Buy Pearl Global Industries Ltd for the Target Rs 1,550 by Prabhudas Liladhar Ltd
Growth momentum continues across geographies
PGIL reported a revenue/EBITDA/PAT growth of 37.2%/50.3%/74.7% respectively. Volumes grew by 14.6% YoY, and 9.6% QoQ to 22.8mn garments, while the blended realization per piece increased by 11.7% YoY. EBIDTA margin expanded by 90bps YoY to 10.1%, driven by operational efficiencies and higher realizations. Reported revenue includes ~INR980mn from value-added services, along with corresponding expenses of ~INR965mn and contributes only marginally to EBITDA. The company has added a 7mn pieces per annum capacity in Bangladesh, which is expected to ramp-up over the next 6-8 months. PGIL also plans to invest INR6.75-7.25bn over the next 3 years towards capacity expansion and backward integration and has set and aspirational revenue target of INR90-100bn by FY30.
Driven by continued demand in key end markets and planned capacity expansions, we expect revenue/EBITDA/PAT to grow at a CAGR of 18%/33%/36%. The recently added value added services are not part of PGIL’s normal course of business. While we have factored in their continuation through FY29, a discontinuation of these services could lower our topline estimates without significantly impacting EBITDA. We have revised our FY27E/FY28E/FY29E estimates by 10.0%/1.3%/4.6%. We continue to value the stock at 24x Sep’28E EPS with a TP of INR1,550 (earlier INR1,500). Maintain ‘BUY’.
Strong international performance:
Consolidated revenue stood at INR18,017mn growing 37.2% YoY and 17.9% QoQ, well above our estimates led by strong volume growth across geographies. Indian operations grew 16.8% YoY whereas international operations reported a robust 42.4% growth. Revenue also includes incremental revenue of INR980mn from value added services.
Healthy volume growth sustains topline momentum:
Volume shipped stood at 22.8mn pieces (Ple 21.6mn pieces). Growth was supported by strong demand from Canada and the UK, while EU volumes continued to improve gradually. Japan and Australia witnessed steady demand during the quarter.
H1FY27 financial performance:
For H1FY27, revenue increased by 31.1% YoY to INR33,298mn. Volumes stood at 43.6mn pieces increasing by 17.5% YoY. EBITDA stood at INR3,457mn, growing 48.1% YoY with EBITDA margins expanding by 119bps. PAT grew 63.6% YoY to INR2,250mn. Given the strong H1FY27 performance, the management now expects the FY28 revenue target (INR6.0bn) to be met/surpassed in FY27.
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SEBI Registration number is INH000000933
