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Robust revenue growth driven by volumes

Pearl Global’s (PGIL) revenue grew 24% YoY to INR15b in 1QFY27, led by volume growth of 21%. Indian business revenue grew 29% YoY to INR3.4b. Gross margin expanded by a robust 550bp YoY to 51.5%, while EBITDA margin settled at 10.7% (+159bp YoY), driven by an improvement in the product mix and operating leverage. Gross profit improvement was driven by stronger volumes and a higher contribution from value-added products. The Indian business is transitioning from fashion products toward core products with better margins, while capacity utilization remains at ~65-70% with scope for further expansion. We expect PGIL to continue delivering mid-double-digit revenue growth, led by capacity expansion by ~6-7m pieces in India and by 10m pieces in Bangladesh. Further, we expect EBITDA margin to expand to ~11-12%, driven by improving capacity utilization and a better product mix. We have raised our earnings estimates by 9%/6% in FY27/28, respectively, and reiterate a BUY rating.

Volume-driven revenue growth; capacity expansions to drive revenue

PGIL’s revenue grew 24% YoY to INR15b in 1QFY27, driven by robust volume growth of 21%, led by an improvement in the order book across its product mix. Capacity utilization for the quarter stood at ~83%, while realization grew at 3% YoY to INR735 per piece. The Indian business grew at 29% YoY to INR3.4b. With ongoing capacity expansion of ~6-7m pieces in India and 10m pieces in Bangladesh, we expect ~15% CAGR over FY26-28. The Bangladesh capacity expansion is expected to commence in Sept’26

Margin expansion led by a better product mix

In 1Q, gross margin expanded 550bp YoY to 51.5%. EBITDA grew 46% YoY to INR1.6b, with EBITDA margin at 10.7% (+159bp YoY), driven by an improved product mix and operating leverage. Adj. EBITDA margin for the Indian business declined to 6.6% due to an increase in other expenses, primarily driven by higher manufacturing expenses. The tax rate increased to 17% in 1QFY27 (14% in 1QFY26), with 1.2% attributable to a one-time asset reclassification in India that resulted in a higher deferred tax liability, implying a normalized tax rate of 15.8%. We expect gross margin to expand to ~49%, led by an improving product mix, and EBITDA margin to 11-12%, led by improving operating leverage due to increasing capacity utilizations in Indonesia and Guatemala, followed by Bangladesh, India, and Vietnam

Valuation and view: Reiterate BUY

We expect PGIL’s growth to be driven by ongoing capex additions across India and Bangladesh, backed by strong top-five customer relationships. We expect revenue, EBITDA, and PAT CAGR of 16%, 29%, and 34%, respectively, over FY26-28, fueled by capacity expansions. PGIL’s asset-light model supports strong return ratios, positioning the company for a gradual recovery in earnings quality. We have raised our earnings estimates and reiterate our BUY rating with a revised TP of INR2,650, valuing the stock at 16x FY28E EV/EBITDA (earlier TP INR2,460). Key risks: tariff and US exposure risk, raw material and cost pressures, and project and customer concentration risk. (refer to our IC note dated Jun’26).

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