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PGIL is a global manufacturer and exporter of Ready-Made Garments (RMG), counting several leading fashion brands among its clients. The company is on a clear growth path driven by

1) Diversified geographic presence

2) Timely and strategic expansion of its manufacturing capabilities

3) Favorable global trade dynamics

4) efficiency gains arising from cost optimization and other sustainability initiatives. It targets to increase the capacity by 50% or more compared to FY24, to reach 120-130mn pieces by FY28. We expect revenue/EBITDA/PAT to grow at ~12%/22%/25% CAGR over FY26-28E primarily driven by the capacity addition, and improved utilization. Given the welltimed capacity expansion along with improved utilization, volume-driven revenue growth, improving margin profile and superior capital returns relative to close peers, we initiate coverage on PGIL with ‘BUY’ and TP of INR2,070.

Diversified manufacturing capacities:

PGIL has manufacturing bases across major textile hubs in Asia (India, Bangladesh, Vietnam and Indonesia), along with a production base close to the US (i.e., Guatemala). This diversified presence differentiates it from other Indian competitors, which have limited overseas presence, and positions it as ideal supplier for major global customers looking to derisk their supply chains.

In-house capacity expansion supported by partnership model:

PGIL continues to invest in its manufacturing capacities, with in-house capacity expected to expand at a 9% CAGR over the next 2 years. These capabilities are enhanced by 9 partnerships facilities (contributed to ~25% of revenue in FY26) which lowers capex requirements and accelerates scalability.

New growth avenues opening up:

PGIL has taken steps to reduce the dependence on the US and diversify into new geographies and customers. India’s recent trade deals, including with the UK and the EU, are expected to create new growth opportunities for Indian textile companies. The EU is India’s second-largest export destination, and its total global imports of textiles and apparel stood at US$263.5bn in 2024, highlighting the scale and long-term potential of the EU market for Indian textile exporters. The Government of India is also taking measures (such as PLI schemes and textile parks) to facilitate the growth. Similar regulatory support is also observed in Bangladesh and Vietnam, where PGIL has strong presence.

Well-defined growth roadmap:

PGIL’s strategic expansion coincides with the expected momentum at the industry level (FTAs, regulatory push, etc.). PGIL has set clear financial targets, i.e., INR60bn revenue, volume above 100mn pieces, and EBITDA margin expansion to 11-12% by FY28, which underpins a credible multi-year growth story.

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