This article first appeared on GuruFocus .
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Revenue:Grew 15% year-on-year to Rs 3,444 crore.
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Gross Profit:Increased 18.5% to Rs 690 crore, with gross margin improving 63 basis points to 20%.
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EBITDA:Increased 90% year-on-year to Rs 96 crore, with EBITDA margin expanding 111 basis points to 2.8%.
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Profit After Tax:Rose 43% year-over-year to Rs 29 crore.
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Employee Expenses:Increased 8% in INR terms to Rs 339 crore, but decreased 2.4% year-over-year in USD terms.
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Other Expenses:Increased 17% to Rs 255 crore, but only 1.5% in dollar terms.
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Depreciation:Increased 21% to Rs 36 crore.
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Finance Cost:Increased 11% year-on-year to Rs 37 crore.
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Other Income:Rs 9 crore versus Rs 40 crore in Q1 last year, which included around Rs 22 crore FX gain.
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Sourcing Segment Revenue:Rs 3,272 crore, up 16% year on year, with EBIT of Rs 58 crore and EBIT margin of 1.8%.
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Manufacturing Segment Revenue:Rs 227 crore, up 4% year on year, with EBIT of Rs 15 crore and a margin of 6.5%.
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New Verticals Investments:Reduced by 8% year-on-year to Rs 37 crore.
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Net Working Capital:Improved to one day at June 2026 from four days at March 2026.
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Net Debt:Reduced 73% to Rs 29 crore from Rs 105 crore.
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Cash Generated from Operations:Rs 151 crore.
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Leverage:Net debt to equity at 0.02x and net debt to EBITDA at 0.07x.
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Return on Capital Employed (ROC):Reported at 19%, and 26% excluding the impact of new verticals.
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GMV:Increased 11% year on year to Rs 5,146 crore.
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Order Book:Grew 23% year on year to Rs 6,095 crore.
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Release Date: August 10, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue grew 15% year-on-year to Rs 3,444 crore, with GMV up 11% and a strong 48% sales growth in North America.
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EBITDA margin expanded by 111 basis points to 2.8%, with profit after tax increasing 43% year-over-year.
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Order book grew 23% year-on-year to Rs 6,095 crore, reflecting strong customer traction and new mandates.
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Net working capital improved to just one day, and net debt reduced by 73% to Rs 29 crore, strengthening the balance sheet.
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New partnerships, including a sourcing-as-a-service contract with a leading French retailer and a manufacturing collaboration with Bosana Apparel Group, are expected to drive future growth.
Negative Points
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Other expenses increased 17% year-on-year, partly offsetting margin gains.
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Depreciation rose 21% due to recent acquisitions and capitalization of office property, impacting profitability.
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Other income declined significantly to Rs 9 crore from Rs 40 crore in the prior year, due to lower FX gains.
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Finance costs increased 11% year-on-year, though stable in dollar terms, as the company uses more factoring.
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Ted Baker brand management business continues to incur losses, with an expected annual loss of $2-3 million.
Q & A Highlights
Q: Given the strong 23% year-on-year growth in the order book and the 15% revenue growth in Q1, should we expect much higher growth this year? A: Sanjay Jain, Group CEO, stated that while the company started the year cautiously, the order book has strengthened and translated into stronger revenue and GMV growth. He expressed continued positivity and commitment to maintaining this trend in the coming quarters. He suggested revisiting any formal guidance after the mid-year point, emphasizing a focus on delivering another healthy quarter before making broader projections.
Q: Can you provide clarity on the new investments, specifically regarding the scale-down plan and the performance of the North America vertical, which saw increased investment? A: Sanjay Jain, Group CEO, explained that the company is focused on growth with clear visibility of revenue and profitability, citing new sourcing-as-a-service contracts with an annual potential of US$330 million that are expected to be profitable from Q1. He confirmed that the overall P&L impact of new initiatives for the full year should be broadly in line with previous expectations, with profitability improving in the coming quarters as efforts mature.
Q: How should we look at the finance cost, given that net debt has reduced significantly but finance costs have remained flat? Does this mean factoring costs will grow in line with revenue? A: Sadik Sunasara, Group CFO, clarified that while interest costs are flat in dollar terms, the company is making a conscious trade-off between using cash for early payment discounts (EPD) and reducing interest costs. Sanjay Jain, Group CEO, added that if EPD usage were not increased, interest costs would decline. The strategy is to use the platform's cash to earn a higher return through EPD, which improves gross margins, resulting in a directionally flat or slightly declining interest cost profile.
Q: Regarding the AI and digital transformation journey, do you see this primarily as a cost-saving measure or also as a driver for revenue growth? A: Palak Seth, Executive Vice Chairman, explained that AI is twofold, focusing on both customer interface and productivity. He cited an example of a Chinese subsidiary that doubled its turnover to $120 million with the same 60-person headcount using cost-effective AI tools. The company views AI as a structural lever for growth, enabling it to scale without a corresponding increase in costs, and it was a key differentiator in winning the new French retailer contract.
Q: The working capital has improved to one day. Is this a typical seasonal change or a structural shift, and can we expect to return to negative working capital days? A: Sanjay Jain, Group CEO, stated that the improvement is structural, driven by a higher share of factorable receivables. The company is guiding towards maintaining low single-digit working capital days, with potential to reach zero or one day in some quarters. This is a result of continuous monitoring and improved capital deployment efficiency.
Q: Can you provide insight into the strong growth in the US (48%) and Europe (21%)? What is driving this turnaround? A: Palak Seth, Executive Vice Chairman, explained that the US growth is a result of three to four years of investment in opening key accounts (Kohl's, Walmart, Fashion Nova, TJ Maxx). With 70-80% of target accounts now onboarded and trial orders successful, volumes are scaling up. In Europe, growth is coming from new account wins in Spain (Mango), Poland (CCC), and replacements in Germany. The company's diversified service model allows it to open accounts with retailers that typically work only with direct manufacturers.
Q: Where are we today in terms of the 'Triple Five' strategy (US$5 billion GMV, 5% PAT margin, and 5% market share), and has the timeline changed given macro factors? A: Sanjay Jain, Group CEO, acknowledged that the journey has faced hiccups, including the Gary Weber bankruptcy and the reduction of the Madeline account, but the company has emerged without any delinquency. He stated that the last 12-18 months were spent stabilizing the business, and with growth returning in Q1 and a strong order book, the belief in the 'Triple Five' goal remains intact. While the exact timeline may shift by a few quarters, the focus is on delivering improved EBITDA margins and profitability each quarter.
Q: What is the larger vision for PDS Ventures, and how do you plan to manage investments going forward? A: Palak Seth, Executive Vice Chairman, described PDS Ventures as a key asset for innovation and differentiation. After seven years of investment, the company is now restricting new venture investments to under Rs 10 crores annually, focusing on deals that bring core business from customers. He also mentioned exploring setting up a professional fund where external investors could contribute capital, leveraging the goodwill and platform already created, to make larger investments without deploying significant new capital from PDS.
Q: Can you help us understand the real opportunity size for PDS and how you grow wallet share with retailers, given that you compete with their internal sourcing teams? A: Sanjay Jain, Group CEO, explained that retailers are increasingly looking to balance their internal sourcing offices with third-party partners for agility and speed. He cited Marks and Spencer as an example, where the new CEO aims to source 50% of product through third parties to reduce a 60-week product development cycle. PDS's model of offering five different services (manufacturing, design-led sourcing, sourcing-as-a-service, etc.) allows it to fit into a retailer's strategy, opening doors that are typically closed to non-factory owners.
Q: Do you see a risk that retailers might bypass PDS and work directly with the factories you onboard after a few years? A: Sanjay Jain, Group CEO, dismissed this risk, stating that factories are a commodity with zero value unless they have the right management and design capabilities. PDS brings on board factories that are excellent in quality and compliance but lack the design and management capability to work directly with retailers. He emphasized that retailers are looking for strategic, professional partners who can add value, reduce lead times, and simplify operations, rather than trying to save the last dollar from a factory.
Q: Given the strong working capital performance, should we expect finance costs to decrease from the current levels? A: Sanjay Jain, Group CEO, explained that while cash flow generation should lower interest costs, the company consciously chooses to use its cash for early payment discounts (EP
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
