PDS Limited has informed stock exchanges about the dissolution of its step-down subsidiary Brand Collective BCPT, Unipessoal LDA in Portugal, effective February 11, 2026. The company received confirmation of this dissolution on February 26, 2026, and has filed the necessary regulatory disclosures under SEBI regulations.

Corporate Restructuring Initiative

The dissolution forms part of PDS Limited's ongoing initiative to streamline the corporate structure of the PDS Group by eliminating non-operational and redundant entities. Brand Collective Portugal has consequently ceased to be a step-down subsidiary of the company.

Financial Impact Assessment

The transaction carries no material impact on the company's financial position, as Brand Collective Portugal did not have any active business operations. The subsidiary's financial contribution to the group was minimal:

Subsidiary Structure Details

Brand Collective BCPT, Unipessoal LDA was held by Brand Collective Corporation Limited, which is a step-down subsidiary of PDS Limited in the United Kingdom. The dissolution represents a simplification of the company's international subsidiary structure.

Regulatory Compliance

PDS Limited has made the required disclosure in accordance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company has also complied with Schedule III of the SEBI Listing Regulations and relevant SEBI circulars dated November 11, 2024, and February 25, 2025.

Key Transaction Details

The dissolution process involved no sale consideration as it was not a disposal transaction but rather a formal dissolution of a non-operational entity. The transaction does not fall within related party transactions and is not part of any scheme of arrangement.

The dissolution represents PDS Limited's continued focus on maintaining an efficient corporate structure by removing entities that do not contribute to active business operations.

PDS Limited held its Q3 FY26 earnings conference call on February 11, 2026, presenting results that demonstrate resilient performance amid challenging global market conditions. The company's leadership team, including Executive Vice Chairman Pallak Seth, Group CEO Sanjay Jain, and Group CFO Rahul Ahuja, outlined the financial performance and strategic developments during this volatile period.

Financial Performance Overview

The company delivered steady growth metrics despite global headwinds affecting the apparel industry. Key financial highlights for the quarter and 9-month period reflect disciplined execution and margin improvement initiatives.

Margin Expansion and Profitability

PDS achieved significant margin improvements during Q3 FY26, with gross margins expanding by 236 basis points year-over-year. This expansion was driven by procurement efficiencies, better product mix, and the integration of Knit Gallery's manufacturing operations. For the 9-month period, gross margins improved by 45 basis points, reflecting the company's focus on structural efficiency improvements.

EBITDA for Q3 increased 11% year-over-year with margin expansion of 28 basis points. However, PAT for the quarter stood at ₹37 crores, representing an 18% decline year-over-year due to higher finance costs and operational expenses.

Manufacturing Segment Growth

The Manufacturing segment showed strong momentum, supported by the successful integration of Knit Gallery and operational improvements across the manufacturing platform. Knit Gallery is expected to achieve approximately ₹250 crores in sales for the current year with a profit margin of 4% to 5%. The management projects 40% to 50% growth for this facility in the following year, leveraging India's favorable trade agreements and the factory's design capabilities.

Market Challenges and Strategic Response

The global apparel environment remains restrained with consumer demand across the US and Europe being value-led and selective. Retailers continue operating with shorter order visibility and tight inventory control, while trade dynamics and tariff-related uncertainties influence buyer behavior.

Despite these challenges, PDS has benefited from structural shifts including vendor consolidation and sourcing diversification. The company's diversified manufacturing footprint across India and Bangladesh positions it well to capture incremental sourcing flows from tariff realignments. Recent US reciprocal tariff framework developments have reduced India's effective tariff exposure from 50% to 18%, while Bangladesh benefits from zero reciprocal tariff position.

Customer Portfolio and Geographic Distribution

PDS has successfully added major new customers including Walmart, Target, PVH, and T.J. Maxx to its portfolio. The company's revenue distribution shows strong performance in the UK market, which contributed 43% of revenue in the 9-month period compared to 37% last year, representing 24% absolute growth.

Leadership Transition and Future Outlook

The company announced a leadership transition with Rahul Ahuja moving to a strategic adviser role while Sadik Sunasara, currently Head of Banking and Treasury Operations in Hong Kong, will be elevated to Group CFO. Additionally, Abhishek Nawani has been appointed as CEO of the Manufacturing business, supported by CFO Mansi Agrawal.

Management remains cautiously optimistic about recovery prospects, expecting improved visibility within one to two quarters. The company continues investing selectively in digital transformation, AI capabilities, and cost optimization initiatives while maintaining strong working capital management at around 7 days.

Source: PDS Limited Q3 FY26 Earnings Conference Call Transcript