This Mukul Agrawal portfolio stock bounces back 22% from day's low

Pearl Global Industries' shares have moved higher by 19% to Rs 1,496.15, bouncing back 22% from its intra-day low of Rs 1,222.45 on the BSE

Pearl Global share price: Shares of Pearl Global Industries (PGIL) have moved higher by 19 per cent to Rs 1,496.15 on the BSE in Wednesday’s intra-day trade on solid earnings for the quarter ended December 2024 (Q3FY25). The market price of the smallcap garments and apparels company has bounced back 22 per cent from its intra-day low of Rs 1,222.45 on the BSE. The stock had hit a record high of Rs 1,718.05 on January 16, 2025.

 

At 01:13 pm, PGIL was trading 14 per cent higher at Rs 1,441, as compared to the 0.08 per cent rise in the BSE Sensex. However, the BSE Smallcap index was down 0.10 per cent at 47,323.

 

As on December 31, 2024, investor Mukul Mahavir Agrawal held 1.2 million equity shares, or 2.61 per cent stake, in PGIL, the shareholding pattern data shows. Further, Sanjiv Dhireshbhai Shah, one of the retail shareholders, holds 3.33 per cent shareholding in the company, data shows.

 

PGIL is one of the leaders in design, manufacturing, and export of diverse apparel products for all seasons, with an annual capacity of 84 million pieces. Its manufacturing facilities are spread across five countries, making it a top contender to emerge as one of the top suppliers to global brands. It exports to various fashion brands and retailers across the globe. 

 

In Q3FY25, the company's consolidated profit after tax (PAT) jumped 42.6 per cent on a year-on-year (YoY) basis to Rs 48.2 crore on the back of strong operational revenues. Consolidated revenues grew by 45.3 per cent on a YoY basis to Rs 1,022.50 crore on the back of an increase in sales volumes. 

 

The company's reported adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) margin declined to 9.1 per cent from 9.7 per cent. PGIL said its Q3 Ebitda is after accounting for additional costs for its new operations at Guatemala and Bihar (India). It expects operational improvement in Guatemala and Bihar in the next financial year.

 

The management said the exceptional performance in the third quarter was fuelled by robust sales volume growth across geographies. They remain optimistic about Bangladesh’s long-term potential, and remain confident in the region’s sustained growth and robust performance.

 

With a healthy order book, the management is confident of sustaining this positive momentum and is actively exploring value-accretive capacity expansions to capitalise on growth opportunities.

 

India is expected to maintain sales growth momentum, supported by the upcoming summer and spring seasons. Additionally, the company is making significant progress on its capacity expansion plan in Bihar, which will further contribute to growth from the next fiscal year, the management said.

 

Domestic credit rating agency, ICRA expects the company to sustain a healthy revenue growth with the likely shift in procurement by large customers from China to markets like India. This will be led by its operational strengths, which provides it with a competitive edge, including long-term relationships with renowned international retailers that have been facilitating repeat business for the company.

 

PGIL has plans to increase its manufacturing capacity, with a proposed capacity expansion of Rs 400-500 crore over FY2025-FY2027, to be funded through a mix of internal accrual and debt. Going forward, the company is expected to continue to report a gradual improvement in its financial risk profile on the back of healthy revenue growth, driven by its plans to widen its product portfolio, client portfolio and geographical diversification over the medium-to-long-term, ICRA said in a report.

 

Meanwhile, the textile sector faced a tumultuous phase in the past five years on COVID-related issues, higher inflation in the US, greater inventory with global retailers due to supply chain issues, and a surge in cotton prices and freight costs. With most of these events abating, we expect the sector to return to the growth track and see volume-driven revenue growth from here on, analysts at Nuvama Wealth and Investment said in report.