PDS Limited Reports Q3 FY26 Results with Margin Expansion Amid Global Challenges
PDS Limited reported Q3 FY26 results showing GMV of ₹14,760 crores with 7% YoY growth and revenue of ₹9,591 crores with 6% growth for the 9-month period. The company achieved significant gross margin expansion of 236 basis points in Q3 driven by procurement efficiencies and better mix. Strong cash flow generation of ₹644 crores and net debt reduction to ₹70 crores from ₹374 crores demonstrate financial discipline. Manufacturing segment growth was supported by Knit Gallery integration, while the company successfully added major customers like Walmart and Target despite global market challenges.
*this image is generated using AI for illustrative purposes only.
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.
| Metric | 9M FY26 | Growth (YoY) |
|---|---|---|
| GMV | ₹14,760 crores | 7% |
| Revenue | ₹9,591 crores | 6% |
| Operating Cash Flow | ₹644 crores | - |
| Net Debt | ₹70 crores | Reduced from ₹374 crores |
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.
| Manufacturing Highlights | Details |
|---|---|
| Knit Gallery Sales Target | ₹250 crores+ |
| Profit Margin | 4% to 5% |
| Projected Growth | 40% to 50% next year |
| Capacity | 40 million pieces |
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.
| Geographic Revenue Split (9M FY26) | Percentage | YoY Change |
|---|---|---|
| UK | 43% | +24% growth |
| Europe | 31% | -12% decline |
| Americas | 20% | +20% growth |
| Asia & Middle East | 7% | In line with last year |
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
Historical Stock Returns for PDS
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -1.19% | -9.13% | -7.69% | +1.06% | -28.11% | +149.38% |
