Pearl Global Ind Q1 FY27 earnings call

What moved the numbers, as management explained it

• Volume growth across all manufacturing locations: shipped 20.8 million pieces in Q1 FY27 vs 17.2 million in Q1 FY26, driving consolidated revenue +24.5% YoY to ₹1,528 cr
• Improved product mix (outerwear, high-value, premium segments) and operating leverage drove Adjusted EBITDA margin to 10.7%, up 140 bps YoY
• Haryana minimum wage revision (+38%) and Noida (+21%) cut India standalone EBITDA margin to 6.6% (from 7.3% YoY) despite revenue growth of 27.4%; structural cost impact
• Adjusted EBITDA stated as INR164 cr excludes ESOP expense (vs filed EBITDA excluding other income of ₹161.10 cr); different definitions account for the gap (accounting)
• Other expenses grew ~51% YoY due to higher mix of outsourcing/contract manufacturing and job work as production volume scaled

The numbers management led with

• Q1 FY27 pieces shipped: 20.8 million pieces (vs 17.2 mn in Q1 FY26)
• Bangladesh additional capacity: 6-7 million pieces; taking group total to ~108 million
• FY27 capex guidance: INR 200-250 crores across geographies
• Japan clothing import share shift: China fell from 65% to 49% (-16 pp); Vietnam at 17.4%, Bangladesh at 4.3%

Guidance on this call

What changed since the Fri 15 May 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 working capital days; Net working capital days at 43-44 days, same as on March 31, 2026
• Finance cost; Finance cost at 1.7% of sales; FY27 target 1.7-1.8% of sales
• Capex FY27; FY27 capex commitment of approximately INR200-250 crores across geographies; detailed plan to be shared in coming months
• Bangladesh capex; Bangladesh expansion: laundry to be operational September; capacity addition of 6-7 million pieces to be available Sept-October
• Vietnam capex; Vietnam land acquisition completed; detailed greenfield capex plan to be shared in coming months
• Bihar capex; Bihar second shed under construction for knit production by Oct-November 2026

The industry, as management sees it

Apparel sourcing is undergoing a structural diversification away from China, evidenced by Japan imports from China falling 16 percentage points in one year. India-UK FTA effective July 15, 2026 and EU FTA expected by early 2027 should structurally lift Indian sourcing share. US retailers are in better financial position post-tariff-refund cycle but order cycles remain short due to ongoing geopolitical and shipping disruptions. India is positioning via PLI, PM MITRA parks and state competition as a major apparel manufacturing hub.

Risks management named

• US tariffs: 10% additional Section 301/MFN on India, Bangladesh, Indonesia; 12.5% on Vietnam
• Iran war and Strait of Hormuz energy volatility pressuring raw materials and timelines
• Container and shipping capacity shortages driving high spot freight
• Bab-el-Mandeb choke point re-emerging as shipping risk
• Haryana 38% and Noida 21% minimum wage hikes compressing India margins
• Q1 India labor availability impacted by harvest, school holidays, West Bengal elections

Asked for a number, answered without one

• UK FTA incremental order book: Pallab said significant jump in UK business by end of FY27; no specific volume or revenue quantum given
• Bangladesh new capacity utilization: Pallab said Bangladesh scaling is faster than India; goal to capitalize; no specific utilization % or margin timeline given
• FY27 revenue growth quantum: Pallab said feasible with current run rate but hedged on Fed rates, Iran war, consumer sentiment
• Gross margin sustainability: Management explained seasonal product mix (outerwear in Q4/Q1); confident of double-digit EBITDA full year; no explicit gross margin trajectory given

Every question, with its answer

1. 1. UK/EU FTA and capacity allocation

   Kishore Kumar, UNIFI CAPITAL14:34

   Question. With the UK FTA in force and EU FTA expected next year, can you share an update on customer interest and facility visits? Can you quantify incremental order volumes from existing and new EU/UK customers? And will a portion of existing India facilities be carved out for these customers, or is incremental capacity enough?

   Answer, Pallab Banerjee, Managing Director. Customer interest started when treaties were being finalized; they are talking to us much more intently about more capacity not only in India but other locations, because diversification within Pearl Global gives them security. UK business will see significant jump by end of FY27. The benefit extends across all Pearl Global locations, not just India. In terms of capacity: no separate factories for EU markets; existing factories have been enhanced where additional requirements came up, and we are ready to execute EU/UK business from these locations. On the second question (tariff discounts on India): previously India was giving double-digit discounts to compensate for the 50% differential; that should fade or be much lesser now. Customers are not asking to compensate the 10% tariff by additional discount at this point.

   Follow-up. Other expenses question — was there any one-off delivery in Q1 driving revenue growth, and is there any revision to full-year revenue guidance?

   Answer. It is not a one-off; tariff overhang release has driven order traction. As long as consumer/market sentiment in Western markets stays positive, growth is real. The previous tariff pressure has eased considerably; even with the Iran war from March, no negative consumer sentiment has been observed in last 6-7 months — a big differentiator this time. On tariff quota proposal under Section 301 for textile/apparel: that US cotton benefit applies equally to all countries, not specifically Bangladesh/India; every country has 10% additional Section 301 tariff, with Vietnam and China at 12.5% (on top of China's existing penalty tariff).

2. 2. Realization per piece and revenue guidance

   Bhavya Gandhi, Bajaj Alternate Investment Management Limited35:07

   Question. Average realization per unit historically 600-650, this quarter 735. Is 700-750 the new normalized range? On revenue, you had alluded to INR 6,000+ crores by FY28 but at current Q1 run rate FY27 itself could hit that — would you like to revise revenue guidance?

   Answer, Pallab Banerjee, Managing Director. On realization: this quarter has a lot of outerwear shipments which skews realization higher; don't fixate on a specific average. Endeavor is to grow from 600 upward — upmarket customers pull it up, volume customers pull it down. On top-line guidance: goal was INR 6,000 crores by 2028; capability and capacity are ready; if macro remains favorable like Q1, we should be very close to target. CFO Sanjay Gandhi added that Q1 FY26 realization was INR 715 vs INR 735 now — about 2.5-3% improvement; full-year FY26 averaged INR 643/piece so quarter-to-quarter comparison should be Q1 to Q1. On the goal: endeavor is to accelerate the FY28 INR 6,000 crores milestone and continue working towards it.

   Follow-up. With Bangladesh adding 7 mn pieces taking total to 108 mn, FY28 capacity was earlier guided at 130-140 mn pieces — should we expect further capex beyond 108 mn?

   Answer. By 2028 we had forecast 125-130 mn pieces installed capacity — that's because we want to grow. INR 6,000 crores is a point-in-time target, not the end goal. Our first target was INR 6,000 crores; next is to touch the billion-dollar mark and move beyond. 108 mn pieces will be crossed by Sept-Oct itself; capacity will continue to grow.

3. 3. Standalone margins and overseas leverage

   Bharat Gulati, Dalal & Broacha38:27

   Question. Standalone margins dipped 70 bps YoY despite record gross margins — should we expect entry into 8.5-9% standalone EBITDA range, or stay in 7.5-8%? Have overseas geographies peaked on EBITDA margins or is there still operating leverage?

   Answer, Sanjay Gandhi, Group Chief Financial Officer. Standalone EBITDA margin decline is because of wage revision in Haryana where four factories operate; that incremental wage hit P&L this quarter. If we add back that impact, we should be looking at 9% plus EBITDA. Target is high-single to double-digit EBITDA in India operations. Overseas locations (Bangladesh new capacity, Vietnam land, Indonesia) all have operating leverage potential. As guided earlier, first target is 10-12% EBITDA by FY28 and we are heading in that direction. On standalone India wage absorption: subsequent quarters will require efficiency and cost optimization to stay competitive and improve EBITDA. On the second question about realization: Pallab clarified it's more seasonality — heavyweight outerwear/winter goods shipped from Vietnam, Indonesia and some from India/Bangladesh, and that's why Q1 realization is structurally higher. On tariff impact on consolidated EBITDA: this quarter has NO tariff impact — entire 10.7% EBITDA is operational improvement driven by volume growth and operational efficiency.

4. 4. Revenue guidance, realization, geography mix

   Sani Vishe, PL Capital41:30

   Question. On realization: were you conservative in forecasting realization growth for FY27 and is it in line with what was expected at end of Q4? On revenue: you had given 12-14% CAGR — should we revise given Q1 run rate?

   Answer, Pallab Banerjee, Managing Director. Top line: we have always said CAGR would be 12-14% but better years we have done more. If FY27 continues this way, it should be better than 12-14%. Will create another platform to share our goals for FY28 and beyond — as of now traction is much better than 12-14%. CFO added they are confident of accelerating the FY28 INR 6,000 crores target and Q1 demonstrates this; double-digit margin is now inherent in the business. Business has reached a stage where it can inherently generate 10-12% EBITDA; convergence of four or five levers will push EBITDA to 11-12%. On realization: Q1 FY26 was INR 715 vs INR 735 now, a 2.5-3% improvement driven by product mix. Last year Q2-Q4 were impacted by price cuts due to US tariffs; that differential should now fade since customers are not asking to compensate the 10% tariff through additional discounts. Focus is more on top-line and bottom-line than realization per piece. On geography volumes: Bangladesh ~45%+, Vietnam and India ~22-27% each, followed by Indonesia and Guatemala.

5. 5. Bihar capacity and India utilization

   Shradha Agrawal, Asian Market Securities44:49

   Question. What is the capacity of Bihar second unit and by when operational? On current India capacity, what is the utilization in Q1?

   Answer, Pallab Banerjee, Managing Director. Bihar has two sheds: one functional with 450 machines (woven), second similar size (knit) ready by Oct-Nov. At full capacity, can ship 4-5 lakh pieces/month from Bihar; currently at 120,000-130,000 pieces/month, ramping over next couple of quarters. CFO added India overall Q1 capacity utilization around 70% with efficiency around 58% — total India utilization 65-70%. Efficiency lower because of fashion garments focus; as FTAs come in, India will trend towards more core products for uniformity across four quarters, which should inch up utilization and margins (core has sharper margins; efficiency gain then improves margin further). India grew 27% YoY in Q1 — positive sign; goal is uniformity across all four quarters.

6. 6. Utilization across geographies

   Abhishek Shankar, ICICI Direct1:02:50

   Question. On utilization: India at 65-70%. Can you share utilization trend across Vietnam, Bangladesh and Indonesia?

   Answer, Pallab Banerjee, Managing Director. India at 70%+ with room to grow; positive direction with FTAs and India promotion. Bangladesh and Vietnam have flexibility of partner factories to ramp up quickly when business comes — inherently utilization looks better in these countries. CFO added group-level overseas utilization is 75-80% on quarterly available capacity; partnership facilities keep adding in Bangladesh/Vietnam. The 120-125 mn pieces target is still intact without greenfield capex. With Bihar second shed operational by Sept-Oct, India revenue run-rate should reach INR 1,700-1,800 crores at full utilization. Bangladesh, Indonesia, Vietnam all have significant room — capacity is not a constraint to grow beyond INR 6,000 crores even in FY27 if momentum continues.

7. 7. FY27 growth assumption, UK FTA impact, customer mix

   Soham Samanta, Motilal Oswal Financial Services1:03:23

   Question. Looking at Q1 numbers, is it fair to assume high-teens growth in FY27? On India-UK FTA, more than a month has passed — any incremental order book visibility or industry-level read? And is the 24% growth mix of old vs new customers?

   Answer, Pallab Banerjee, Managing Director. On high-teens FY27 growth: with current run-rate, it's feasible — but second half depends on US (Fed potentially hiking further, war developments). If trend continues, feasible. On India-UK FTA for industry: India-UK exports currently USD 1.2-1.3 bn; should at least double in 2-3 years. Customers visiting India more frequently; products where India and Bangladesh pricing is similar but Bangladesh landed 10% cheaper — that business will come to India immediately. Pearl already supplying major UK retailers and seeing significant growth with them. On 24% growth mix: Pearl serves 7 different product categories (covering ~70-75% of apparel except sweaters/undergarments); strategy is to expand wallet share with existing customers by adding the remaining 4 categories to those supplying 2-3 already. Also new customers added and then grown by adding categories over time. On-site product development and showrooms in markets enable this strategy.

8. 8. Gross margin sustainability, finance cost trajectory

   Pulkit Singhal, Dalmus Capital Management1:05:06

   Question. Gross margin jumped significantly YoY from 46% to 51.5%, but other expenses up 51% YoY. Is this one-time or sustainable? And on finance cost — should we read its tapering as receivable days going up?

   Answer, Sanjay Gandhi, Group Chief Financial Officer. On gross margin vs other expenses: combination of outsourcing (partnership factories) and in-house production — manufacturing expenses under 'others' have gone up because partnership factory output; gross profit improved due to volume growth led by high value-added margin products from overseas. Given current customer/product/geography mix which should continue in Q1 series of subsequent years, this gross margin is very much sustainable. Pallab added it's more accounting practice — own facilities may also have contract workers/job work that classifies under 'other expenses'. On finance cost: net working capital days remain at 43-44 days (same as March 31, 2026); finance cost absolute amount stagnant, as % of sales down to 1.7%. Receivable factoring continues; using more internal cash generation. Going ahead, finance cost targeted at 1.7-1.8% of sales — as scale grows it could move to 1.7-1.8% level.

9. 9. Bangladesh ramp-up and order cycle trends

   Roshan, Antique Stock Broking Limited1:06:34

   Question. Bangladesh expansion scheduled for September — what utilization can be expected in first 12 months and how quickly will new capacity achieve margins comparable to existing facility? Second, despite global disruptions you indicated healthy momentum — are customers moving from seasonal to longer ordering cycles?

   Answer, Pallab Banerjee, Managing Director. On Bangladesh: scaling is faster than India because the industry is concentrated in one city (Dhaka), labor pool is experienced and middle management is seasoned. Goal is to fully capitalize the new capacity within next one year. On ordering cycles: contrary to your question — with so much forecasting of high inflation, negative consumer sentiment, retailers have become MORE conservative on long-term orders. They are reading actual sales and then placing business; the trend is more on short-term orders with pressure on supply chain to reduce lead times. Repeated logistics disruption (containers, peak season rates) is preventing retailers from ordering early. It's a continuous push-pull.

10. 10. Gross margin seasonality and Japan market

    Manjubhashini A, Ask Wealth Advisors Limited1:07:38

    Question. On gross margins: earlier you said the gross margin in Q1 FY27 is representative and trend should be similar to FY26 — so Q3 FY27 should follow similar seasonality jump? And could you re-state the Japan/China/Vietnam/Bangladesh import share numbers discussed earlier?

    Answer, Pallab Banerjee, Managing Director. On gross margin sustainability: Q4 and Q1 are the two seasons where outerwear ships heavily — that's the differential from season to season. CFO confirmed: product mix has driven gross margin improvement; season-to-season trend should continue; confident of double-digit EBITDA in FY27 means Q3 also improves. On Japan numbers: China share of Japan imports fell from 65% to 49% — 16% shift out of China; Vietnam now 17%+ of Japan total imports, Bangladesh ~4.3%. Pearl currently supplying MUJI in Japan; looking to diversify to other significant Japanese retailers; Japan becoming an interesting market as brands like UNIQLO, MUJI, GU go international. Top five Pearl accounts include a Japanese client.

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