This article first appeared on GuruFocus .
Release Date: May 18, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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PDS Ltd ( BOM:538730 ) achieved a GMV growth of 5% to approximately Rs. 19,666 crores and a revenue growth of 4% to Rs. 13,110 crores for FY26, outperforming the broader apparel industry.
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The order book for FY27 shows promising growth, with an 11% increase overall and a significant 30% increase in North America.
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The company has successfully reduced net debt from Rs. 374 crores to Rs. 105 crores, despite acquisitions, through disciplined working capital management.
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PDS Ltd is focusing on higher-value service-led sourcing platforms, securing a significant sourcing-as-a-service mandate with a leading U.S. value retailer.
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The company has implemented a BCG-led transformation initiative, Project Pulse, to enhance procurement efficiencies and operational improvements, which is expected to yield ongoing benefits.
Negative Points
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The global apparel supply chain faced challenges due to geopolitical disruptions and cautious consumer sentiment, impacting overall industry growth.
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EBITDA for the year decreased to Rs. 385 crores from Rs. 457 crores last year, indicating a decline in profitability.
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The company experienced a decline in gross margin in some segments, such as the New Lobster business, which saw a significant drop from 30% to 20%.
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PDS Ltd's brand business, particularly the Ted Baker arrangement, faced challenges due to the bankruptcy of retail partners, impacting profitability.
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Despite improvements, the company remains cautious about macroeconomic uncertainties and potential order deferments, which could affect future growth.
Q & A Highlights
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Warning! GuruFocus has detected 3 Warning Signs with BOM:538730.
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Q: What is the outlook for gross margin and EBITDA margin for this year? Can we expect further gains? A: We anticipate an average 40 to 50 basis point improvement in gross margin annually over the next one or two years. This year, we are targeting a gross margin improvement of 50 to 75 basis points, which should also reflect in the EBITDA margins. (Respondent: Sanjay Jain, Group CEO)
Q: How sustainable is the current working capital level, and can it improve further? A: We aim to maintain the current working capital levels throughout the year, although there may be some fluctuations quarter by quarter. We are committed to not allowing it to revert to previous higher levels. (Respondent: Sanjay Jain, Group CEO)
Q: What is the outlook for the top 10 customers in FY27, given the challenges faced this year? A: We expect growth in the vicinity of about 7% to 8% across our top 10 clients. While this is slightly lower than the average, new verticals and North America will drive growth. (Respondent: Sanjay Jain, Group CEO)
Q: Can you explain the value proposition of PDS and how it plans to scale with large retailers like Walmart? A: Retailers like Walmart source 70-80% through third-party vendors. PDS offers a strategic vendor model, sourcing as a service, and manufacturing, which are attractive to retailers looking to cut costs and restructure. We are in discussions with several large retailers for long-term contracts. (Respondent: Palak Seth, Executive Vice Chairman)
Q: Why did PDS choose to enter the brands segment, and what is the plan for this business? A: The brand segment was synergistic with our offerings, but challenges arose with third-party franchisees. We are now focusing on manufacturing, sourcing as a service, and design and sourcing, while carefully evaluating the brands segment. (Respondent: Sanjay Jain, Group CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
