CANTABIL - CANTABIL RETAIL INDIA LIMITED Share Price

Cantabil Retail India Limited's management provided an optimistic outlook during the earnings conference call held on February 6, 2026. Key highlights include:

1. Financial Performance: For Q3 FY '26, there was a revenue from operations growth of 19% to INR 264.4 crores compared to INR 222.6 crores in Q3 FY '25. EBITDA increased by 31% to INR 95.2 crores, with an EBITDA margin improvement to 36%. PAT for the same period rose by 31% to INR 45.1 crores, reflecting a PAT margin of 17.1%.

2. 9-Month FY '26 Performance: For the 9-month period, revenue increased by 20% to INR 599.1 crores, while PAT grew by 27% to INR 66.5 crores. The management highlighted a strong same store growth (SSG) of 6.3%, affirming consistent customer trust and engagement.

3. Future Guidance: The management expects sustained revenue growth of over 20% for FY '27, with aspirations to exceed INR 1,000 crores in revenue. Furthermore, they aim for gross margins to improve by 1-2% over the coming fiscal year.

4. Store Expansion: The company plans to open 75 new stores annually, focusing on larger store sizes averaging 1,600-1,700 square feet, enhancing the retail footprint in both Tier-2 and Tier-3 cities.

5. Brand Strategy and Consumer Sentiment: The recent GST rationalization has positively impacted consumer sentiment and sales momentum. The management noted that the company's ongoing investments in store expansion, product innovation, and customer experience will further fortify their growth trajectory.

6. Long-term Vision: Management is optimistic about achieving their Vision 2027, which encompasses expanding retail presence, improving operational efficiencies, and solidifying Cantabil's position within India's fashion landscape.

Through disciplined execution and strategic investments, Cantabil aims to leverage its strong brand equity to navigate the competitive retail environment effectively.

1. Question: Can you explain what is the square feet for the mature stores that you have used to calculate the SSG? And what is the revenue per square foot?
Answer: The revenue per square foot for matured stores is currently INR 1,018 compared to INR 962 last year. We used 7.08 lakh square feet as the metric for the SSG calculation, which accounts for the older stores. Our total retail area across all stores is 8.82 lakh square feet, with the L2L metric reflecting performance in our matured stores.

2. Question: Employee cost is very well controlled. How are we managing this in spite of store expansion?
Answer: Our employee costs remain around 9%-10% of revenue and we're effectively managing them by maintaining this ratio even as revenues increase. The strategy involves careful hiring and operational efficiencies, and we expect this ratio to remain consistent going forward while scaling.

3. Question: What would be the sustainable level of SSG that we are targeting going forward?
Answer: We are targeting a long-term sustainable same-store sales growth of around 5%-6%. While some quarters may see fluctuations, this has generally been our expectation and plan moving forward.

4. Question: What benefits have we seen from the GST reduction?
Answer: We observed significant momentum post-GST rationalization starting September. Consumer footfall increased notably in October and November, thanks to GST benefits and seasonal demand, though it normalized in December. Overall, we expect continued long-term positive impacts from this change.

5. Question: What is our guidance for revenue and gross margin expansion going forward for FY '27?
Answer: We have a continuous revenue growth target of over 20% and aim to cross INR 1,000 crores by FY '27. For gross margin, we are operating at about 58%-59%, with potential improvements of a few percentage points anticipated.

6. Question: What is the number of franchisee stores as of December 25?
Answer: We currently have a total of 131 franchise stores, which constitutes about 20% of our overall 646 stores.

7. Question: How do the family stores' profitability compare to traditional men's stores?
Answer: Family stores have an EBITDA margin that is 2% higher than traditional men's stores. This is primarily due to lower rental costs per square foot while maintaining a robust sales volume.

8. Question: What is your guidance regarding the number of new store openings by the end of this fiscal year?
Answer: We aim to open 75 new stores annually. The average size of the new stores is increasing, and we will adjust our expansion plans based on demand trends in the coming quarters.

9. Question: How has the labor code impacted employee costs?
Answer: We have largely remained compliant with the new labor code, avoiding one-time expenses since we were already operating at compliant standards. Adjustments have been made where necessary.

10. Question: Can you provide clarity on the working capital and inventory days?
Answer: Currently, our inventory days are around 110 to 120 days. We aim to reduce this slightly while maintaining necessary stock levels based on our sales requirements, with an ideal target of around 100 to 120 days.