PDS Ltd (BOM:538730) Q3 2026 Earnings Call Highlights: Strong Manufacturing Growth Amid Global …

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Thu, February 12, 2026 at 4:02 AM GMT+9 3 min read

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This article first appeared on GuruFocus.

Release Date: February 11, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

PDS Ltd (BOM:538730) reported a 7% year-on-year growth in GMV for the nine-month period, reflecting steady throughput across its platform.

The company's manufacturing segment is showing strong growth momentum, supported by the integration of Knit Gallery and operational improvements.

Gross margin expanded by 36 basis points year over year in Q3, driven by procurement efficiencies and a better mix.

PDS Ltd has successfully reduced its net debt significantly from 374 crores in March 2025 to around 70 crores as of December 2025.

The company is well-positioned to benefit from recent tariff developments, with a strong presence in both India and Bangladesh, enhancing its competitiveness in global apparel sourcing.

Negative Points

The global apparel environment remains volatile, with restrained consumer demand across the US and Europe impacting growth.

PDS Ltd's top-line growth was impacted by challenges with Matalan and Gerry Weber, which affected overall performance.

Employee expenses increased by 9% year over year in Q3 FY26, partly due to the Knit Gallery acquisition.

The company faces challenges with shorter order visibility and tight inventory control from retailers.

Despite efforts, the order book growth has slowed to 6-7%, reflecting cautious customer sentiment and market uncertainties.

Q & A Highlights

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Q: Could you explain the factors behind the highest gross margins recorded this quarter and their sustainability? A: (Group CFO) The high gross margins are due to better negotiation opportunities with factories facing industry headwinds and the integration of Knit Gallery, which has higher margins. Additionally, improvements in procurement processes have contributed. While quarter-to-quarter margins may vary, we aim for a sustainable year-over-year improvement of around 50 basis points.

Q: Why have operational costs, specifically employee costs and other expenses, increased despite expected cost-saving measures? A: (Group CFO) The increase is mainly due to variable payouts and some operational expenses hitting in Q3. While cost-saving measures have been implemented, full benefits will be more visible in the coming quarters as severance and redundancy costs are phased out.

Q: What percentage of your total sourcing is from Bangladesh, and are there plans to diversify? A: (Group CEO) Approximately 55-60% of our sourcing is from Bangladesh. We are not diluting this but are adding more jurisdictions like India, Egypt, and Turkey to serve customers better without reducing our Bangladesh operations.

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Q: How is the growth slowdown affecting PDS, and what are the plans to mitigate this? A: (Group CEO) The slowdown is due to unprecedented geopolitical disturbances and cautious customer sentiment. However, we are adding new customers and verticals, with significant growth in new verticals and manufacturing. The slowdown is mainly in mature verticals due to deferment requests from customers, but the order book remains intact.

Q: How is the manufacturing segment, particularly Knit Gallery, expected to perform in the future? A: (Group CEO) Knit Gallery is expected to grow by 50% next year, with improved margins. The integration of PDS processes and systems should enable this growth without significant additional CapEx. The manufacturing segment is transitioning to profitability, with a focus on operational efficiencies and strategic customer relationships.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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