Pearl Global Ind Q4 FY26 earnings call

What moved the numbers, as management explained it

• FY26 consolidated revenue +11.5% YoY driven by volume and high value-added products growth in overseas business (Bangladesh, Vietnam, Indonesia).
• Q4 India standalone revenue fell ~23% YoY as 50% US tariff pushed US retailers to shift production out of India; pre-tariff orders largely shipped by Dec-Jan, with net impact showing in Q4.
• FY26 adjusted EBITDA margin 10.3% ex one-offs vs reported 9.3%; one-offs were US tariff impact ₹36 cr (FY26) / ₹5 cr (Q4) and incremental ramp-up losses at Bihar and Guatemala of ₹13 cr (FY26) / ₹3 cr (Q4). (one-off)
• Q4 consolidated adjusted EBITDA margin hit highest ever at 10.3% (10.9% ex one-offs) on cost restructuring and operational improvements.
• FY26 PAT +17% YoY to ₹270 cr; Q4 PAT ₹81 cr (+24.6% YoY) on margin expansion and lower base.

The numbers management led with

• Installed capacity: 101 million pieces per annum as of March 31, 2026 (crossed 100 million milestone ahead of H1 FY27 target)
• Target capacity FY28: 125-130 million pieces by FY28, shipping ~100 million pieces to achieve ₹6,000 crore revenue
• FY27 capex guidance: ₹200-250 crores across geographies for FY27

Guidance on this call

What changed since the Sat 7 Feb 2026 call

Guided on earlier calls, and what was filed

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.

By business

Balance sheet, capex and funding

• Net worth ₹1,438 cr as on 31 March 2026 vs ₹1,146 cr as on 31 March 2025.
• Cash and bank balance ₹634 cr (ex-LC earmarked) as on 31 March 2026 vs ₹513 cr a year earlier.
• Working capital days at 43 as on 31 March 2026.
• ROCE 28% as on 31 March 2026.
• FY26 capex: ₹250 cr committed, completion by H1 FY27; Capital WIP ₹110 cr (Bangladesh), expected to add ₹40-50 cr more on commissioning.
• FY27 capex planning: ₹200-250 cr across geographies; Vietnam land parcel $2.5-3 million under advanced stage of conclusion.

The industry, as management sees it

U.S. consumer sentiment positive despite inflation; no slowdown visible unlike 2022 at similar oil price levels. India-U.K. and India-EU FTAs creating preferential access to all major global markets (U.S., EU, U.K., Japan, Australia). U.S. retailers got big respite from tariff; Q1 results showed positive consumer sentiment. Bangladesh garment exports showing consistent momentum to key markets. Vietnam proven important manufacturing hub for U.S. market.

Risks management named

• Guatemala operations still in losses; targeted breakeven in FY27 with restructured strategy
• Partial US tariff burden sharing (10% Section 122) continues into FY27 affecting India margins
• Bihar facility in ramp-up phase; incremental losses of ₹13 crore in FY26 to normalize
• Seasonal product/customer mix shifts can impact quarterly gross margin realisation

Not answered directly

• Exact continuing tariff cost in FY27 (evasive answer; only qualitative guidance provided)
• Customer-specific vendor share for Muji (transparency not yet available)

Every question, with its answer

1. 1. Segment performance and sustainability

   Bharat Gulati, Dalal & Broacha

   Question. India saw sharp degrowth of 23% in Q4; contribution dropped from 32% to 23%; other segment (primarily Guatemala) jumped to ₹214 crore revenue with ₹85 million EBIT. Where did that spike come from and is it sustainable?

   Answer, Pallab Banerjee, Sanjay Gandhi, MD, Group CFO. India degrowth due to 50% US tariff; customers pushed to shift production from India to other countries; impact materialized in Q4 as existing orders shipped out by December-January. Growth in 'other segment' (includes Bangladesh, Vietnam, Indonesia, Dubai, U.S. entities) came from volume and value-added products across Bangladesh, Vietnam and Indonesia — not just Guatemala. This is a sustainable year-on-year number.

   Follow-up. So it's fair to say Q4 had a huge spike in Indonesia revenue that aided for loss in India revenues?

   Answer. All 3 entities (Dubai, U.S. and Indonesia) contributed to growth. Billing to U.S. and Dubai happens for Bangladesh, Vietnam and Indonesia operations. This will be sustainable.

2. 2. Guatemala operations

   Bharat Gulati, Dalal & Broacha

   Question. Are we still in losses in Guatemala and when do we achieve breakeven — start of FY27 or will it take longer?

   Answer, Sanjay Gandhi, Group CFO. Guatemala strategy reworked; Q1 FY27 showing positive progress; should achieve breakeven in FY27; will keep investors updated on progress during the quarter.

3. 3. India EBITDA margins

   Bharat Gulati, Dalal & Broacha

   Question. India achieved 9.6% EBITDA in Q4 excluding tariffs. Can this go to group levels by FY28? Where is this number going forward given significant top line degrowth but margin maintained?

   Answer, Sanjay Gandhi, Group CFO. India Q4 historically robust; confident of double-digit EBITDA in Q4 FY27 as well. Full year target is high single-digit for India. This will get reflected in group results on higher side.

4. 4. Capacity expansion timeline

   Bharat Gulati, Dalal & Broacha

   Question. FY28 capacity target of 125-130 million pieces. Of the 25-30 million capacity addition from here, how much will be utilizable in FY28?

   Answer, Pallab Banerjee, Managing Director. Bangladesh expansion (2 units: washing and stitching) will be ready H2 FY27 with ramp-up through FY27 and FY28. Vietnam greenfield also in progress. Bihar factory in ramp-up phase (line-by-line). As of March 31, established capacity at 101 million pieces. By 2028, should have 125-130 million established capacity shipping around 100 million pieces to achieve ₹6,000 crore target.

5. 5. Realization gains from tariff removal

   Bharat Gulati, Dalal & Broacha

   Question. Once the tariff goes out of business, how much realization gain will that bring?

   Answer, Sanjay Gandhi, Pallab Banerjee, Group CFO, MD. Very difficult to quantify as every season involves fresh negotiation. There will definitely be improvement; this is factored into 10% EBITDA margin guidance for FY27. Currently at ₹635-640 per garment; should sustain. Realization depends on knits vs wovens ratio and customer mix (e.g., Primark and lower-FOB customers affect average).

   Partly answered.

6. 6. Input costs and demand outlook

   Kishore Kumar, Unifi Capital

   Question. Energy costs impacting raw materials (cotton, polyester) and freight costs. How is Pearl Global managing this? Are current pricing negotiations with customers reflecting the increase? What are you hearing about demand trends given U.S. inflation?

   Answer, Pallab Banerjee, Managing Director. Raw material cost increases visible to both us and customers; normally share that visibility during price negotiations. Impact limited to 1-2 months if booked after order. Energy impact on manpower is manageable. Despite U.S. inflation, consumer resilience and buying patterns are strong; compared to 2022 when oil at similar $110 levels caused sentiment drop, no such trend seen now. Second half U.S. slowdown possible but not currently visible.

   Follow-up. When booking a new order, do you simultaneously place fabric order with suppliers?

   Answer. Yes, immediately upon order booking, fabric orders are placed with suppliers and raw material costs are fixed.

7. 7. FTA-driven India business recovery

   Kishore Kumar, Unifi Capital

   Question. FTA opportunities for India should bring back business shifted due to tariffs. Can India capacity utilization improve as this business returns?

   Answer, Pallab Banerjee, Managing Director. Both scenarios applicable: EU and U.K. customers heavily penetrated in Bangladesh and Cambodia (LDC duty-free) now interested in India as FTA opens up. Customers already engaging us for additional capacity in India. For U.S. business shifted to other countries, items where raw material is easily available and competitive in India will come back. Current order book matches India capacity well.

8. 8. FY28 growth target

   Kishore Kumar, Unifi Capital

   Question. FY28 INR6,000 crore target implies 9% CAGR. Is that the minimum or should we target 12-14% growth you guided last year?

   Answer, Pallab Banerjee, Managing Director. 12-14% is the planned CAGR; some years offer more growth opportunity (like last year in Bangladesh). Tariff year slowed growth pattern. ₹6,000 crore achievable with modest 9% growth for both years. Confident of hitting target and maybe more.

9. 9. Capex costs and depreciation

   Kishore Kumar, Unifi Capital

   Question. How much incremental start-up cost should we factor for new capacity in India and Bangladesh in H2? Does 10% EBITDA guidance for FY27 include this incremental cost? What depreciation should we keep?

   Answer, Sanjay Gandhi, Group CFO. FY27 guidance factors in incremental costs during stabilization. CWIP at ₹110 crores largely for Bangladesh factory expansion; additional ₹40-50 crores to be capitalized. Total Bangladesh capex around ₹150 crores. Further capex commitments across geographies may be added; will update in next quarter or earlier. Depreciation will apply on capitalization.

10. 10. FY28 revenue target reconciliation

    Soham Samanta, Motilal Oswal

    Question. FY28 target of ₹6,000 crore with 100 million shipping at ₹630 realization doesn't match. Should we assume realization declining or is the target higher?

    Answer, Pallab Banerjee, Managing Director. ₹6,000 crore was target set in 2023; we have been ahead of that trajectory in recent years. If current trend continues, it should be more than ₹6,000 crore.

    Follow-up. Is 12-13% growth achievable based on current trend?

    Answer. Yes, if global leaders continue to be sensible, 12-13% is the planned rate.

11. 11. Bangladesh growth contribution

    Soham Samanta, Motilal Oswal

    Question. If chasing 12-13%, can Bangladesh be the largest driver with 20%+ growth?

    Answer, Pallab Banerjee, Sanjay Gandhi, MD, Group CFO. Bangladesh historically contributed major part of turnover; this year Vietnam grew faster than Bangladesh. Investing in all regions — Vietnam, Bangladesh, India — as India issues are temporary. 12-14% growth looked at group level; capacity commercialization lag means one origin contributes more in one year, another in the next year.

12. 12. FY27 EBITDA margin guidance

    Soham Samanta, Motilal Oswal

    Question. You said double-digit margin will continue. Should we expect 10-11% similar margin for full FY27?

    Answer, Sanjay Gandhi, Group CFO. Trajectory is 10% to 12%. 10% is the first big milestone. Looking at 10-12% range in coming years starting with FY27.

13. 13. Inventory management

    Abhishek Shankar, ICICI Direct

    Question. Inventory days have moved up. Is this because of lower shipments in H2 due to shipment issues, or does it indicate higher shipment expected in Q1?

    Answer, Sanjay Gandhi, Group CFO. Both perspectives valid. Inventory days increase also reflects higher shipment expected in Q1.

14. 14. Muji client contribution

    Harsh Dubey, LFC Securities

    Question. Muji (Japanese brand) moving from tactical to top tier. What revenue contribution is expected from Muji and what is Pearl Global's share of their vendor sourcing?

    Answer, Pallab Banerjee, Managing Director. Muji has been working with us for some time; grew rapidly in last 2-3 years. Discussing further growth with both India and Bangladesh as source countries; Muji exploring other origins. Already crossed $65 million total turnover with Muji; expected to continue in top 6 clients. Vendor share visibility not yet available for Japanese customers but working towards that transparency level.

    Follow-up. Any plan to add UNIQLO (competing with Muji)?

    Answer. UNIQLO not on priority as brands compete. Fast Retailing has other brands in scope; will put effort to add 2-3 more Japanese customers.

15. 15. New client additions and wallet share

    Harsh Dubey, LFC Securities

    Question. Any update on adding new clients in India? Your clients grow at 7-8% but you target 12-14%. Is the extra 4-5% from vendor consolidation and wallet share gains?

    Answer, Pallab Banerjee, Managing Director. Continuously adding new clients as a group; evaluate based on customer growth, market positioning and financial confidence. Wallet share gains come from working closely, offering best services, designs and multi-location, multi-category strength. Growth rate expected to be better than customers' growth rate.

16. 16. Capex sufficiency for capacity addition

    Bhavya Gandhi, Bajaj Alternative Investments Limited

    Question. Will the INR250 crore capex be enough for 25-30 million piece capacity addition or will you need to spend beyond that?

    Answer, Sanjay Gandhi, Group CFO. INR250 crore will add 6-7 million pieces from Bangladesh (total 107+ million). Additional 20+ million pieces will come from combination of capex and partnership facilities. Capex beyond INR250 crores may be needed; outlined for FY27 but ballpark given. Actual capex may be more.

17. 17. Margin expansion levers

    Bhavya Gandhi, Bajaj Alternative Investments Limited

    Question. Steps taken in last 2-3 years for margin improvement have played out. Are there further margin improvement levers like the laundry capex in Bangladesh?

    Answer, Sanjay Gandhi, Group CFO. Laundry capex will improve EBITDA margin without impacting top line. 10% EBITDA confidence for FY27 is largely operational capability as demonstrated across last 4 quarters. Journey to 10-12% will combine laundry and other capex for margin improvement plus customer and product profile enhancement for value addition.

18. 18. Customer commitment for new capacity

    Bhavya Gandhi, Bajaj Alternative Investments Limited

    Question. For 25-30 million piece addition, have you locked in customers or do you have visibility from customers for this new capacity?

    Answer, Pallab Banerjee, Managing Director. Do have strategic discussions with customers providing some visibility. Not long-term committed orders; it's about understanding customer category requirements, size and needs. Continue to grow with existing customers while bringing in new ones; increase wallet share via multi-location, multi-category offerings.

    Partly answered.

19. 19. Client discussions and order book visibility

    Manjubhashini, ASK Wealth Advisors Limited

    Question. With tariff easing and increased India capacity, how are client discussions progressing? Any improvement in order placement timelines? Visibility on volume pickup given Indonesia and Vietnam already at high utilization?

    Answer, Pallab Banerjee, Managing Director. India got affected with 50% tariff while others at ~20%. With tariff moving away, positive customer response seen. EU and U.K. customer interest due to potential FTA implementation adding to momentum. Good traction in India order books.

    Follow-up. Vietnam at 80% utilization — is 80% optimal or can it stretch to 90%? When do you look for additional capacity?

    Answer. 80%+ utilization in Vietnam is being driven largely by partner factory capacity. When partner proportion goes high (e.g., 90%), control becomes less. Right time to invest in-house. Decision based on maintaining 85-15 or 80-20 in-house to partner ratio.

20. 20. Tariff impact base calculation

    Manjubhashini, ASK Wealth Advisors Limited

    Question. Tariff impact of ₹36 crore in FY26. Adjusted EBITDA base for FY27 growth would be ₹468+36=₹504 crore? Or is there some continuing tariff cost?

    Answer, Pallab Banerjee, Sanjay Gandhi, MD, Group CFO. Breaking down the ₹36 crore: India faced much higher tariff burden; customers demanded higher discount share from India specifically. Some tariff (10% under Section 122) continues at reduced level; burden share will continue partially. ₹36 crore will come down significantly but may not be zero. New costing each season without tariff should result in margin gain.

    Follow-up. Is ₹5-8 crore a reasonable estimate for continuing tariff-related costs?

    Answer. There will be definite improvement as tariff cost won't be there going forward. Every season is new costing. Tariff not part of costing means margin profile improvement.

    Not answered directly.

21. 21. Design capability scaling

    Shirish Pardeshi, Motilal Oswal

    Question. Design is a pillar for attracting new clients. How many designs churned in last year and how will this segment scale in 2-3 years?

    Answer, Pallab Banerjee, Managing Director. Investing in design teams in sales regions (Spain/Europe, U.S., U.K.) working closely with customers on trends and requirements. Design team size grown from 70-75 to crossing 100. Technology investment: 3D designs and AI rendering improving sales adoption. Both investments go hand in hand.

    Follow-up. What is the employee base in FY25 vs FY26 and what are you looking for next 2-3 years?

    Answer. Design staff nearly crossed 100 from previous 70-75 range. Continues to grow as clients added and their specific needs (handwriting, style) require dedicated investment.

22. 22. Marketing and business development investments

    Shirish Pardeshi, Motilal Oswal

    Question. Same question on marketing investments in front-end staff and business development? Any target for adding 2-3-4 customers every quarter?

    Answer, Pallab Banerjee, Managing Director. Leadership across regions front-ends key customers; as customers are acquired and sized, dedicated teams built (design, merchandising, sourcing, technical approvals). Core staff generating new designs for existing and new customers remains constant; additional people added as new clients onboard. Continuous process with target list of well-performing growing companies. Conversion to orders per quarter difficult to predict — marquee customers take 2+ years of conversations before placing business. Publish new additions contribution to top line annually.

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