Buy Pearl Global Industries Ltd For Target 1,500 by Prabhudas Liladhar Capital Ltd
Beyond targets, aiming for a new growth horizon
We attended Pearl Global Industries (PGIL) Analyst Day, where management highlighted its strong performance against the goals set 2024, and outlined the path for future growth. Bangladesh remains the key growth hub, where it recently inaugurated a new ~7mn pieces capacity, to take capacity to ~108mn. The company also expects improved performance in India, while Vietnam continues to focus on highvalue products and future expansion. PGIL plans INR6,750-7,250mn capex through FY30, split between capacity expansion and backward integration. Current trajectory indicates that the company is ahead of its earlier targets, with the INR60bn revenue target expected to be achieved before FY28E. For FY30, management targets INR90- 100bn revenue and ~INR11-14bn adjusted EBITDA, implying 16-18% and 23-32% CAGR, respectively. Revenue growth will be primarily driven by capacity (targeting 170- 175mn pieces per annum by FY30), while targeting 12-14% margins. We roll forward our estimates to FY29E while factoring the newly announced growth plans. We expect revenue/EBITDA/PAT to grow 17%/31%/35% over FY26-29E. EBITDA margins are estimated to reach 12.8%, driven by operating leverage and backward integration. We value the stock at 24x Sep’28E with a TP of INR1,500 (earlier INR1,167). Upgrade to ‘BUY‘ from ‘Accumulate’.
Key takeaways
Steady progress across geographies, Bangladesh remains pivotal for future growth:
PGIL recently commissioned its new facility in Bangladesh adding ~7mn pieces of garment capacity at optimum utilization taking the overall capacity to 108mn pieces. Management is also strengthening its factory readiness, compliance and customer engagement in India to capture FTA led growth opportunities arising from EU. Vietnam remains the hub for high value products, with utilization nearing 80%. PGIL has acquired a land parcel in Vietnam for future expansion.
INR6,750-7,250mn growth capex through FY30:
PGIL plans to invest INR6,750- 7,250mn through FY30, with INR3,250-3,500mn earmarked for capacity expansion across geographies and INR3,500-3,750mn towards backward integration, including knitting and dyeing capabilities. The investments are aimed at scaling capacity, strengthening vertical integration and improving margins and operating efficiency. Management intends to fund the capex through a mix of internal accruals and debt, while targeting 22-25% RoCE from the investments.
On track/ahead of stated targets across key operating metrics:
PGIL is progressing ahead of its previously outlined targets across key operating parameters. The company is likely to achieve its INR60bn revenue target before FY28E, while garment capacity is expected to reach above ~115mn pieces by FY27. Tariff-adjusted EBITDA margin stood at 10.3% in FY26, broadly achieving its target of crossing double-digit margins. Further, RoCE has exceeded the guided 20–22% range, while working capital remains well controlled at 38-42 days (as per company numbers), broadly in line with management's stated range.
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