PDS

PDS reported a 6% year-on-year revenue growth for the 9-month period of FY26, reaching ₹9,591 crores, with GMV growing 7% to ₹14,760 crores. Excluding the impact of Gerry Weber and Matalan, the underlying growth for 9M FY26 was 11.2%. The global apparel market remains highly restrained and value-led, characterized by shorter order visibility and tight inventory control, influenced by geopolitical disturbances and tariff uncertainties. Despite these headwinds, PDS demonstrated disciplined execution, leveraging structural shifts like vendor consolidation and tariff realignments in India and Bangladesh.

The manufacturing business is now profitable, achieving 3.5% to 4% margins, and grew 35% over the same period last year. The acquisition and integration of Knit Gallery, completed in Q1 FY26, is on track and has significantly strengthened India's manufacturing presence. Knit Gallery is projected to grow its sales from approximately ₹250 crores in the current year to ₹375 crores next year, representing a 50% growth, without requiring significant additional capex. The internal merger of the Design Arc vertical with Poeticgem is also underway, aimed at optimizing manpower and onboarding ~$50-60 million of the Matalan account onto Poeticgem's books.

PDS saw a gradual improvement in profitability, with gross margin expanding 236 basis points year-over-year in Q3 FY26 and 45 basis points in the 9-month period. This was driven by procurement efficiencies, better product mix, and the contribution from Knit Gallery. Q3 FY26 EBITDA increased 11% YoY, with a 28 bps margin expansion. However, PAT for Q3 FY26 declined 18% YoY to ₹37 crores. Employee expenses increased 9% YoY in Q3, primarily due to the Knit Gallery acquisition, variable payouts, and ESOP expenses, with the full benefits of cost-saving initiatives expected to be visible in the coming quarter.

The company significantly deleveraged its balance sheet, with net debt reducing sharply to ₹70 crores as of December 2025, down from ₹374 crores in March 2025, despite adding ₹98 crores of debt for the Knit Gallery acquisition. This resulted in a comfortable net debt-to-EBITDA ratio of 0.2 and a normalized return on capital employed of approximately 28%. Working capital management improved substantially, with net working capital days reduced from 17 to 7 days, contributing to a strong operating cash flow generation of ₹644 crores for the 9-month period.

PDS is strategically positioned to capitalize on incremental sourcing flows due to tariff realignments, particularly benefiting from India's reduced tariff exposure to the US (from 50% to 18%) and Bangladesh's zero reciprocal tariff position. The company is actively adding new customers like Walmart, Target, PVH, and T.J. Maxx, and is bidding for large sourcing contracts in France, the US, and the UK with a combined potential of $1 billion. Management expects 10-15% growth from its largest customer, Primark, next year and continues to pursue its long-term '333 and 555' strategies, focusing on selective investments in digital, AI, and cost transformation.

In 9M FY26, the UK market contributed 43% of revenue, growing 24% YoY, while the Americas contributed 20% with 20% YoY growth. Europe's share declined from 38% to 31%, with a 12% YoY decline, primarily due to subdued customer sentiment and the impact of Gerry Weber. PDS is actively diversifying its sourcing footprint beyond Bangladesh (which accounts for 55-60% of total sourcing) to India, Egypt, and Turkey, leveraging FTAs to enhance competitiveness and respond dynamically to customer reallocation decisions.