Pearl Global Industries Limited: Navigating Global Headwinds with Strategic Resilience in H1 FY26

Pearl Global Industries Limited, a leading Indian garment exporter, has demonstrated robust financial and operational performance in the first half of fiscal year 2026 (H1 FY26), despite a challenging and volatile global geo-political and macro-economic environment. The company's strategic diversification and disciplined execution have been instrumental in driving growth and maintaining profitability, as highlighted in its latest investor presentation and concall transcript.

For H1 FY26, Pearl Global's consolidated revenue crossed the INR 2,500 crore milestone, reaching INR 2,541 crore, marking a significant 12.7% year-on-year growth. This impressive performance was primarily fueled by high-value-added product sales and higher realization from its Vietnam and Indonesia operations, which delivered double-digit volume expansion. Adjusted EBITDA for the period stood at INR 236 crore, an 18.4% increase year-on-year, with a healthy margin of 9.3%. Excluding the reciprocal tariff impact of approximately INR 21 crore and initial losses from new facilities in Guatemala and Bihar, the adjusted EBITDA margin would have been even stronger at 10.6%. The company's Profit After Tax (PAT) grew by 17.0% to INR 138 crore, underscoring its ability to convert revenue into sustainable earnings.

Financial Highlights: A Snapshot of Performance

(Note: Numbers are rounded off to the nearest decimal. Adj. EBITDA excludes ESOP expenses. PAT includes exceptional items.)

Strategic Diversification and Market Expansion

A key pillar of Pearl Global's resilience has been its proactive strategy to reduce dependency on a single market. The USA's contribution to the group's revenue has significantly decreased from 86% in FY21 to approximately 50% in H1 FY26. This strategic shift has been complemented by notable progress in expanding the company's footprint across high-growth markets such as Australia, Japan, the UK, and the EU. Management is actively scouting for marquee client relationships in these new geographies, leveraging favorable trade agreements and growing retailer interest.

Within India, the company has accelerated the onboarding of quality domestic customers, bolstering near-term stability and mitigating some of the impacts from the US tariff landscape. This multi-pronged approach to market diversification ensures a robust order book and positions Pearl Global for sustained growth.

Operational Excellence and Sustainability Initiatives

Pearl Global's operational growth in H1 FY26 was significantly driven by sustained momentum in Vietnam and Indonesia, which delivered double-digit volume expansion and maintained strong operational performance. These hubs validate the company's strategic foresight in building multi-hub production capabilities that balance scale with agility. The migration of sourcing out of China continues to benefit Vietnam and Indonesia, strengthening their market positions.

The company is also making significant investments in sustainability and efficiency. A total planned capex of INR 250 crore for FY26 is underway, with INR 134 crore already utilized. This capex is allocated for:

• Capacity Expansion in Bangladesh: INR 110 crore allocated, with INR 65 crore committed. The apparel manufacturing unit is targeted for completion by Q2 FY27.
• Capacity Expansion in India: INR 20 crore allocated, already completed, with commercialization in progress.
• Sustainable Laundry Capacity Expansion: INR 90 crore allocated, with INR 33 crore committed for a facility in Bangladesh, targeted for completion by Q2 FY27. This initiative is expected to reduce washing costs, decrease water consumption, and generate a Return on Capital Employed (ROCE) of 18-20%.
• Solar Power Installation: INR 5 crore allocated, completed for all plants, with power generation initiated in three out of five plants.

Furthermore, Pearl Global has upgraded its Bangladesh operations with eFlow Nanobubble technology, replacing traditional water-based washing. This advancement leads to up to 32% water savings, 9% reduction in power consumption, and a 20% improvement in time efficiency. All capex projects are undertaken with a higher standard of sustainability, optimizing water and energy consumption, minimizing environmental impact, and supporting green initiatives.

Financial Prudence and Shareholder Value

The company's financial health remains strong, with net worth standing at INR 1,271 crore as of September 30, 2025, up from INR 1,146 crore on March 31, 2025. Cash and bank balance, excluding cash earmarked for LC payments, was INR 416 crore, with an additional INR 128 crore invested in mutual funds and fixed deposits, totaling INR 544 crore. Working capital days improved to 33 days. The Return on Capital Employed (ROCE) improved significantly by 375 basis points to 29.0% in H1 FY26 from 25.2% in H1 FY25, driven by prudent capital allocation and efficient working capital management.

In line with its commitment to shareholder value, the board declared an interim dividend of INR 6.00 per equity share, representing a 20% payout ratio of Group PAT and 120% of the face value of the share. The company has a finalized dividend policy to declare at least 20% of consolidated profit after tax annually.

Outlook: Sustained Growth and Strategic Clarity

Pearl Global Industries Limited is well-positioned for sustainable growth, anchored in agility, technology, and long-term stakeholder value creation. Management expects normalization in the coming quarters and remains confident in its ability to adapt swiftly to changing requirements. The company's diversified global footprint empowers it to recalibrate production and meet demand across high-growth markets. With a robust order book and disciplined execution, Pearl Global aims to maintain momentum and deliver long-term value to its shareholders. The aspiration towards achieving 12% EBITDA margins continues, with efforts focused on improving performance in the second half of FY26.