PGIL- Pearl Global Industries Ltd - Short Term Investment Mantra

PGIL- Pearl Global Industries Ltd

Can be bought at CMP 150 for a Short term Targets of 180 to 220

House of Pearl Fashions Ltd is a multinational, ready to wear apparel manufacturing conglomerate. The company is operating in three distinct business streams namely manufacturing, marketing and Distribution and souring of garments. They also provide supply chain solutions for the fashion industry globally along with warehousing & distribution networks in the UK & US. The company conducts their business through their subsidiaries in India as well as overseas. They are having 15 subsidiaries that operate in India, US, UK, Hong Kong, Indonesia and Bangladesh. The company product offering includes various kinds of knits, woven sweaters and bottoms in the men, women and kids wear categories. They are servicing 82 retailers across the globe with a healthy spread between USA, Latin America & Europe. Some leading customers include GAP, JC Penney, Banana Republic, ASDA-Wal-Mart, Kohl's, Esprit, Next to name a few.

It is in manufacturing of quality garments for leading brands around the world. Their Factories are in India, Bangladesh, Indonesia. That is why it is immune to geographical risks.It gives supply to many well known brands like, GAP, Children place, Old Navy etc.

Higher capacity utilization will increase profit margin. Dividend payout in increased by promoters.Debt/Equity ratio at 0.53. Net sales increased 503.18 cr. 50% up YoY. Government package can increase output of whole textile industry in addition to labor reforms

"Prakash Diwan of Altamount Capital Management told CNBC-TV18, "Pearl Global Industries is fairly large into readymade apparel manufacturer. It is a global player, has some 22 centers from where they do the production. The kind of cliental that it boost off is really impressive. You have all the big brands that it supplies too. They have their own in house brands which is still kind of bloom into very large blockbusters of sorts. Interestingly this company also supplies accessories and furnishings and other things to global players so especially based on the designed studios that it has created. So there are huge value adds."

One of the triggers could be if the Europe turns around, that is where the origination of most fashion businesses takes place and last three years have been dull with Europe, so that could be a big trigger. If you look at earnings, I do not think it is impressive as yet but what could be a game changer for this company is it’s business which is set up about three years back and the supply chain management globally particularly center out of the US kind of going to unleash a lot of power with the e-commerce platforms that they have stocked in," he said.

PEARL GLOBAL INDUSTRIES LTD - SHAREHOLDING PATTERN

CATEGORY SHARE (%)  PROMOTERS 66.58  BANKS/FIS 2.37  FIIS 6.51  INSURANCE 0.00  MUTUAL FUNDS 3.72  INDIAN PUBLIC 14.99  CUSTODIANS 0.00  OTHER 5.83

PEARL GLOBAL INDUSTRIES LTD - FINANCIAL RESULTS

PARTICULARS ( CR)	MAR 2017	MAR 2016	% CHG
NET SALES	529.12	503.33	5.12
OTHER INCOME	10.74	7.55	42.25
TOTAL INCOME	539.86	510.88	5.67
TOTAL EXPENSES	508.87	484.82	4.96
OPERATING PROFIT	30.99	26.06	18.92
NET PROFIT	16.3	13.07	24.71
EQUITY CAPITAL	21.66	21.66	-

"They have built a team of specialists on the e-commerce side so they could tie up with Amazon, Jabong and Myntra whatever the global players as well and the manufacturers offer some sort of a platform which is very cost effective. 

Subsidiaries:

India

• Pearl Global, North India
• Pearl Global, South India

Bangladesh

• Norp Knit Industries
• Nor–Pearl Knitwear
• Norwest Industries

UK

• Poeticgem
• Pacific Logistics

Canada

• Poeticgem, Canada 

Hong Kong

• Norwest Industries
• Norwest Industries, simple approach

China

• Norwest Industries

USA

• Depa International Inc., New York
• House of Pearl Fashions US
• Depa International Inc., New Jersey

Indonesia

• PT Norwest Industries

Clients:

• Walmart
• TESCO
• Banana Republic
• NEXT
• LeeCooper
• Primark
• Springfield

Milestones:

1987 –

• Pearl Global started operations

1994 –

• Pearl Global lists at the BSE, NSE, DSE and ASE

1998 –

• Establishment of international presence with incorporation of Norwest Industries in Hong Kong

2002 –

• PT Norwest, Indonesia started production setting up of sourcing office in China
• Setting up of sourcing office in China

2004 –

• The company acquired import and distribution businesses in the US.and the UK and also consolidated overseas entities

2005 –

• Setting up of sourcing office in Bangladesh
• Nor Pearl and Norp Knit, subsidiaries in Bangladesh commenced operations

2006 –

• Reorganization of group companies and consolidation of operations under House of Pearl Fashions Limited
• HoP (US), new subsidiary incorporated in the US.

2007 –

• The company’s subsidiary signs a Collaboration agreement with DLF Retail Developers Ltd. for development of its real estate property situated on prime location on NH–8, Gurgaon, measuring 9.20 acres.
• The company’s subsidiary ventures into into real estate, infrastructure and education activities.
• House of Pearl Fashions announced that it has acquired FX Imports, UK based import and distribution company through is subsidiary Poetiegem UK. FX Imports, is a supplier to the mid market fashion retailer. 
• House of Pearl Fashions has bagged orders for $ 7.5 million, Rs 30 crore approx., from US buyers, including JC Penney/H & M/GAAP/KOHLS. This is a substantial growth over the last financial year, as these orders are equal to the entire year of sales for this division. 

2008 –

• House of Pearl Fashions has through Multinational Textiles Group, Mauritius, a wholly–owned subsidiary of the company, entered into a Share Purchase Agreement for acquisition of 38% of ordinary shares of Nam Long Garment Joint Stock Company, Vietnam.
• Multinational Textiles Group, Mauritius, a wholly–owned subsidiary of our company, has entered into an agreement for purchase of 1,87,500 ordinary shares of Re 1 each (being 75% of the issued ordinary shares) and 31,90,000 redeemable preference shares of Re 1 each (being 100% of issued preference shares) of simple approach, Hong Kong.

2009 –

• House of Pearl Fashions’ subsidiary company, Nor Pearl Knitwear, Bangladesh, is in the process of restructuring its business due to problems it has faced in executing orders for the past 3–4 months. This entails in a temporary closure of its manufacturing facility till June 30, 2009, located at Comilla Export Processing Zone, Comilla, Bangladesh. The management will in due course review its decision of closure of factory. 
• House of Pearl Fashions through its subsidiary, House of Pearl Fashions (US) has signed a Multi–Year License Agreement with Geoffrey Beene, LLC for Mens's Casual Slacks, Casual Shorts and Dress Slacks under Geoffrey Beene Label. 

Products:

• Men's Wear 
• Women's Wear 
• Kids Wear

Business Divisions:

• Design and development – Over 30 designers working across the group constantly provide latest design inputs on latest design trends internationally and presentation of product ideas from across the globe gives the buyer a sense of cross–country styles of trends. It has got dedicated fabric development and sampling unit in China and India.
• Manufacturing – It is currently operating ten modern ready to wear apparel manufacturing facilities, of which seven are located in India, two in Bangladesh and one in Indonesia.
• Sourcing – Hong Kong is one of the biggest hubs for garment sourcing across the world.
• Marketing – It has integrated marketing and merchandising teams in Canada, Europe, HK, UK, and US, closely interacting with existing and potential customers at their doorstep.
• Logistics and warehousing – The company has warehousing, logistics and distribution infrastructure in the UK and the US. It also offers services such as – logistics and transportation, garment processing, Ironing and storage, quality control and reverse logistics.