PDS Limited has released its investor presentation for Q3 and 9M FY26, revealing a mixed performance characterized by steady revenue growth but declining profitability amid challenging market conditions. The global apparel sourcing and manufacturing company demonstrated resilience in topline growth while facing margin pressures from operational investments and market uncertainties.

Financial Performance Overview

The company's financial results for the nine-month period ended December 31, 2025, show measured progress in key operational metrics despite profitability challenges.

For Q3 FY26 specifically, GMV reached ₹4,660 crores with 6% year-on-year growth, while revenue stood at ₹3,173 crores, up 2% from the previous year. The quarter saw improved gross margins of 22.7% compared to 20.4% in Q3 FY25, representing an expansion of 230 basis points.

Operational Excellence and Working Capital Management

PDS demonstrated significant improvements in working capital management, a critical factor in the current challenging environment. Net working capital days declined substantially from 17 days in March 2025 to 7 days in December 2025, reflecting enhanced operational efficiency and cash flow management.

The company generated cash flow of ₹644 crores from operations during the nine-month period, with interest costs reducing by 15% in Q3 versus Q2. Net debt decreased from ₹374 crores as of March 31, 2025, to ₹70 crores as of December 31, 2025, despite adding ₹91 crores from the Knit Gallery acquisition.

Strategic Investments and New Verticals

PDS continued its strategic expansion through investments in new verticals, though with a more disciplined approach. Total investment in new initiatives stood at ₹101 crores in 9M FY26, down from ₹115 crores in the previous year. The company highlighted positive outlook for design-led sourcing initiatives, particularly through the Knit Gallery acquisition, which is expected to grow by 50% next year.

Market Positioning and Growth Catalysts

The company emphasized its strategic positioning to benefit from evolving global trade dynamics, particularly the India-EU and UK Free Trade Agreements. These agreements are expected to enhance price competitiveness and margins through duty-free access and simplified rules of origin. PDS's diversified sourcing footprint across India, Bangladesh, Vietnam, Egypt, and Latin America provides flexibility to navigate geopolitical disruptions and supply chain challenges.

The order book stood at ₹5,179 crores, representing 6% year-on-year growth, indicating underlying demand traction despite customers operating with shorter order visibility and calibrated buying decisions.

Technology and Digital Transformation

PDS continues investing in AI and technology infrastructure to drive operational efficiency and cost optimization. The company has implemented various digital tools across design, procurement, manufacturing, and compliance functions, supported by a robust SAP S/4 HANA backbone covering over 150 legal entities across 24+ countries.

The completion of the BCG-led cost transformation program in Q3 FY26 is expected to yield benefits in FY27, with initiatives spanning fabric and trims procurement, cut-make costs, and process improvements.

Outlook and Strategic Focus

Looking ahead, PDS remains focused on profitability enhancement, standardization, and execution discipline. The company expects to benefit from vendor consolidation trends as global brands reduce supplier bases and shift volumes to fewer, trusted strategic partners. The integration of manufacturing capabilities through facilities in Bangladesh and the newly acquired Knit Gallery in India positions PDS to capture larger, higher-value programs from global customers.

Source: PDS Limited Investor Presentation Q3 & 9M FY26

PDS Limited has submitted its monitoring agency report for the quarter ended December 31, 2025, regarding the utilization of proceeds from its Qualified Institutional Placement (QIP). The report, prepared by CRISIL Ratings Limited as the appointed monitoring agency, was considered and approved by the company's Audit Committee and Board of Directors in their respective meetings held on February 10, 2026.

QIP Issue Details and Proceeds Structure

The company's QIP was conducted from August 22, 2024, to August 27, 2024, raising gross proceeds of Rs 43,000 lakhs. After deducting issue expenses, the net proceeds available for utilization stood at Rs 41,055.96 lakhs.

As of December 31, 2025, cumulative issue expenses incurred amounted to Rs 1,858.49 lakhs, with the remaining Rs 85.55 lakhs lying unspent in the company's monitoring account and fixed deposits.

Fund Utilization Progress

The monitoring agency report reveals that no funds were utilized during the quarter ended December 31, 2025, toward the stated objectives. The total utilization status shows Rs 30,256.13 lakhs deployed since the QIP completion, leaving Rs 10,799.83 lakhs unutilized.

Deployment of Unutilized Proceeds

The company has deployed the unutilized funds across various instruments to ensure optimal returns while maintaining liquidity. The deployment includes fixed deposits with ICICI Bank, balances in monitoring accounts, and subsidiary account balances.

Compliance and Monitoring Framework

CRISIL Ratings Limited, serving as the monitoring agency under the SEBI regulations, confirmed that all utilization remains aligned with the disclosures made in the placement document. The report indicates no material deviations from the stated expenditure plans and confirms that all necessary government and statutory approvals have been obtained.

The company's fund utilization strategy focuses on two primary objectives: repayment of borrowings across the company and its subsidiaries, and pursuing strategic acquisitions along with general corporate purposes. The monitoring framework ensures transparency and regulatory compliance throughout the utilization process.

Regulatory Compliance Status

The monitoring agency confirmed that PDS Limited has maintained full compliance with SEBI regulations regarding QIP proceeds utilization. No deviations were reported, and the company has obtained all required approvals from NSE, BSE, NSDL, CDSL, and the Registrar of Companies. The report emphasizes that the amount allocated for strategic acquisitions and general corporate purposes does not exceed the prescribed limits of 35% collectively and 25% individually of the gross proceeds.