Ladies and gentlemen, good day and welcome to Pearl Global Industries Limited's earnings call for Q2 and H1 FY 2026. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. Before we begin, please note that this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Shishir Gahoi, Head of Investor Relations of Pearl Global Industries Limited.
Thank you, and over to you, sir.
Thank you very much. Good afternoon, everyone, and I am delighted to welcome you all to this earnings call for Q2 and H1 FY 2026. I hope you all had an opportunity to review our press release and the investor presentation, which are available under the Investor Relations section of our website, and the same are uploaded on the BSE and NSE websites. To discuss our results, we have with us our Managing Director, Mr. Pallab Banerjee, and our Group CFO, Mr. Sanjay Gandhi. They will take you through our results and business performance, after which we will proceed for the question and answer session. Before we start, I just want to highlight that this call may include forward-looking statements based on the company's current views and expectations. Actual results could be different as future performance is uncertain and involves risks that are hard to predict.
I will now hand over the call to our MD, Mr. Pallab Banerjee. Over to you, Pallab.
Thank you, Shishir. Good afternoon, everyone. In Q2, financial year 2026, we reported another quarter of encouraging performance. Our H1 FY 2026 revenue crossed the INR 2,500 crore mark with an improved profitability. This is despite the level of uncertainty and volatile geopolitical environment we are all living in today. For H1 financial year 2026, consolidated revenue stands at INR 2,541 crore. It grew up by 12.7% year-on-year, driven by improved product mix and higher realization from our country of origin of Indonesia and Vietnam. Our Adjusted EBITDA, excluding the ESOP expenses, grew 18.4% year-on-year to INR 236 crore, with an EBITDA of 9.3%. Now, if we exclude the tariff expenditures that we incurred and a little bit of losses that we had in our new facilities of Bihar and Guatemala, we would have a standing at 10.6% EBITDA.
Our strategy of geographical diversity has been working well for us, and we have been able to make a notable footprint across various markets of Australia, Japan, the U.K., and the EU, apart from the U.S. From a strategic standpoint, we are broadening our client base even for India into the countries of Japan, Australia, and the U.K., which is supported by favorable trade agreements and a growing retailer interest in these particular markets. India-European Union FTA negotiation is yet to finalize the deal, hopefully by this year-end, which may provide a strong uplift to India's export categories, including the ready-made garments. Additionally, the U.K. FTA, which has already been concluded and will be implemented very soon, will position Indian exporters to a benefit and with tangible gains which are expected from financial year 2027 onwards. We remain positive to capture this increased demand.
Our diversified model, strong customer relationships, and solid order book are providing us the resilience and the flexibility, reinforcing our confidence in sustaining this consistent performance over the next few quarters as well. Let me now share some updates for each geography. I will start with the Vietnam operations. So here the momentum has continued. We have a revenue and volume growth during this quarter, reflecting the success of strategic foresight and the investment that we have been making out here. Also, it is supported by the favorable tariff regime across the U.S., European Union, U.K., etc., and having strong trade linkages. Vietnam continues to enhance our competitiveness in major markets. It is encouraged by the strong customer traction, and we plan to explore additional capacities in Vietnam to further deepen our customer engagement and increase their loyalty.
Similarly, for Indonesia, we also have delivered good robust growth in both volume and revenue for this quarter, complementing the strong performance which came from Vietnam as well. Following the successful relocation of our factory from the waterside to the interior, we are steadily regaining the business and meeting the rising customer demand by consistently delivering the value. The migration of sourcing out of China is definitely helping Vietnam and Indonesia to further strengthen our positions and giving us the confidence to sustain this momentum in coming quarters as well. In Guatemala, our Central American operations continue to gain customer interest from the U.S., especially. It is supported by the reduced transit time to the USA and only a 10% reciprocal tariff with zero FTA duty or MFN duty.
While the initial setup phase involved certain challenges and losses last year, this has narrowed this quarter, and we are expecting to decline further in the second half of financial year 2026, thus improving the traction and driving gradual recovery for us in this market. Bangladesh continues to be a strong growth driver for PGIL, benefiting from the already existing FTAs due to their LDC status, the Least Developed Countries status. And this is across key markets of the European Union, the U.K., Australia, and China. So naturally, this country has still a lot of potential and advantage in garment exports. So we continue to leverage Bangladesh's tariff advantages. We have sustained strong customer demand and competitive pricing.
Our CapEx plan remains firmly on track, targeting an additional capacity of five to six million pieces, which will drive efficiency improvements and reinforce our leadership in the sustainable manufacturing through upgraded washing facility as well. In India, where our standalone revenue is at INR 531 crore in the first half of financial year 2026, Adjusted EBITDA, excluding the ESOP, stands at INR 30 crore, which is a margin of 5.7%. Excluding the impact of tariff and the related costs of Bihar, this will stand at 7.2% EBITDA. Now, driven by the CapEx and the strong global network, Pearl Global is well-positioned for sustainable growth and further robust order book across all our regions, and it is coupled with the disciplined execution, reinforcing our ability to deliver long-term value and maintain this momentum.
With our robust order book, continued focus on the strategic execution, and a diversified geographic presence, we feel that we are very well-positioned to sustain this growth momentum and deliver long-term value to all of you. Now, I will hand it over to Sanjay, our Group CFO, who can provide the detailed overview of the quarter two and the first half of financial year 2026. Sanjay, over to you.
Thank you, Pallab. Welcome to our quarter two and H1 FY 2026 earnings call. I will now take you through our financial and operational performance. H1 FY 2026 revenue crossed INR 2,500 crore milestone, reaching INR 2,541 crore, a 12.7% year-on-year growth driven by high value-added product sales in Vietnam and Indonesia. Adjusted EBITDA, excluding ESOP expense, stood at INR 236 crore, up by 18.4% in H1 FY 2026 at a margin of 9.3%.
Adjusted EBITDA margin, excluding tariff cost of INR 21 crore in H1 and loss at new facilities, Guatemala and Bihar, stands at 10.6%. PAT in H1 FY 2026 grew to INR 138 crore, a growth of 17% on a year-on-year basis. Quarter two FY 2026 for group results. For quarter two FY 2026, total revenue stood at INR 1,313 crore, an increase of 9.2% year-on-year. Adjusted EBITDA, excluding ESOP expense, came in at INR 122 crore, up by 43.6% year-on-year, with margin at 9.3%, improved by 108 basis points year-on-year. Adjusted EBITDA margin, excluding tariff costs in India and loss in new operations, stands at 10.1%. PAT rose to INR 72 crore, making a 29.4% growth year-on-year. Now, talking about the standalone financial performance, H1 FY 2026 revenue stands at INR 531 crore. Adjusted EBITDA stands at INR 30 crore. Adjusted EBITDA at INR 30 crore grew by 72.7% year-on-year.
Adjusted EBITDA margin at 5.7% grew by 258 basis points year-on-year. Adjusted EBITDA margin, excluding tariff costs for INR 8 crore, stands at 7.2%. PAT stands at INR 41 crore, compared with INR 27 crore in H1 FY 2025. Quarter two FY 2026, quarter two FY 2026 revenue stands at INR 264 crore. Quarter two FY 2026, Adjusted EBITDA stands at 11 crore. EBITDA margin at 4%. PAT stands at INR 15 crore, compared with INR 12 crore in quarter two FY 2025. Our strong performance at the group level is reflected in our strengthened balance sheet. Net worth as of 30th September 2025 stood at INR 1,271 crore, compared to INR 1,146 crore as of 31st March 2025.
Cash and bank balance, excluding cash earmarked for LC payment, stood at INR 416 crore, with an additional INR 128 crore investment in mutual fund and fixed deposit, totaling to INR 544 crore as of 30th September, compared to INR 513 crore as of 31st March 2025. Working capital days stood at 33 days as of 30th September 2025. Gross margin improved by 375 basis points to 29% in H1 FY 2026 from 25.2% in H1 FY 2025. Other key highlights, despite global headwinds and tariff uncertainty, our operational performance remained steady year-on-year. We shipped 19.9 million pieces, highest in quarter two series. Total number of pieces shipped rose to 37.1 million in H1 FY 2026 from 36 million pieces in H1 FY 2025.
In line with our stated dividend policy and commitment to shareholder return, the board has declared an interim dividend of INR 6 per share for H1 FY 2026, representing a 20% payout ratio with respect to group PAT and 120% of face value. PGIL received a total dividend of approximately INR 32 crore in H1 FY 2026 from our subsidiary company, Norp Knit Industries in Bangladesh, and Pearl Global (HK) Limited from Hong Kong. This is in line with fungibility of cash across group entities. The company has been consistently declaring dividend from subsidiary company in Bangladesh and Hong Kong since FY 2022. We have upgraded to e-Flow nanobubbles technology, replacing traditional water-based washing in Bangladesh. This advancement enables us to up to 32% water saving, 9% reduction in power consumption, and 20% improvement in time efficiency.
Also, with solar projects installed in India, the renewable energy consumption has increased substantially to 35%. On the capital expenditure front, we are progressing well in line with our plans, with a committed outlay of INR 250 crore for FY 2026. Of this, INR 134 crore has already been utilized towards capacity expansion and technology upgrade, ensuring timely execution to support our future scalability. Construction of the apparel manufacturing unit in Bangladesh is in full swing and is targeted for completion by quarter two FY 2027. Out of INR 110 crore allocated, INR 65 crore has already been committed. In India, Bihar capacity expansion with an allocation of INR 20 crore has been fully completed, and the project is now in the process of commercialization. Construction of laundry facility in Bangladesh is in full swing and is targeted for completion by quarter two FY 2027.
Out of INR 90 crore allocated, INR 33 crore has been committed. Other planned CapEx of INR 25 crore for replacement and efficiency improvement, INR 11 crore has already been committed. In summary, we have delivered a resilient quarter of growth, maintaining healthy margins despite challenging macro environments. As we look ahead, we remain confident in our strategy, execution capabilities, and long-term value creation. Thank you. With this, I now hand over to the moderator to open the floor for questions and answers.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Kishore Kumar from Unifi Capital. Please go ahead.
Hello. Good afternoon, sir, and thanks for the opportunity. Congrats on showing the resilience on both sides of numbers. Sir, my first question is on the volumes that we have done for Q2 and Q1, I mean H1. There's a moderation in volume. Is it because of postponement by the U.S. customers? And how are you seeing the volume trend going forward? Because India contributes a sizable portion of the H2 business for the spring and summer season. What's your plan here, sir?
This particular quarter normally is a little slow in terms of shipping and number, where the volume builds up and then starts going on during the spring summer from India.
I think that is not a big, I would say, a needle mover as of now. What we are finding is that the order books are robust. Yes, there has been a shift because the U.S. customers who have placed business and are still placing business in India, they have been asking for some mitigation between this extra penalty tariff and the higher tariff compared to the other countries. I think there is definitely less interest for us also to book that business because it will not give us that kind of margins. The alternate markets are yet to fully kick in. But yes, there is good traction that we have seen from markets of Japan, Australia, and the European and U.K. markets are also opening up. Those are the things that we will see will continue to happen.
In terms of India's specific numbers, if you see, we are almost there. It's like a little bit of negative, I think, you saw in this particular quarter. But again, that plus minus up down depending on how much of inventory in hand, which sometimes we hand over the goods, but it is not shipped out, not clearing up yet, so we cannot call it as inventory shipped. So we haven't seen any big switch or big variation in terms of numbers of manufacturing and shipping.
Got it. Sir, and what's the.
Yes, please go ahead, please.
No, repeat the second part of the question once again.
The India, as you said, because from Q2 and Q4, we do a sizable volume from India to the U.S. for the spring and summer seasons. Given the tariff still going on, what's your plan, sir?
Are we going to do it here or move it to Bangladesh and other countries?
So for us, if some of it is moved to other countries, then our bottom line would get better, definitely, because India, normally, we are forced to give that tariff advantage to these customers. But certain products which have capabilities in India and we would like to maintain those minimum lines and all, we are still continuing to do it in India. So this is something. Q3 numbers are, the order books are looking fine. Q4 also, the booking will be happening now. If there is a good announcement from both the countries of U.S. and India in terms of some tariff agreement and a settlement, which too much news is coming out, but we haven't seen the actual result. If it happens, I think then we will see a surge in demand.
Otherwise, I think, as you see, the number growth at this point of time with these negative margins is not advisable. So we'll not push for the number growth at this point of time unless until this tariff thing is cleared for the U.S. market. For all other markets, we are aggressive and we will continue to do so.
Got it, sir. Got it. My second question is on the tariff impact in Q2. Sir, we can see only marginal impact in the business due to the ongoing tariff. Could you please help us understand how much was actually given as a discount by Pearl and how much was actually passed on to the value chain? And the remaining would be taken by the brands, right? Hello?
Just a minute. It was just a minute.
Yes, sir.
Ladies and gentlemen, the line for the management seems to be disconnected. Kindly hold while we reconnect them.
Ladies and gentlemen, the management is back in line with us. Thank you for holding. Sir, please go ahead.
Just a minute. We are just trying to get connected to the management.
The line for the management is disconnected. Kindly hold while we reconnect them. The management is back in line with us. Thank you for patiently holding. Sir, please go ahead.
It seems their line is not.
The management is disconnected. Kindly hold while we reconnect them.
We have the line for the management reconnected. Sanjay, sir, are you able to hear me? Sir, we are not able to hear you. Ladies and gentlemen, the line for the management has got disconnected. Please stay connected while we reconnect the management.
It's coming. Hello? Are we audible?
Ye s, Pallab, you are audible.
Hello, Pallab, we are audible. Now we can hear you.
Okay. So I was speaking to Mr. Kishore.
Yes, yes. Yes, sir. Yes, yes. Can you hear me?
Yes, we can hear you.
Sir, I was asking about the impact of tariff. Actually, Q2, we see marginal impact that is lesser than what we had in Q1. How much discounts we gave it to the brands and our customers, and then how much was passed on to the value chain? Could you please help us understand that math ?
It is depending on the kind of negotiation and business understanding that we have. So most of the U.S. customers are asking for mitigating the 25% penalty, which on an FOB value or the first sale value works out to be approximately around 14%-15% discount to mitigate that 25% tariff.
So this is the ask from most of the U.S. customers. And then comes the negotiation and what kind of other services that we are providing to them. So on that basis, we try to negotiate. So this is the current status. So yes, there are at least about three of the customers where we are not sizable big customers where we are not giving any discounts. And the others, we are giving discounts depending on the negotiation that we could manage to have with them.
Understood, sir. And one final question before I move to the queue. Can we expect similar margin impact in the coming quarter as well on tariffs if that's a change for the full quarter?
The strategy for the company is, if I look at last year, at this point of time, almost about 60% plus exposure was there to the U.S. market from India.
But this year, I think that proportion has changed. So we have already reduced the U.S. exposure, and now it is just below, I think, 50% at this point of time. Out of which also, we are trying to move out some of the customers where we don't have to pay the tariff discounts or this kind of advantages that they're asking for. So that is our effort. As it continues, then the impact will continue to get lesser and lesser going forward. And in the meantime, if a deal is stuck between both the governments, then definitely this will be behind us. So only time will tell what happens. But yes, for our business, our business strategies are in place so that we don't have to really depend big time on the U.S. market and continue to grow our business as we have promised to all of you.
Got it, sir. Thank you so much. I will join the queue, sir.
Thank you.
Thank you very much. Participants who wish to ask a question may press star and one at this time. I repeat, participants who wish to ask a question may press star and one at this time. The next question is from the line of Sahil Sharma from Dalmus Capital Management. Please go ahead.
Yeah. Thank you for the opportunity. So, sir, I'd like to mention that we have reduced our revenue contribution from the U.S. to approximately 50% from 86% in FY 2021. So I just wanted to understand your thoughts on how do you see the development in this geography next three to five years down the line. And if we are to reduce our concentration of the U.S. markets, so which are the markets we are looking to expand into?
We had given a roadmap for Pearl Global to do INR 6,000 crore by 2028. On that, what are the strategies that we had put in place that is continuing? Rather than depending on only one major market, we had taken a call to diversify our market base. Yes, so each of the markets we do try to build our expertise upon depending on what are the forecasts of that particular market, how the sentiments are, whether the market is experiencing any growth or not. Those are things that play into our strategy as we push where we need to push more and where we need to push less. At this point of time, in the U.S., there were a lot of economists who were forecasting that there could be some impact on the tariff.
What we also saw, the sentiment in most of our retailers is to buy conservatively and keep their Open-to-Buy for later date as much as possible. Keeping that in the mix, definitely we were accelerating much more in the other markets. That's the result that we are seeing as of now. Now, if you're talking about three to five-year horizons, what I'm finding is due to various geopolitics and fast-changing economic scenario and the macro factor changes that are happening in our world now, I think it will be too long to focus for three to five years about each of the markets where it will be very deterministically. I would say we will be flexible. We now have a good share and good understanding of all the markets. Wherever we find opportunity and sustainable opportunity, we'll continue to push for that.
So today, across the markets of Australia and Japan and Europe and Spain and the U.K., we have got captured some sizable brands and will continue to grow their volume share.
Understood. And so just continuing from this volume, lower volume growth in the first half of FY 2026 of around 3%, whereas it was around 30% last year. So I just wanted to check with you whether is it constrained on our capacity which is limiting this volume growth?
No, our capacity we have built up. We are ready to do more depending on how the markets are reacting. So I think I definitely answered the first gentleman to Mr. Kishore also. In terms of we haven't seen a huge decline in the number, but yes, the growth which we are talking about is slower at this point of time because of some of these macro factors.
But we are still continuing to grow. And we will see that growth happening in the second half as well.
Okay. And one last thing. What would be our capacity currently at the group level?
So our capacity at the group level remains at 93.6 million pieces. Plus, there is a production which is under construction of new facilities in Bangladesh undergoing. Bihar has just started the commercialization. So as the ramp-up happens, that capacity will keep on adding with the commercialization of the fully installed machine. So we'll keep updating on that installation. However, what we stated with the CapEx committed, we will be in excess of 100 million pieces in terms of installed capacity. And with the high-value added and partnership, I think by middle of next financial year, we would be ready to ship almost 100 million pieces by middle of S1 end of FY 2026-2027.
So that's what our trajectory was. We mentioned that we are in line with that.
Okay. Thank you so much.
Thank you very much. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Shradha Agrawal from AMSEC. Please go ahead.
Yeah. Hi. Congratulations on a great quarter despite macro challenges. Two questions. How are we looking at demand in the U.S. when retail prices start to move up? Because what we understand is currently retailers are holding back pricing on the inflation to the end consumer there.
Yes, that is correct. What we have seen is what was expected that more and more price tickets will change. That has not yet happened.
There have been strategically most of the retailers are trying to increase the price ticket wherever they're finding that they can get a better price. Only on those styles of those programs, they are increasing the price ticket. So yes, this change, I think in terms of price points, will be slow in the U.S. So that means most of the retailers are still holding on to their core and basic price points by pressurizing the supply chain and absorbing some of the cost themselves. But still, I'm not seeing that they're aggressively buying also. So they're just maintaining the number. They're keeping certain Open-to-Buy close to the season because they're just waiting and watching kind of scenario that we're seeing in the U.S. more.
In that context, how do we look at the order book number for the next spring season across geographies? I mean, across our manufacturing region.
Yeah. So you see what we have as Pearl specifically, how we are doing, we have been growing the customer base also. So we have been targeting, as always, which are the customers who are growing or who are able to gain market share. We are trying to gain more wallet share from them. And if we are not working with them, then we are making an entry to work with them. So this addition of new base and new kind of customers continues at Pearl. So we are not looking forward to a big challenge in terms of getting our numbers. So that's why order book is as per our plan across the geographies. In India specifically, because of the high tariff and the high discount situation that comes in, we are not aggressively pushing for U.S. market business.
Right.
For just one basic understanding question, you indicated that to mitigate the 30% reciprocal tariff, incremental reciprocal tariff for impact of India, a 15% discount on FOB is sufficient. So I didn't get the math. So how is 15% offsetting the 30% incremental reciprocal tariff?
So it is not for 30%. It's for the 25% penalty. So if you see a $10 garment, when it lands in U.S., you have to pay the tariff. So that 25% tariff means $10 will land at $12.50, a penalty which is there. So that will make it to $12.50. Now, if you decrease this $10 to, let's say, what, 15%, which would be about $8.5, then it will, with this penalty tariff, it lands at $12.50.
So that's where the math works out that you have to give approximately 15% of discount in your first cost to get to the same price point. That's how it works out. You can work it out in the math.
Okay. And some countries like Vietnam and Indonesia, what has been the extent of tariff sharing that we've done with retailers? Any quantification, broad quantification also would be helpful.
So when this 10% tariff was implemented, that time most of the retailers had asked for some partnership, which I think was impacting us almost both close to just below 2%, but close to 2%. Some of these are still continuing, and they will be, I think they were requested us to anniversary that.
So if I look at when we then became 20% or 19%-20%, because that's the time the negotiation of the customer was weak because everywhere they could go to source, it would be similar kind of tariff. So we didn't see significant growth when the tariff went from 10%-20%. So I think we are continuing in that approximately 1%-2% in the other market, which I think now would slowly, as we go into the next season or the new season, we try to build up that cost into the cost. But that's the kind of understanding with the customers so far.
Right. So if assuming this tariff situation were to continue for another quarter, so the full impact of tariff would be felt in 3Q. So in that sense, 3Q would be the bottom, and hopefully by 4Q, things get resolved.
Can we expect margins to go back to the pre-tariff structure? Or structurally, do you see a lower margin profile given pricing negotiations that would continue, at least on the new 20% tariff, which has become the base now?
As I just said, looking at when it becomes 20%, and if you know it before booking the business, then you try to factor in that kind of in the costing. So when you see when the tariff was implemented, we had already an order book from the customer. So the customers came and said, "Okay, now we have placed the business. We didn't factor this tariff, so give us a discount so that we can mitigate that tariff." Now, when the new season comes and if the customer says, "Okay, give me a 2% discount," even before finalizing the cost.
So that's where, as a supplier, we do have a little bit of leverage to build up that kind of costing in our costing. So I would say that risk goes away, reduces. But for India, where the penalty is still there and the numbers are too big, it will continue to have an impact whatever business to U.S. that we do from India. Sanjay, what do you want to add?
Yeah. Hi. So I mean, on the margin perspective and the tariff impact, which is more for India business in quarter three and quarter four, we are pretty confident despite that tariff impact, which is there on some of the sales which is happening from India to U.S. The overall margin profile of the company should remain in the similar range what we had last year.
We do not foresee any kind of challenge in maintaining or maybe making all our efforts to improve that.
Got it. Thank you. Thank you and all the best.
Thank you very much. The next question is from the line of Tejas Gutka from Electrum Portfolio Managers . Please go ahead.
Very heartening to see the result from the current environment. A couple of questions. I go back to that flattish volumes. Volumes are flattish. Volumes have grown. So clearly, there is some realization bump up. So if you could just give some color on that.
Yeah. Sure. So the revenue growth of H1 is around 12.7%. So as you rightly noticed, there is a 3.5% of quantity increase. The rest is a price increase.
And one of the reasons for increase in the sales is that the high value-added product in Vietnam and Indonesia have grown faster compared to the decrease in sale of the lower value addition. Overall, the composition of the customer mix and the product mix have gone favorably towards a higher realization, which is sustainable as we go in future year as well. And that's what has led to growth in revenue.
So fair to assume that as the tariff overhangs kind of come off, if and when, then this would also improve our margin profile?
Sure. I mean, you rightly observed it.
Fundamentally, if you look at the construct of the business, which we have stated as one of the commentaries that if we remove the reciprocal tariff, we could have been looking at more than 10% consecutively for these two quarters in this financial year and also quarter four of last financial year, and so as the tariff situation improves between India and U.S., definitely we are already poised to double-digit EBITDA margin for the business prospectively, and then it will improve further from that level.
So that's very heartening to hear. The second question was the INR 6,000 crore target by FY 2028. If we continue at the current pace, it looks like very easily achievable. So do you think there's a need to revisit that target, maybe target something higher?
So I just had a couple of points. Yeah, you rightly said the point on acceleration.
So as I earlier mentioned about the capacity reaching that in excess of 100 million pieces by mid-FY 2026-2027, which means the shipment number of pieces can definitely be accelerated against what we stated by FY 2028. So we are on a path of capacity addition. We do have capacity leverage available in India as well. And elsewhere, the capacities are also getting created. So we will be well- positioned to capture any such opportunity which will be there, assuming this tariff situation goes off and there are other FTAs with India also get materialized from an implementation perspective while we continue to grow in the rest of the geographies.
Great. And the last bit was the aspiration towards 12% margins. Assuming nothing changes on the tariff, does that aspiration still continue?
Yes. Aspiration is there, 100%.
We are definitely working towards it and seeing how the businesses become more and more resilient and can withstand any such challenges while we still maintain our target of 12% of the top.
We have identified all the levers and how one of the levers is definitely getting slowed down because of this tariff on India. Otherwise, I think all of the levers are still in some kind of action.
That's great to hear. Super. Thank you so much and all the best.
Thank you very much.
Thank you.
Thank you very much. The next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead.
Yeah. Congratulations on a very good set of numbers. So my first question is regarding if you can mention the exact capacity addition we are planning for FY 2027 year closure.
Because while you mentioned about 100 million getting crossed by FY 2026 or mid of FY 2027, if you can provide some capacity numbers for FY 2027 and FY 2028. Broad numbers is also fine.
So FY 2027, with all the CapEx, which is already undergoing, we should be in excess of 100 million pieces. Plus, there are other CapEx opportunities or the partnership opportunities being explored in overseas locations as well. With that, we should be inching towards 110 million approximate number. We need to really do the math about the timing of when this partnership facility gets materialized. But we should be looking at 110 million-115 million by end of FY 2027. For FY 2028, I think we can update you as we go into the next quarter and reach year-end FY 2026.
Once the board approves all the CapEx plan, I think I'll be in a position to add more on that. However, as we stated earlier, by FY 2028, our endeavor is to have partnerships that announce capacity of 130 million-135 million pieces. We are still working in that direction. That's what the direction we have internally, and we are working towards it.
Perfect. With respect to the overall mix of Vietnam and Indonesia increasing, can we expect that the overall realization should gradually start inching towards 700 mark on a consolidated basis, on a full-year basis as well?
On a full-year basis, see, H1 is always where we have much of the business, but the construct of the business is always evolving both in Vietnam and Indonesia as well. So there is definitely a possibility of improvement in overall realization for the full year.
Now, whether it reaches 700 or remains 675, 680, or 705, that is something we, as a business situation, keep evolving. We'll keep updating on that. As we look at the number of exports , we have close to 700 realization export of this financial year, which is largely because of the value-addition products which are being sold in Vietnam and Indonesia. So yes, we are definitely improving it. Now, how much improvement leads us to 700? That is something we will keep you updating as the strategy keeps evolving.
Got it. And sir, how much maximum capacity utilization can we reach? Say for example, even for FY 2027, if we are closer to 110 million pieces, can we touch like a 90% capacity utilization mark or 80, 85, something realistic to work with?
For the new facilities, normally full operation takes a couple of years.
So that's where I think the number is slightly low. Maybe the 85 is the highest, I think, would be possible at any point of time if there are new facilities getting built. Otherwise, if the facilities are continuously running, then achieving 90%-95% is not difficult for us. That's how it plays out. Because we were continuously growing, that's why we said that we were keeping a target of at least 120 million plus capacity to achieve 100 million of shipment. That's how we had planned it.
Got it, sir. And just one last thing on the Bangladesh laundry facilities, if you can just quantify how much margin improvement can we see because of that on the overall numbers on consolidated basis, maybe in a year or a two-time frame? Yeah.
If you refer to the commentary which is mentioned on the CapEx return on capital employed, we see that internal return on capital employed by way of saving in washing cost and other efficiency should be 18%-20%. Now, the CapEx amount which is mentioned here is around INR 90 crore. I guess you can just do that mathematics around where it will lead to in terms of the margin improvement once the capacity gets fully functional. We should be like as soon as it gets commercialized. I think by all probability, FY 2027- 2028 should be the full year for us to reap that cost advantage and the economies there. The reflection will be there.
But the exact number, we'll work it out and share with you maybe in the next earnings call as we reach closer to the capitalization of the plant and commercialization.
Sure, sir. And just on the India business, we've added some new customers. If you can name them, who have we targeted? If you can provide some qualitative or quantitative data as well.
No point going into that kind of detail as of now. Yes, India, what we have done is we've opened up some domestic brands as well as adding other customers internationally. Now, as we add customers, initially, the traction is low. First of all, it's more of a trial order that they give us, and we execute it. And then we build up the relationship and confidence and then start giving them the design on which gets picked up.
So normally, our observation is that to add a new customer, it takes at least about five to six months to really start moving on traction. And then yes, once the delivery has happened, that means for the first year, we see acceleration as we try to gain the volume share of that particular customer. So we continuously are on the plan of adding customers. We don't publish them in the beginning, but the top big ones, the top six or seven or eight that we have been sharing with you always. Got it. Fair enough. Thank you so much for the elaborate answer and all the best for the coming quarters.
Thank you so much.
Thank you.
Thank you very much. The next question is from the line of Prerna Jhunjhunwala from Elara Securities. Please go ahead.
Hello.
Congratulations on a strong set of numbers despite this tariff headwind and stuff. Just wanted to understand that you have let go of some volume and also some realization. So if these actions were not taken, what would have been your revenue this quarter?
Sorry, Prerna, I didn't get your question. Why should we let go of our revenue? We're not letting go of our revenue.
No, no. I'm just saying that some volumes were let gone because some businesses did not want to do in the U.S. with lower volume.
Let me clarify that. Let me clarify to that. See what happens is India has zero tariff. So the customers are there with us. Customers are strategic, and customers have been working with us. It's not like they're just coming and going kind of customers. They are stable customers.
So rather than executing the program in India, if we execute it outside of India, then we don't have to pay for this penalty. My customer doesn't have to pay for this 25% penalty tariff. So if we execute in India, they will request us to compensate that penalty tariff. So that is why sometimes it's prudent not to execute from India and to execute it from the other countries wherever possible. It's not every case it is possible, but under no circumstances, I think it's prudent to let go of a business which is a customer who's coming to life from it. So that's the correction I would like to make.
Thank you. That clarifies a lot, I think. I thought that there's some volumes also that you would have forgone this quarter to some extent, maybe a small quantity. Thanks. Thanks. Thanks for the clarification.
So you mentioned that there is a 15% impact. So is it prudent for us to understand that this revenue could be higher by 15% if the tariffs were not there?
Yes, that's for sure. Because most of the retailers are still asking to compensate for this extra penalty tariff. So that means most of not only for Pearl, but anybody who is exporting out of India has this challenge. So yes, wherever we can compensate, we try to compensate in terms of our costing or in terms of some other benefit that we try to give to the customers. But yeah, that's the challenge that most of the players in India, including Pearl, have at this point of time for the U.S. So if this tariff goes away, then definitely that advantage comes in.
Then, as you said, India region, then we can book more business and more aggressively. The customer also comes to India, and Indian manufacturers can aggressively book also from the U.S.. So these two factors will start playing much more if the tariff goes away.
Okay. Understood, sir. Just to let me clarify. Thank you and all the best.
Thank you.
Thank you very much. The next question is from the line of Kishore Kumar from Unifi Capital. Please go ahead.
Thank you for the question. Just want to understand the country mix for this quarter.
Mr. Kishore, your voice is very low. Can you please be a little more louder?
Is it okay now?
Yes, sir.
Sir, I just wanted to understand the country mix for this quarter. We did about 50%. How much went from India to the U.S. and from the rest of the country?
And could you please quantify the other geography mix as well?
So overall, as a company, U.S. is contributing. That means the goods which are moving into U.S. is just below 50%. What we saw is about 48.7% was going into U.S. And I think it's pretty much similar for India at this point of time. For countries like Indonesia, where the exposure to U.S. is high, in Vietnam also it's slightly higher. Bangladesh and India, I think it compensates so that overall it comes down to 48%-49%.
Other geographies, sir?
Other geographies means other markets. So yes.
Yes, sir. Japan, Australia, U.K., Europe.
Yeah. So basically, if you talk about Spain and Japan are the next big ones that we have, we should be around, I think, anywhere between 15%-17%. And then followed by the Australia and U.K.
Gotcha. Understood. So that's the.
This is the note.
Sir, on the volume guidance front, you actually mentioned about the margin sustainability. On the volume front, H2, can we because the last H2 was a higher base, can we expect similar volumes, or should we expect higher volumes as the business comes back?
So we are seeing good, robust order book. Whatever we had done last year, we have already crossed that number in terms of our order booking and all. So that way, I think we are progressing. See, last year, our overall number grew almost close to about 30%. I don't think this year would be such a high growth, but it's an upward trend. We will be doing the business.
Understood, sir. Thank you so much and all the best, sir.
Thank you.
Thank you very much. The next question is from the line of Pulkit Singhal from Dalmus Capital Management.
Please go ahead.
Thank you for the opportunity and congrats to the management team for navigating this situation fairly well. I have just one question. I'm just trying to understand in the process of navigating through this kind of trade war and the kind of experience that we are going through, what is the kind of learning or what is the kind of influence or experience that we are gaining that is helping us shape our strategy for the next three to five years? Sometimes these situations throw in certain kind of understanding that we get either from the customer side or we end up taking something on the cost side, which helps us benefit even in the future whether the situation stays or not. If you could share certain learnings that have come across. Yeah.
So you see that the core basics, basically, the core basics has to be strong. That means the manufacturing expertise that we are bringing onto the table, that has to continue to grow because we are ultimately manufacturing and we are competing across the globe. And I think that as a company, we are continuing to invest upon. Then comes the second one is the diversified market. I think that was both in terms of manufacturing base as well as the customer base. I think that's something you have been tracking Pearl for quite a long time, and you had a lot of conversation with us. And I think you had that visibility that we have been always talking and strongly believing in that, and which is giving us the result at this point of time, which we have seen. So these are two, I think, is definitely.
Then, of course, the other things that we had built up as our strength is helping us. Sanjay, why don't you add those.
Yeah. I think the learning on the capital allocation discipline and the policy which we consistently have applied for the last three years have been really great learning for us and paved the foundation very clearly that we should be continuing and while strengthening and making amends wherever it's required. Then being open to look at an opportunity as in when the industry offers that, which we saw in last year in Bangladesh growth, having the good sound balance sheet and the financial discipline really helped in terms of capturing those opportunities which we. Every disruption will give us. With the disruption.
I think we have kind of made that financial discipline and governance and capital allocation, which really kind of be ready in a situation as and when the opportunity comes, keep on accelerating growth. Diversification, which Pallab mentioned, is definitely there.
I think you already saw that. Diversification, strong in design, presence across all the markets, and of course, the manufacturing expertise that we are bringing onto the table to our customers. These three things followed by all the discipline, the health is going to be there.
While we have been more diversified versus some of our peers, I think even still the top five clients tend to be still a heavy portion for us.
So I'm just trying to understand that in the next three years, are you able to therefore force a higher level of diversification now, given that some of your clients would definitely probably be wanting to work with you, given that you have a more diversified sourcing model, and they may want a partner like that? So are you able to push that agenda a lot more to be able to say that I can now steer it in a way so that with the top clients, I mean, I can further diversify it a lot faster than the trend that has been?
Yeah. So you see, one of the things to make it more efficient, I would always keep my 50% of the business approximately in the top five because where much more strategic approach can be done by both the sides.
Of course, these five can change depending on their financial strength and their marketing strength. So if a company is growing, if my top five is growing, then I grow. So that's something that is important. So these top five may change, but I think that what you call concentration or consolidation of the top five, at least about 50% of the total business, will always help in terms of bringing in much more efficiency for the organization. And then the balance 50% is a place where always there will be a dynamic change. Who are the performers? Who are growing market share and their want shares among their clients are the ones that we would always be interested in. So that it's always a healthy combination at both sides.
Okay. Okay.
So in the balance 50%, are we able to have, let's say, a lot more clients in, say, the next three years than we currently have?
Yes. I think as we grow on strength, definitely the diversification is happening.
Okay. Got it. Great. Thank you. And all the best.
Thank you.
Thank you very much. The next question is from the line of Manjubhashini from ASK Wealth Advisory. Please go ahead.
Hello, team. Good afternoon. Congratulations on good set of numbers given the volume front and the business side. So my first question is, on the volume side, a lot of people try to understand what is constraining the volume growth. I think this is coming from the fact that if we see the first half of last year, there was a very good growth on an average first half of last year.
Then it was close to 41% growth, and that continued in Q3 as well. So now that we are at an average of 3% volume growth for the first half of FY 2026, so how should we take things in the second half, as you think in the second half? Is it going to be flat compared to the second half of last year, or do you think there is still some growth visibility that one has as of now?
Yeah. So let's look at revenue growth. I think there are some technicality around the minutes which are getting produced with a number of pieces. So we are looking to grow in H2 as well. Based on the order book visibility we have, which looks strong for the H2. So yeah, there should be growth. Talking about the growth number at this point in time, I think. Yeah.
I can try to explain this to you because we are in a fashion and not absolutely a basic commodity kind of business. So the number of pieces may vary up and down, but our capacity is getting fulfilled. That means if my machines are making a 20-minute garment or they are making a 25-minute garment, so that my productivity and my earnings or my growth of sales revenue, that will continue to grow. It will depend on what kind of order opportunity that we are getting and what kind of business fashion trend that we are catering to. So yes, maybe you saw a 3% growth, but I don't think you should be too much focused on that. You might see a bigger number in the second half depending on how it is.
Sometimes if you're getting a huge amount of big order size of a jersey order or a basic tee order, then the number will significantly show a growth. And sometimes if it's a jacket or outerwear or pants which are growing compared to a t-shirt, then the overall number may not look so heavy. But I think overall, we are in a growth path. So we are not seeing any change in that.
Understood. And in the first half, we grew by 12% on the top- line print. So should we aspire to go higher than this number in the second half, or a similar run rate of growth should we achieve?
No, no. Our aspiration is definitely higher.
Got it. Got it. And just one more thing on some of the capacity getting shifted away.
I mean, before I go to that, so earlier, I think what we had indicated was 15%-16% of your overall consolidated sales is what goes into the U.S. geography. Is there any change to that?
Yes. About three years, three to three and a half years back, we were at almost 80%-86% plus exposure in the U.S. market. As this growth has happened, we have really diversified into the other market. That's why the U.S. goods which are shipping into the U.S. is around 49% as of now, as I was just mentioning. But there are certain U.S. customers who are based out of the U.S. but are global brands. So naturally, if I have to talk in terms of those customers, then our exposure is almost about 60% plus.
Look, this is on the U.S. customers, on the overall customer base.
So some of the U.S. customers may take the delivery of the orders with non-U.S. regions as well. Is that correct?
Yes. Yes. Yes.
So now I'm trying to understand from the sales mix in currency terms, how much of it gets landed into U.S. geography?
Around 49% of what is revenues to us as of now.
Okay. So 49% of overall.
Sorry, just to add that, I think 15%-16% which you mentioned was India export to U.S. That's what was captured in earlier. That is, yeah. If you talk of India, which is doing about 25% of the total turnover, and there, almost 50% of it, 50%-60% of it was going to U.S. So from the total turnover, the U.S. component from India works out to be about 15%. I think that's the number if you are mixing up with.
Does it make sense to you now?
Yes, so let's say for the first half of 2500 gross sales, 15% of 2500 lands with U.S. That is how I should understand it, right?
From India. From India.
From India. Okay. Now, I'm still not clear about this.
We believe it would be out of this INR 2500 crore, almost about INR 1250 crore would be just below INR 1250 crore would be landing into U.S.
Okay. Understood, and the incremental capacity additions that are happening from Indonesia, Vietnam, and Bangladesh, let us assume the tariff situation doesn't ease out and the things continue on a status quo basis. So can incremental volume, which could have gone from India, be supported from the other geographies?
Yes. 100%. Okay, and
even if the situation continues status quo, you are guiding for a flat-ish EBITDA margin in FY 2026, usually FY 2025.
There may not be any reduction in the EBITDA margin even if the tariff situation continues. That is the commentary you made earlier.
Yeah. As we mentioned, we are very confident of maintaining the same EBITDA margin, and we are making all our efforts to make an improvement. As we have seen the improvement in H1 number, we are definitely trying to see for H2 also improvement compared to last year's number. So the full year, we are either at the same level or slightly better. That's what our endeavor is.
Okay. Thank you. And I wish you all the best.
Thank you.
Thank you very much. Ladies and gentlemen, due to time constraints, that was the last question. I would now like to hand the conference over to management for closing comments.
Thank you to all participants.
In H1 FY 2026, the company delivered strong performance despite a challenging and uncertain environment. Our diversified multi-country manufacturing model has been instrumental in driving the growth, and we remain optimistic about sustaining the momentum through our strategic CapEx initiative. In case of any further queries, kindly reach out to our SGA, our Investor Relations advisor, or Shishir, our Head of Investor Relations. Thank you.
Thank you very much. On behalf of Pearl Global Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.