Cantabil Retail India Limited — Q4 FY26 earnings call

Call held 19 May 2026

Management summary

Cantabil Retail reported robust Q4 and full-year FY26 results, with significant growth in revenue, EBITDA, and PAT, driven by strong store expansion and operational efficiencies. The company maintained its gross margin targets and expressed confidence in sustaining same-store sales growth despite macroeconomic headwinds. Strategic investments in new store formats and a debt-free balance sheet position Cantabil for continued growth, though inflationary pressures remain a watch item.

Highlights

  • FY26 Revenue from operations grew by 18% to INR 852.6 crores, demonstrating strong top-line growth.

  • FY26 EBITDA grew by 29% to INR 264.3 crores, with margins expanding to 31% from 28.4% in FY25, reflecting operational efficiency.

  • FY26 PAT grew by 28% to INR 95.8 crores, with margins improving to 11.2% from 10.4% in FY25.

  • The company consistently delivered strong results over the last 5 years with a CAGR of 22% in revenue and 26% in PAT.

  • Opened 91 stores in FY26, contributing to a total of 652 stores covering 9.15 lakh square feet, with new stores performing well.

Concerns

  • Analyst concern regarding the correlation between same-store sales growth (SSG) and monetary policy tightening, potentially impacting discretionary spending.

  • Acknowledged inflationary environment and raw material price increases, which necessitate sharing costs with customers and bearing some internally.

  • An intercorporate loan of INR 25 crores was given out, though management stated it was for better returns and could be closed this financial year.

Key financials

2 periods

Q4 FY26

  • Revenue
    ₹253.5 Cr
    YoY +15%
  • EBITDA
    ₹78.1 Cr
    YoY +34%
  • PAT
    ₹29.2 Cr
    YoY +30%

FY26

  • Revenue
    ₹852.6 Cr
    YoY +18%
  • EBITDA
    ₹264.3 Cr
    YoY +29%
  • EBITDA Margin
    31%
  • PAT
    ₹95.8 Cr
    YoY +28%
  • PAT Margin
    11.2%

What they filed

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

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue151 223 220 159 176 +17%264 +18%253 +15%179 +13%
EBITDA35 72 58 49 42 +20%95 +32%78 +34%59 +20%
Net profit7 34 23 15 7 +0%45 +32%29 +26%16 +7%
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.

Capital allocation

high confidence
  • Capex ₹100 Cr
    • New corporate office cum warehouse ₹50 Cr
    • Building another floor in existing factory and Bahadurgarh warehouse ₹10 Cr
    • New store additions (capex per square foot) 1,800 Rs
    Yes. We are having this conference from the new corporate office itself. Capitalized all the building has been capitalized. Overall, the budget was for the building, barring land was approximately INR50 crores to INR55 crores, almost everything has been done, and it has been capitalized in the book and balance sheet has been taken the depreciation effect of this as well. (Shivendra Nigam, Page 15); Some INR100 crores has always been on the plan and maybe numbers going forward. (Shivendra Nigam, Page 16); INR1,800 is the capex per square feet, if we are adding 90, 91 or 100 stores. (Shivendra Nigam, Page 13)
  • Debt Gross ₹0 Cr · Net ₹0 Cr · 0.0× EBITDA
    Interest cost, we don't have because we are debt free. (Shivendra Nigam, Page 13)
  • Liquidity Cash ₹50 Cr Company has fund surplus and cash surplus, part of which is given as an intercorporate loan for better returns.
    So, cash flow would have been -- if you see this year, we are having, say, 50% -- INR50 crores of my cash surplus. 50% was there. 50% what it means this is given to non-related party for better return. (Shivendra Nigam, Page 16); So, we have given an intercorporate loan. We are having the fund surplus, we have. So, we are getting some good amount of returns. (Shivendra Nigam, Page 6)

Guidance & targets

Revenue

  • Revenue from operations Revenue · FY27 · High confidence INR 1,000 crores
    And going forward also, FY27 target is online, INR1,000 crores of revenue and 725 across the number of stores.

    — Shivendra Nigam

Store Count

  • Total number of stores Store Count · FY27 · High confidence 725 stores
    And going forward also, FY27 target is online, INR1,000 crores of revenue and 725 across the number of stores.

    — Shivendra Nigam

Store Additions

  • Net store additions Store Additions · Next 1 year · Medium confidence 90-100 stores
    So, net number, we are targeting to 90, 100 stores. Net number maybe 70%, 75% but that depends.

    — Shivendra Nigam

Retail Area

  • Retail area addition Retail Area · Per annum · High confidence 15-20% per annum
    Yes. We are targeting that. We are targeting that 15% to 20%, 15% minimum. 15% to 20% that depends on the location of the store, but we are targeting this much of area.

    — Shivendra Nigam

Same-Store Sales Growth (SSG)

  • SSG Same-Store Sales Growth (SSG) · Medium-term / FY27 · High confidence 5-6%
    Yes. We are continuously delivering for last many years you say, 5% to 6%, that we have been promising. We are targeting more, but at least 5% to 6% of the sales store growth is absolutely on track. (Page 5); We are expecting to take it forward from 5% to 6%. Otherwise, 5% to 6% would have been maintained. (Page 12)

    — Shivendra Nigam

Gross Margin

  • Gross Margin Gross Margin · Long-term · High confidence 60%
    So, yes, this is a mix of, obviously, some part of the inflation is there and a better mix in terms of margins, better product margin because we are maintaining 60% of the gross margin. (Page 7); 60% is the guidance. For us, our internal guidance is to maintain the gross margin at 60%. (Page 8)

    — Shivendra Nigam

EBITDA Margin

  • EBITDA Margin EBITDA Margin · Long-term · High confidence 30%
    The moment we will be able to maintain that, our EBITDA margin, 30% will always be on the card.

    — Shivendra Nigam

Footwear Sales

  • Footwear sales as % of total sales Footwear Sales · End of this financial year · Medium confidence 3-4%
    Going forward, we have a target to increase it, maybe end of this financial year 3% to 4%, 4%. We have plans.

    — Shivendra Nigam

Kids Wear Sales

  • Kids wear sales as % of total sales Kids Wear Sales · Next year · Medium confidence 4-4.5%
    But next year, we see it around coming to the 4%, around 4%, 4.5% of total sales.

    — Deepak Bansal

Marketing Expenses

  • Marketing expenses as % of revenue Marketing Expenses · Medium confidence 1.8-2%

    Previously 1.7% → 1.8-2%

    1.7% as of now. It may go up to 2%, 1.8%, plus/minus 0.1% 0.2%, not beyond that.

    — Shivendra Nigam

Inventory Management

  • Inventory days Inventory Management · High confidence Around 110 days
    So, approximately near this only 110 days in terms of finished goods inventory as well as 105 days of working capital, approximately would be around this.

    — Shivendra Nigam

Working Capital

  • Working capital cycle Working Capital · High confidence Around 105 days
    So, approximately near this only 110 days in terms of finished goods inventory as well as 105 days of working capital, approximately would be around this.

    — Shivendra Nigam

Manufacturing

  • Own manufacturing contribution Manufacturing · Going forward · High confidence 60%
    So, manufacturing is still we are maintaining 60-40. 60% is own manufacturing through our dedicated Bahadurgarh factory, which has a capacity of producing approximately 18 lakh to 20 lakh garment, which as of now is fulfilling about 25% requirement, plus my job worker is 35%. So, we are controlling own manufacturing through job worker as well as factory, which is brought largely 60% and accessories is 40%. And going forward also, this ratio is largely maintained.

    — Shivendra Nigam

What to watch in Q1 FY27

Same-Store Sales Growth (SSG)

Next quarter
Current Around 5%
Target Maintain 5-6%

Why it matters

SSG is a key indicator of organic growth and demand resilience amidst monetary policy tightening.

Yes. We are continuously delivering for last many years you say, 5% to 6%, that we have been promising. We are targeting more, but at least 5% to 6% of the sales store growth is absolutely on track.

Risks & concerns

  • Monetary policy tightening and its impact on discretionary spending

    medium

    Analyst raised concern that monetary policy tightening could negatively impact same-store sales growth, as discretionary spending takes a hit.

    Analyst acknowledged

  • Inflationary environment and raw material price increases

    medium

    Management noted some input material price hikes, which are partially passed to customers and partially absorbed, and acknowledged potential impact on demand.

    Both acknowledged

Q&A highlights

8 direct
Same-Store Sales Growth (SSG) and monetary policy impact Direct
Our SSG last year was around 5%. And in April also, our SSG was around 5%. So, monetary policy right now is not hampering our SSG growth because in May also, till now we are getting a decent SSG. So in the past also, yes, monetary policy constraints the customer pockets. But due to our efficiency practices and adopting some incentive policies at different ends, and by the marketing activities, we are able to get the SSG in the tightness of the financial policy.

Analyst questioned the sustainability of SSG amidst monetary tightening, and management provided a clear strategy and confidence in maintaining 5-6% growth.

Asked by Abhi Jain

New store performance and customer adaptation Direct
So, our new stores are giving very good response. So, last year, we opened around 53 stores. And right now, also around 45 stores are in the pipeline and all stores are performing very well. So, we are not facing any challenge in the new markets or such.

Addressed concerns about the success and customer acceptance of new store formats and expansion into new markets.

Asked by Abhi Jain

Intercorporate loan details Direct
So, we have given an intercorporate loan. We are having the fund surplus, we have. So, we are getting some good amount of returns. Normal market returns in terms of fund is approximately 6% to 7%. This we have been around 12%. So, for 1 year, so that is for the better return only.

Clarified the nature and purpose of a significant loan, indicating it's an investment for higher returns rather than a liability.

Asked by Tarun Sharma

Gross Margin sustainability amidst inflation Direct
Yes, sir. The margin, what we are targeting on a long-term basis is approximately 60%. Any of the commentary we are giving is getting better than that. However, 1% may be up and down but that is there. But the overall target to maintain 60% of the gross margin.

Reaffirmed the company's commitment to maintaining a 60% gross margin despite inflationary pressures, a key profitability indicator.

Asked by Swapnil Gupta

Rationale for COCO vs. franchisee-led growth Direct
Company DNA is from very start was about the COCO stores. So, we open the franchisee stores also. So, we have around 20% franchisee and 80% company. But as we are doing bigger stores, we are doing the high rental properties, prime locations. And naturally, sometimes franchisees are not comfortable with very high investment properties with high rentals. So, company go for the COCO stores and in those places.

Explained the strategic preference for company-owned, company-operated (COCO) stores in prime locations due to higher investment requirements, while utilizing franchisees in Tier 3 markets.

Asked by Arjun Gaikwad

Capex optimization strategy for inflation Direct
Interest cost, we don't have because we are debt free. And the capex, we have planned to lower our capex, per square feet because we have right now adopted a new furniture fixture category, which is -- which has slightly less cost than what we are doing in the previous year. So, capex, per square feet, we think will go down in this year because the new fixture design has been adopted with a lesser cost.

Management outlined a proactive strategy to mitigate inflationary pressure on capex by adopting a new, more cost-effective furniture fixture category.

Asked by Abhi Jain

Benefit of larger store formats Direct
Obviously, we are opening more family stores, right? So, the benefit is in that we are a better portfolio of family stores where sizes are not available, it could be men like Maharashtra, Gujarat where big properties are not available. We have better EBITDA margin in the bigger stores. Profitability is higher in the bigger stores and EBITDA margins are lower in the smaller stores. That's why we are opening bigger stores.

Clarified the strategic advantage of opening larger family stores, specifically highlighting improved EBITDA margins and better portfolio management.

Asked by Dharmesh Shah

Manufacturing capacity and strategy Direct
So, manufacturing is still we are maintaining 60-40. 60% is own manufacturing through our dedicated Bahadurgarh factory, which has a capacity of producing approximately 18 lakh to 20 lakh garment, which as of now is fulfilling about 25% requirement, plus my job worker is 35%. So, we are controlling own manufacturing through job worker as well as factory, which is brought largely 60% and accessories is 40%.

Provided details on the company's manufacturing model, capacity, and future plans for expanding the specialized suit facility for better margins.

Asked by Ankit Shah

3 min read 7 chapters

Detailed narrative

FY26 Financial Performance Highlights

Cantabil Retail delivered strong financial performance in FY26, with revenue from operations growing by 18% to INR 852.6 crores compared to INR 721.1 crores in FY25. EBITDA saw a 29% increase to INR 264.3 crores, with margins improving to 31% from 28.4% in FY25. Profit After Tax (PAT) grew by 28% to INR 95.8 crores, and PAT margins expanded to 11.2% from 10.4% in FY25. The company also reported robust Q4 FY26 results, with revenue up 15% to INR 253.5 crores and EBITDA up 34% to INR 78.1 crores.

Store Expansion and Retail Footprint Strategy

The company expanded its retail footprint by opening 91 stores in FY26, bringing the total to 652 stores across 9.15 lakh square feet. For FY27, Cantabil targets a total of 725 stores and plans for net additions of 90-100 stores. The strategy emphasizes opening larger family stores (average opening size of 1,700 sq ft) in prime locations, as these formats yield better EBITDA margins compared to smaller stores. Retail area is targeted to grow by 15-20% per annum.

Margin Management and Cost Efficiency

Cantabil successfully maintained its gross margin at approximately 60%, a key long-term target, despite some raw material price increases. The company attributes this to a better efficiency mix, pricing corrections, and GST benefits. Operating expenses were also tightly controlled, with retail cost reducing from 34% to 33% year-on-year. The internal guidance is to maintain an EBITDA margin of 30%.

Sales Growth Drivers and Product Mix

Same-store sales growth (SSG) remained robust at around 5% in FY26 and April, with management confident of maintaining 5-6% despite monetary policy tightening. Footwear sales grew by 40% to INR 14 crores in FY26 and are targeted to reach 3-4% of total sales by the end of the current fiscal year. Kids wear sales, currently 2-3% of total sales, are projected to grow to 4-4.5% next year. E-commerce sales also grew by 10% in value to INR 11 crores in FY26.

Capital Allocation and Debt-Free Status

Cantabil maintains a debt-free balance sheet, which provides flexibility for growth investments. The company capitalized a new corporate office cum warehouse with a budget of INR 50-55 crores in FY26. Capex per square foot is expected to decrease in FY27 due to the adoption of a new, more cost-effective furniture fixture category. The company has a cash surplus, part of which (INR 25 crores) was given as an intercorporate loan for better returns.

Inventory and Working Capital Management

The company demonstrated improved efficiency in inventory and working capital management. Inventory days reduced from 123 days to 109 days in FY26, and the working capital cycle improved from 115 days to 105 days. Cantabil maintains an inventory provisioning policy of 10% for goods aged 1-3 years and 50% for goods older than 3 years, with 70-75% of total inventory being within 1.5 years.

Manufacturing Strategy and Capacity

Cantabil maintains a manufacturing strategy where 60% of its production is in-house (through its Bahadurgarh factory and job workers) and 40% for accessories. The factory has a capacity to produce 18-20 lakh garments, fulfilling 25% of requirements, with job workers contributing 35%. The company plans to expand its specialized suit facility, which offers better margins, as requirements increase.

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