquidity and operational resilience
- 9M FY26 results reaffirm strength of diversified business model; results enable sustained growth even in uncertain environment
In their words
A major and long-awaited development was the India-U.S. bilateral trade deal, which reduces the tariff from 50% to 18%, significantly enhancing the India's textile export competitiveness.
4 years back, we were completely or almost completely dependent on U.S. market. Today, we have been able to share the -- all the 5 major markets.
Our target is to really move to those double-digit EBITDA at stand-alone at a group level. And we are definitely working towards it. ... Next financial year, we are well positioned to achieve this double-digit number.
To check next time
What management committed to on this call, or the dates they gave.
- Bangladesh 6 million piece capacity expansion construction completion and commercial commissioning, targeted by Q2 FY27.
- Sustainable laundry facility (INR 90 cr allocated, INR 51 cr committed) construction completion, targeted by Q2 FY27.
- Bihar ramp-up to full 900 machine capacity and reduction in ramp-up cost of INR 11 cr (9M) into Q4 and FY27.
- Reversal of U.S. penalty-tariff discounts on existing orders, since penalty removed from filings post 7 February 2026.
- India-UK FTA becoming operational (expected by March-April 2026) and India-EU FTA implementation timeline (expected 2027).
- Guatemala path to breakeven in FY27 and Indonesia progression from single-digit to double-digit EBITDA margin.
Transcript
We have not transcribed this call's recording. Read the company's transcript (PDF).
The stock after the call
| After the call | Close | Stock | Nifty 50 |
|---|---|---|---|
| Next session Mon 9 Feb 2026 | ₹1,796.40 | −2.09% | +0.68% |
| 5 sessions Fri 13 Feb 2026 | ₹1,586.10 | −13.55% | −0.87% |
| 20 sessions Mon 9 Mar 2026 | ₹1,465.60 | −20.12% | −6.48% |
From the close of Fri 6 Feb 2026, ₹1,834.80: the close before the call day (the call's time is not on file). Adjusted daily closes; the move includes everything else that happened in those sessions.