PDS Ltd: A Contrarian Bet Worth Considering?

Stock market investing is often about spotting what others miss. Most retail investors look at a high Price-to-Earnings (PE) ratio and run away. They fear a “ valuation trap .” But sometimes, the smartest people in the room see something else. Today, we discuss one such stock that looks like a value trap to many. With current valuation that looks incredibly expensive, this stock has caught the attention of three of India’s most famous “ super investors ” and they own a huge chunk of this company. These Warren Buffetts of India are Mukul Agrawal , Vallabh Bhanshali and Sanjiv Shah . Names that are sure to turn heads for the right reasons. And when a stock is backed by these 3, it deserves a deep dive. The company in question is PDS Ltd . If you look at PDS Ltd PDS Ltd on a screener, you might see a standalone PE ratio of about 200. A number that looks scary and is hard to justify for any company, let alone a textile player . Especially when the industry median is just 38x. This is sure to make you wonder why are investors like Sanjiv Shah, Mukul Agrawal and Vallabh Bhanshali holding this stock? What is it that these super investors are seeing that is missing the eye of the average investor? Before we try and figure it out, it is important that we know more about PDS. Incorporated in 1998, PDS Ltd was earlier known as PDS Multinational Fashions Limited. The company is in the business of trading ready to wear apparels, providing services to group companies engaged in the export of ready to wear apparels and sourcing & distribution of their products. But that is not all. The company is also engaged in the business of holding, owning, leasing or licensing real estate. It is not just one factory. It is a holding company with a massive network of over 50 subsidiaries across the globe. So, while the standalone business only earns some service fees and dividends, the real money lies with its subsidiaries. Which makes it imperative to look at the consolidated numbers, and once we do that the picture changes completely. The consolidated PE drops to around 47x. Now while this number is not exactly what many investors find “cheap,” it is far from the scary 200x figure. Retail investors often follow the “Smart Money.” In the case of PDS Ltd, the list of shareholders reads like a Hall of Fame of Indian investing. According to the latest shareholding data available on Screener, here is who owns a piece of the pie. #1 Sanjiv Dhireshbhai Shah : Known for his deep-value picks, he holds a massive 4.82% stake. #2 Mukul Mahavir Agrawal : A star in the mid-cap space, he owns 2.38%. He is known for spotting multi-baggers early in their growth cycle. #3 Vallabh Bhanshali : A veteran market voice, the Co-Founder of the ENAM Group along with the silent Warren Buffett of India, Nemish Shah holds 1.10% under his personal portfolio, and another 1.5% under Enam Investment & Services Pvt Ltd. A holding by these 3 investors speaks a lot about the trust these investors have in the company. It suggests they believe the company still has potential despite a big correction. To understand why these investors are interested, you must look past the “Textile” label. PDS is not a typical garment manufacturer. It does not own hundreds of rusting factories or heavy machinery. Instead, think of PDS as the ‘Amazon of Fashion Sourcing’. It operates on a model called “Platform as a Service.” The company is a leader in design-led sourcing, which means they don’t just take orders. They design clothes for global giants like Primark, Tesco, and Walmart. Plus, it also undertakes outsourced manufacturing and partner with over 600 factories worldwide. To put it simply, PDS gets the order, and the partner factory makes it. This keeps PDS asset-light with less worry about maintaining machines. On the other hand, through PDS Ventures, is where the game changes. The company is also investing in the future. They have invested in tech startups like Style Theory and Smartex, a clear bet on fashion technology. This unique model allows PDS to scale up without spending huge amounts of money on new factories. And that could be the hook for the super investors. Let’s look at the financials of the company to try and find out what holds the attention of the 3 super investors. The company’s sales are recovering amidst drop in global demand for clothes triggered due to inflation in the US and Europe. Despite this, PDS posted consolidated sales of Rs 3,419 cr in the September quarter. This is a jump from Rs 2,999 cr in the June quarter. It shows that orders are flowing in again. For a long-term view, the company’s sales have grown at a compounded rate of 14% between FY20 and FY25. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the company have logged compounded growth of 19% from Rs 204 cr in FY20 to Rs 481 cr in FY25. And for H1FY26, EBITDA of Rs 154 cr was already recorded. When it comes to profits, there is volatility, but the situation seems to be improving. The net profit for the quarter was Rs 48 cr, which is a jump from the Rs 20 cr they made in the June quarter. But still lower than the Rs 75 cr the company made in March 2025. Between FY20 and FY25, the company has recorded a compounded profit growth of 24%. Investors must know that PDS runs on very thin margins. Their operating profit margin (OPM) is usually around 3% to 4%. Because they are a trading and sourcing platform, they work on high volumes but low margins per item. This means even a small rise in costs can hurt their profits. As of September 2025, PDS has cash and equivalents amounting to Rs 1,007 cr, which could be taken as a war chest that helps them survive tough times. When it comes to debt, the company has borrowings of about Rs 1,229 cr. While debt is present, it‘s debt to equity ratio stands at 0.7x. While this is more than desirable, its not scary. Add to that the company’s current ROCE (Return on Capital Employed) of 16%, which is one of the highest when compared to industry peers. The industry median currently is 8%. Which simply means that for every Rs 100 PDS uses as capital it makes a profit of Rs 16 on it while its peers average around Rs 8. And the company does not shy away from sharing such wins with its investors. PDS has a history of paying healthy dividends (around 19% payout). This pays investors to wait while the stock price recovers. The dividend yield on the stock is about 0.9%. Let us now take a look at the share price of PDS Ltd . The company’s share was trading at a price of around Rs 82 in December 2020 and as on 16 th December 2025 it was Rs 359, which is a jump of almost 340% in 5 years. However, the stock has seen a drop in the last 12 months. The dip in yearly profit growth (down 27% TTM; partially due to a high base effect) is probably the reason the stock price has fallen recently. At the current price of Rs 359, the stock is trading at a discount of 46% from its all-time high price of Rs 666. PDS Ltd is a classic “contrarian” bet. It looks expensive on the surface and faces short-term headwinds. But under it all, it is a global ‘platform’ giant with a solid balance sheet. No wonder investors like Mukul Agarwal, Vallabh Bhanshali and Sanjiv Shah have been attracted to the company. Now that the stock is currently trading at a discount of over 45%, it is giving rise to a lot of questions in the investor cycles, to ascertain if this is a trap hiding in plain sight or a big opportunity one will regret missing out on. Which way will PDS move and will it be able to bounce back is a hot question now. Although it has already shown signs of a comeback, it will be fascinating to watch how this stock does in the year to come. For now, adding this stock to a watchlist is an intelligent idea. Note: We have relied on data from www.Screener.in and www.trendlyne.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only. Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India. Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.