Pearl Global Industries Limited Q1 FY23 Earnings Conference Call Insights

Key highlights from Pearl Global Industries Limited (PGIL) Q1 FY23 Earnings Concall

Management Update:

• PGIL said it reported the highest ever Q1 performance since inception.

Q&A Highlights:

• Keshav Kumar of RakSan Investors asked if PGIL’s partnership model is similar to what the related party PDS is doing with the sourcing business. Pallab Banerjee MD said that the model is different from PDS model. In PDS, it’s more of a trading and sourcing model, while PGIL present itself to customer as a manufacturer.

• Hemant Shah of Edha Wealth asked that since Q1 has been a record quarter, if it’s fair to assume that PGIL can do a topline of about INR3,100 crore for FY23. Pallab Banerjee MD replied that that number is in the target line in FY23. And with 1Q23 being encouraging, and with utilization improving, PGIL is hopeful of breaching the INR3,000 crore mark.

• Hemant Shah of Edha Wealth enquired about the traction in 1Q23 for the phenomenal growth. Pallab Banerjee MD replied that the company had all three strategy of acquiring new customers, better efficiency and better mix that helped in this growth.

• Hemant Shah of Edha Wealth also asked about the sustainability of 7-8% margin level going forward for FY23. Pallab Banerjee MD answered that the whole plan and strategy is made for that. However, there could be certain risks in the market or in the macro factors.

• Parth Desai with HCM asked about the current capacity utilization for FY22 and 1Q23. Pallab Banerjee MD said that the company has established its factories and partner factories. PGIL has a capacity of almost about 80 million plus and out of that it’s currently in the range of 65% utilization. Also, without any major capex, PGIL said it can get to the 80 million type capacity.

• Parth Desai with HCM enquired that from a client perspective, if majority of clients are in the US and if there is any scope for geographic expansion. Pallab Banerjee MD answered that PGIL’s major business is US, more towards 90%. However, the company added that this should change a little bit going forward.

• Akshay Kothari of Envision Capital asked if there is any slump in demand due to ongoing recession in US since it’s PGIL’s major market. Pallab Banerjee MD clarified that currently US is going through high inflation and fear of recession. PGIL is impacted more in the short run due to the inventory level resulting from US inflation.

• Akshay Kothari of Envision Capital asked about the current revenue from the partnership facility. Pallab Banerjee MD said the percentage grew up from 2% level to 20% in India. So standalone revenue is INR320 crore plus.