PDS (Buy)
We recently had the opportunity to meet with the management of PDS during an investor roadshow, where we were joined by Pallak Seth (Promoter), Sanjay Jain (Group CEO), and Rahul Ahuja (Group CFO).
The management shed light on the company’s growth strategy in line with its ambitious 3-3-3 vision, which aims to achieve $3 billion GMV over the next three years while delivering a 3 per cent PAT. To reach this milestone, PDS plans to maintain a sustainable mid-teens growth rate, projecting a GMV of $3 billion and a top-line of approximately $2.1 billion. Additionally, the company aims to transition from the investment stage to the extraction stage, leveraging past investments in employee costs to reduce fixed costs and improve margins, targeting a 3 per cent PAT by FY27. Furthermore, PDS intends to diversify into high-value categories, expand its customer base across geographies, and capitalize on growth opportunities.
The recent acquisition of a 55 per cent stake in Knit Gallery India Pvt Ltd. (KGIPL) for ₹41 crore is expected to enhance PDS’s sourcing footprint and manufacturing capabilities in India. This strategic move, valued at approximately 6x EV/EBITDA and 4x P/E, is anticipated to be finalized by May’25.
Looking ahead, key drivers such as increased outsourcing by global retailers, a turnaround in manufacturing operations, the introduction of new revenue streams like SAAS/Brand management, and expanding penetration in the US market are poised to drive top-line growth for PDS.
Target Price: ₹790, Current Market Price: ₹449.40
Analyst: Broker
Published on March 10, 2025.
