Shares of Pearl Global Industries Ltd saw a significant jump of 6.12% on Friday, reaching a high of Rs 1,353 on the BSE. This surge followed an analyst meet where Motilal Oswal Financial Services (MOFSL) reaffirmed its 'Buy' rating for the apparel manufacturer and increased its target price to Rs 1,500, up from Rs 1,360.
MOFSL's upgraded outlook is based on several strategic initiatives by Pearl Global, including robust capacity expansion, diversification of its product portfolio, backward integration efforts, and a projected improvement in operating margins. The brokerage anticipates the company's revenue, EBITDA, and Profit After Tax (PAT) to grow at Compound Annual Growth Rates (CAGRs) of 17%, 32%, and 38% respectively, over the fiscal years 2026-2028.
Growth Framework and Financial Targets
The analyst meet highlighted Pearl Global's structurally stronger growth framework, with management targeting a mid-to-high teens revenue growth of 16-18% between FY26 and FY30, alongside an approximate 15% volume growth. EBITDA margins are projected to expand to 12-14%, driven by operational leverage and an increased contribution from knit products.
Pearl Global's management has set an ambitious revenue target of Rs 6,000 crore by FY28, which MOFSL believes the company is on track to achieve ahead of schedule. Furthermore, the company aims for Rs 9,000-10,000 crore in revenue by FY30, reflecting a consistent 16-18% CAGR from FY26.
Capacity Expansion and Strategic Investments
A key driver for this projected growth is substantial capacity expansion. Pearl Global currently boasts a capacity of around 108 million pieces, with plans to increase this to 120-140 million pieces by FY28 and further to 170-175 million pieces by FY30, targeting an optimal utilization rate of approximately 80%.
To support these expansion plans, the company intends to invest a total capital expenditure (capex) of Rs 675-725 crore through FY30, with Rs 325-350 crore specifically allocated for capacity enhancement. Additionally, Pearl Global is focusing on backward integration, aiming to reduce its reliance on outsourced washing from about 60% to 20-25% by establishing new laundry facilities in Bangladesh. This strategic shift is expected to boost margins by around 40 basis points on Rs 6,000 crore of revenue.
Analyst Projections for Future Performance
MOFSL's financial models predict Pearl Global's FY27 revenue to reach Rs 5,900 crore, with an EBITDA of Rs 640 crore and an adjusted PAT of Rs 390 crore. For FY28, the brokerage estimates revenue of Rs 6,930 crore, EBITDA of Rs 810 crore, and an adjusted PAT of Rs 530 crore. The revised target price of Rs 1,500 values the stock at 18 times FY28E EBITDA, implying an upside of about 18% from MOFSL's reference price of Rs 1,274.