Summary
Cantabil Retail India Limited - Q3 FY '26 Earnings Call Summary Friday, February 06, 2026, 17:00 Hrs (IST)
Event Participants
Executives 5 Basant Goyal (Whole-Time Director), Deepak Bansal (Whole-Time Director), Poonam Chahal (Company Secretary), Shivendra Nigam (CFO), Vijay Bansal (CMD)
Analysts 8 Anand Mundra (Soar Wealth), Ankit Shah (White Equity Investment Advisors), Arpan Rathod (Insight Advisory), Harshit (Anand Rathi), Hitaindra Pradhan (Maximal Capital), Mehul Kataria (Insight Advisors), Naitik (NV Alpha Fund), Pavan (Ratna Traya), Shrinjana Mittal (MS Capital), Tanmoy Roy (Individual Investor)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations (Q3) | ₹264.4 crores | +19% YoY; Driven by strong winter demand and 6.3% SSG. |
| Revenue from Operations (9M) | ₹599.1 crores | +20% YoY; On track for “Vision 2027” target of ₹1,000 crores. |
| EBITDA (Q3) | ₹95.2 crores | +31% YoY; Margin expanded to 36% (up 340 bps) due to operating leverage. |
| PAT (Q3) | ₹45.1 crores | +31% YoY; Margin improved to 17.1% from 15.4% YoY. |
| PAT (9M) | ₹66.5 crores | +27% YoY; Margin at 11.1% vs 10.4% YoY. |
| Gross Margin | 63.1% (Q3) | +2% YoY; Benefit from pricing corrections and operational efficiencies. |
| Same Store Sales Growth (SSG) | 6.3% | Consistent performance; management targets 6-7% as sustainable long-term. |
| Store Count | 646 stores | Total retail area of 8.82 lakh sq. ft.; 131 stores are franchised (20%). |
| Average Selling Price (ASP) | ₹1,491 (Q3) | Flat YoY; 9M ASP improved by 4% to ₹1,070 due to product mix. |
| Inventory Days | 120 days | Targeted range of 100-120 days to maintain shelf requirements. |
Geographic & Segment Commentary
- Family Stores: These stores deliver 2% higher EBITDA margins compared to standalone men’s stores due to lower rental costs per square foot combined with high sales throughput. Management is prioritizing larger family store formats (1,600-1,700 sq. ft.) where the right property opportunities exist.
- E-commerce: Revenue reached ₹37 crores for 9M FY26, with Q3 accounting for ₹17.7 crores. The segment operates via an Omni-channel model with a return rate of 32-33%, contributing roughly 6% of total sales with a target to reach 8-10% in the next fiscal year.
- Tier-wise Mix: Presence is balanced across Tier-1 (20%), Tier-2 (40%), and Tier-3 (40%) towns. Management noted that demand remains resilient across all geographies with no specific regional slowdown.
Company-Specific & Strategic Commentary
- Vision 2027 & Expansion: The company aims to surpass the ₹1,000 crore revenue mark by FY27. Store expansion is currently focused on increasing the average store size to 1,600-1,700 sq. ft. to accommodate family wear.
- GST Rationalization: The reduction in GST (effective Sept 22) was passed on to consumers, boosting footfalls in October and November. This move significantly supported the 18% volume growth achieved during the quarter.
- Inventory & Fashion Strategy: Management maintains a “Fresh Store” policy where inventory older than one year is moved to Factory Outlets (FOs) or liquidated online. The company is actively testing fashionable garments for the younger generation to supplement its core basic clothing line.
- Operational Model: 80% of stores are Company-Owned Company-Operated (COCO). Franchisee stores (20%) operate on a fixed commission basis (27-28%) where the franchisee bears all front-end costs (rent, salary, electricity) while Cantabil retains inventory ownership.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue | ₹1,000 crores+ by FY27 | Driven by 20%+ annual growth, 6-7% SSG, and continued store expansion. |
| Store Expansion | 75 new stores per year | Focus on increasing retail area through larger store formats (Family Stores). |
| PAT Margin | 12% - 13% for FY27 | Expected improvement of 1-2% due to GST rationalization and scale. |
| Gross Margin | 58% - 59% (Sustainable) | Management targets maintaining this range with a slight 1% improvement. |
Risks & Constraints
| Risk | Context |
|---|---|
| Inventory Management | Requires maintaining 7 pieces per square foot (5 on shelf, 2 in back) to meet display standards. This necessitates stable working capital of 100-105 days. |
| Seasonality | Q3 is disproportionately vital for profitability due to higher ticket values of winter wear; Q2 remains a traditionally leaner period. |
| Competition | While management claims a “secret sauce” in efficiency and ASP positioning (₹1,050 range), increased competition from aggressive branding by larger national players remains a monitorable. |
Q&A Highlights
Pricing vs. Volume
- Question: Why has revenue growth matched volume growth (18%) without pricing growth? (Ankit Shah)
- Answer: ASP for the quarter was flat at ₹1,491. While pricing didn’t increase, the “basket size” improved, with ticket sizes rising from ₹4,500 to ₹4,900. (Shivendra Nigam)
Franchisee Model
- Question: How is the inventory and cost split managed in franchise stores? (Ankit Shah)
- Answer: Inventory stays on Cantabil’s books until sold to the end-user. Franchisees receive a 27-28% commission and bear all operational expenses like rent and electricity. (Shivendra Nigam)
Online Strategy
- Question: Do you send inventory to marketplaces and what are the return rates? (Anand Mundra)
- Answer: No, inventory is held in our warehouses/stores and fulfilled via Omni-channel. Return rates are ~32%, and pricing parity is maintained between online and offline. (Basant Goyal)
Store Payback
- Question: What is the ramp-up time for new stores to reach maturity? (Hitaindra Pradhan)
- Answer: The maturity period and capital payback period are approximately 2 to 2.5 years. Matured stores yield ~₹790 per sq. ft. vs ~₹675 for new stores. (Shivendra Nigam)
Key Takeaway
Cantabil Retail India Limited delivered a strong Q3 FY26, characterized by a 19% revenue growth and a significant 31% surge in PAT, underpinned by robust winter demand and a 6.3% SSG. The company successfully utilized operating leverage to expand EBITDA margins to 36% during the quarter. Strategically, the firm is transitioning toward larger “Family Store” formats and passing through GST benefits to maintain volume momentum, which grew 18% YoY. With 646 stores currently operational, the company remains confident in achieving its “Vision 2027” target of ₹1,000 crore revenue. Management’s focus remains on high inventory turnover, passing through rationalized tax benefits to consumers, and maintaining a lean franchise-linked expansion model. Looking ahead, the company expects to sustain a 20%+ growth trajectory with improving PAT margins as it scales toward its FY27 goals.
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