Concall AI

Cantabil Retail India Limited — Q4 FY25 earnings call

Call held 16 May 2025

Management summary

Cantabil Retail delivered a strong performance in FY25, achieving its highest ever revenue and PAT, driven by robust growth across all key metrics. Despite a challenging market and a negative SSG in Q4, the company remains confident in its growth trajectory towards INR 1,000 crores turnover by FY27, supported by strategic store expansion and margin management. Capital allocation remains focused on internal accruals for growth and maintaining shareholder returns.

Highlights

FY25 Revenue from operations grew 17% to INR 721 crores, achieving highest ever yearly revenue.
FY25 PAT grew 20% to INR 74.9 crores, marking the highest ever PAT.
FY25 EBITDA grew 26% to INR 205 crores, with EBITDA margin expanding to 28.4% from 26.4% in FY24.
Q4 FY25 EBITDA margin improved significantly to 26.8% from 23.1% in Q4 FY24.
Company is operating with 600 showrooms and has a vision to achieve INR 1,000 crores turnover by FY27.

Concerns

Q4 FY25 SSG was negative 1%, attributed to early summer and Holi impact.
Inventory days were slightly higher at 120-121 days, compared to the target of 110-115 days.
8 stores were closed due to performance issues, and 10 were relocated during the year.

Key financials

2 periods

Q4 FY25

Revenue
₹219 Cr
YoY +13%
EBITDA
₹58.6 Cr
YoY +31%
EBITDA Margin
26.8%
PAT
₹22.5 Cr
YoY +23%

FY25

Revenue
₹721 Cr
YoY +17%
EBITDA
₹205 Cr
YoY +26%
EBITDA Margin
28.4%
PAT
₹74.9 Cr
YoY +20%

What they filed

Q1 FY27: revenue up 12.6%, net profit up 6.7% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	151	223	220	159	176 +17%	264 +18%	253 +15%	179 +13%
Expenses	117	150	161	110	134	169	175	119
EBITDA	35	72	58	49	42 +20%	95 +32%	78 +34%	59 +20%
Margin	23%	33%	27%	31%	24%	36%	31%	33%
Other income	1	2	3	2	2	2	3	3
Interest	8	9	9	11	11	12	14	14
Depreciation	19	20	23	22	24	25	29	28
Profit before tax	8	45	30	19	9 +13%	60 +33%	39 +30%	21 +11%
Tax rate	17%	24%	25%	23%	21%	25%	24%	22%
Net profit	7	34	23	15	7 +0%	45 +32%	29 +26%	16 +7%
EPS	0.78	4.11	2.69	1.75	0.81	5.39	3.49	1.95

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Menswear
81% Sales Contribution
Womenswear
11% Sales Contribution
Accessories
5% Sales Contribution
Kidswear
3% Sales Contribution

Capital allocation

high confidence

Capex ₹25 Cr entirely through internal accruals
- Opening new stores and renovation of new stores
- Warehousing and corporate facility completion
- Bahadurgarh facility enhancement ₹8 Cr
Absolutely from the internal accruals going forward as well. We are the cash surplus company.
Liquidity Liquidity disclosed Company is a cash surplus company.

Absolutely from the internal accruals going forward as well. We are the cash surplus company.

Guidance & targets

Revenue

Turnover Revenue · by FY27 · High confidence INR 1,000 crores

To further capitalize on the brand acceptance, we have outlined a vision 2027 of achieving INR1,000 crores turnover by FY 2027.

— Vijay Bansal
CAGR for INR 1,000 Cr target Revenue · until FY27 · High confidence 17-18%

So if you add up 17% to 18% in next 2 financial year, we are achieving INR1,000 crores. So this is not 13%, this is 17%, 18%.

— Shivendra Nigam

Store Count

Total Stores Store Count · by FY27 · High confidence 725

So I see in your vision 2027 that you mentioned you plan on increasing the store count to 725.

— Arnav Sakhuja (referencing vision)

Store Operations

Average Size of New Stores Store Operations · future · High confidence 1,700 square feet

So last year, our average size was 1,635 square feet. So it's going to increase a little bit till 1,700 square feet per store, for the new stores.

— Deepak Bansal

Profitability

EBITDA Margin Profitability · future · High confidence 28-30%

And then the EBITDA margin in the range of 28% to 30% is going to be maintained.

— Shivendra Nigam
Gross Margin Profitability · future · High confidence 55-56%

we have to maintain our gross margins approximately 55%, 56%.

— Shivendra Nigam

Sales Growth

Same-Store Sales Growth (SSG) Sales Growth · annual basis · High confidence 5-6%

So out of this, we are having 5% to 6% target to have the same-store sales growth.

— Shivendra Nigam
SSG Volume Contribution Sales Growth · future · Medium confidence 2-3%

So going forward, when I'm talking about 5% -6% SSG, 2% to 3% would be the volume and some correction would take it to 6%.

— Shivendra Nigam

Capital Expenditure

Capex Capital Expenditure · Next FY · High confidence INR 25-30 crores

So we have allocated INR25 crores to INR30 crores.

— Shivendra Nigam
Total Capex for INR 1,000 Cr Target Capital Expenditure · for INR 1,000 crores turnover · High confidence INR 50-52 crores

So total capex requirement is INR50 crores to INR52 crores for this financial year, right, which completes all my requirement of INR1,000 crores, not we are more than double it from the INR1,000 crores.

— Shivendra Nigam

Working Capital

Inventory Days Working Capital · long-term · High confidence 110-115 days

So our long-term target is to maintain somewhere between 110 to 115 days, and that is going to be.

— Shivendra Nigam

Product Mix

Womenswear Contribution Product Mix · in a year or two · Medium confidence 13%

Previously 11% → 13%

And ladies contribution in total sales will increase a bit like it's 11%. It can go to 13% in a year or two.

— Deepak Bansal

What to watch in Q1 FY26

Annual Same-Store Sales Growth (SSG)

next quarter / annual basis

Current Q4 FY25 SSG: -1%

Target 5-6% annual SSG

Why it matters

To assess if the Q4 SSG dip was temporary and if the company is on track for its annual SSG target.

But overall, our target is to keep the 5% to 6% on an annual basis, and that will be achieved.

Risks & concerns

Challenging Market Environment
medium

Achievement of historical high revenue and profit despite a challenging market environment.

Management acknowledged
Seasonal Impact on SSG
medium

Early summer and Holi season impacted Q4 SSG, leading to a negative 1% growth.

Management acknowledged
Outdated Stores and Market Changes
low

Some stores become outdated due to market changes, leading to closures or non-renewal of leases.

Management acknowledged
E-commerce Margin Dilution
low

Increased e-commerce contribution might slightly dilute gross margins in the future.

Management acknowledged

Q&A highlights

8 direct

Store Concentration and Mix for New Stores Direct

So right now, we have like presence of 20% of the stores are in the Tier 1 towns, 40% Tier 2 and 40% in Tier 3 towns. So same kind of spread we are expecting in the next 2 years. ... So it will be a mix. Right now, like we have 10% of our store are ladies, kids store; 20% are the family stores; 30% are the men's and ladies stores; and 40% are the men's stores. These are our broad classification of the stores. So in the same manner, we will be going forward.

Clarifies the company's strategy for geographical and product mix expansion, indicating a balanced approach across city tiers and store formats.

Asked by Arnav Sakhuja

Average Selling Price (ASP) vs Volume Growth Direct

So our ASP increased by more than INR20 when compared to the last year. So we always mentioned that our USP is our average selling price because we are into the mid premium segment brand. And we are more value brand and coming into the premium segment brand. Because this space has ASP of INR1,050 is very less crowded. So we plan to be in this space only in the future also.

Addresses concerns about ASP stagnation despite volume growth, confirming ASP improvement and strategic focus on the mid-premium segment with a target ASP of INR 1,050.

Asked by Himanshu Bisani

Confidence in INR 1,000 Crore Revenue Target by FY27 Direct

Right. Correct. Absolutely. We are always in a believer on long-term sustainable business. You can check our history as well. So the same number we are going forward. So all the planning is accordingly.

Management expresses high confidence in achieving the ambitious INR 1,000 crore revenue target, citing historical performance and strategic planning.

Asked by Himanshu Bisani

Funding for Growth and Internal Accruals Direct

Not at all. No, not at all. Absolutely from the internal accruals going forward as well. We are the cash surplus company.

Reassures investors that the company's growth plans, including the INR 1,000 crore target, will be funded through internal accruals, indicating strong financial health and no immediate need for external fundraising.

Asked by Ankit Babel

Free Cash Flow Post Rent and Capex Direct

So if I'll take about post my operational one. So if I take my post operation, if you are reducing, my free cash flow, if you have seen post net operating cash flow is INR148 crores, but that does not include my rentals. INR80 crores of rental has to included, to be reduced from this INR148 crores. ... Then INR60 crores full year? Full year, yes.

Provides a clear calculation of the company's free cash flow after accounting for rentals, indicating a healthy cash generation ability of INR 60 crores for the full year.

Asked by Bhargav

Gross Margin Increase Drivers Direct

Discounting, we have controlled to the slight portion of discounts, but there is a significant portion of correction in prices for this 2%. ... Yes, cost side.

Clarifies that the 2% gross margin improvement was primarily driven by price corrections and cost management, with a smaller contribution from controlled discounting.

Asked by Shrinjana Mittal

SSG Volatility and Seasonality Direct

So our overall target is to be taken on an annual basis. We are going to achieve on an annual level. A couple of quarters due to headwinds of other things as well. Like this quarter, we were going very well. But the immediately sudden post of the summer came early, right? So we have never seen a 2-month gap in summer and Holi. This time, it was there. So these kind of exceptions would be there. But overall, our target is to keep the 5% to 6% on an annual basis, and that will be achieved.

Explains the reasons behind Q4's negative SSG, attributing it to seasonal factors like early summer and Holi, while reaffirming the annual SSG target of 5-6%.

Asked by Shrinjana Mittal

Preparedness for INR 1,000 Crore Sales Target Direct

So we are absolutely ready for all these things because we are just looking at the INR1,000 crores is just done, right? So we don't need much changes in our system or any of the back ending. As far as capex is concerned that you asked, so our warehousing come corporate facility is going to be complete by end of this calendar as well.

Management confirms that the company's manufacturing, warehousing, and corporate infrastructure are being scaled up and will be ready to support the INR 1,000 crore sales target.

Asked by Naitik

2 min read 6 chapters

Detailed narrative

Strong FY25 Performance and Growth Benchmarks

Cantabil Retail reported its highest ever revenue and PAT in FY25. Revenue from operations grew 17% YoY to INR 721 crores, up from INR 615.6 crores in FY24. EBITDA increased by 26% to INR 205 crores, with the EBITDA margin expanding to 28.4% from 26.4%. PAT also saw a significant 20% growth, reaching INR 74.9 crores compared to INR 62 crores in FY24, with PAT margin at 10.4%.

Q4 FY25 Performance and Seasonal Headwinds

In Q4 FY25, revenue from operations grew 13% to INR 219 crores, and EBITDA increased by 31% to INR 58.6 crores. The EBITDA margin for the quarter stood at 26.8%, an improvement from 23.1% in Q4 FY24. However, the Same-Store Sales Growth (SSG) for Q4 was negative 1%, primarily attributed to the early onset of summer and the timing of Holi, which impacted demand during the quarter.

Strategic Store Expansion and Mix

The company currently operates 600 showrooms and plans to increase this to 725 stores as part of its Vision 2027. New stores are expected to have an average size of 1,700 square feet, larger than the current average of 1,300 square feet. The store mix will maintain its current spread, with 20% in Tier 1 cities, 40% in Tier 2, and 40% in Tier 3 cities, focusing on a balanced portfolio of men's, women's, kids', and family stores.

Margin Management and ASP Improvement

Cantabil Retail aims to maintain its gross margins at 55-56% and EBITDA margins between 28-30% in the future. The gross margin improvement in Q4 was primarily driven by a slight correction in prices and controlled discounting. The Average Selling Price (ASP) increased by over INR 20 year-on-year, with the company targeting an ASP of INR 1,050 in the mid-premium segment.

Capital Allocation and Funding Growth

The company is a cash surplus entity and plans to fund its growth, including the INR 1,000 crore turnover target, entirely through internal accruals. For the next financial year, a capex of INR 25-30 crores is planned for new store openings and renovations. The total capex requirement to achieve the INR 1,000 crore turnover vision is estimated at INR 50-52 crores, which includes enhancing the Bahadurgarh facility and completing warehousing and corporate facilities by calendar end.

Product Segment Contribution and Future Focus

Menswear currently contributes 81% of total sales, followed by womenswear at 11%, accessories at 5%, and kidswear at 3%. The company plans to increase the womenswear contribution to 13% in the next one to two years. Margins are reported to be almost consistent across all product categories, and there are no immediate plans to enter new segments like cosmetics or beauty products.

This is an AI-generated summary of a publicly available earnings call transcript.

View original transcript