Cantabil Retail India Limited: Strong H1 FY26 Performance and Ambitious Vision 2027

Cantabil Retail India Limited, a prominent player in the Indian apparel sector, has reported a robust standalone performance for the second quarter and half-year ended September 30, 2025. The company's investor presentation and earnings call highlighted significant growth in revenue and profitability, underscoring its consistent strategic execution and expanding market presence. This period marks a continuation of the positive momentum established in FY25, with management expressing confidence in sustained growth driven by favorable market conditions and strategic initiatives.

For the half-year (H1 FY26), Cantabil's revenue from operations surged by 20% year-on-year, reaching INR335 crore, up from INR279 crore in H1 FY25. This impressive top-line growth was complemented by a 23% increase in EBITDA, which stood at INR91.1 crore compared to INR73.9 crore in the prior year. The EBITDA margin for H1 FY26 improved slightly to 27.2% from 26.5% in H1 FY25. Profit After Tax (PAT) also grew by 19% to INR21.4 crore, maintaining a PAT margin of 6.4%. For the second quarter (Q2 FY26) alone, revenue from operations grew by 16% to INR176 crore, and EBITDA increased by 22% to INR42.1 crore. However, the PAT margin for Q2 FY26 saw a slight dip to 3.8% from 4.3% in Q2 FY25, primarily due to initial costs associated with new store openings and increased IndAS 116 adjustments.

Strategic Growth and Operational Excellence

Cantabil's growth is underpinned by a clear strategic roadmap, articulated through its Vision 2027. The company is actively pursuing several initiatives to enhance its market position. A key strategy involves increasing its retail presence by expanding the store network to 725 stores from the current 605, with a particular focus on exclusive women's and kid's wear outlets. This expansion is coupled with a broader geographical reach, targeting an presence in 325 cities across India, up from 303.

Operationally, Cantabil is focusing on improving same-store sales growth by enhancing store ambience, optimizing display, and ensuring better inventory rotation. Management aims for higher single-digit same-store sales growth. A notable shift in strategy is the deliberate move towards opening larger stores, with new outlets averaging 1,600 square feet, up from the previous 1,300 square feet. This move is expected to yield better sales, improved merchandise display, enhanced customer experience, and ultimately, better EBITDA margins. The company's diversified product portfolio, encompassing men's wear, women's wear, kid's wear, and accessories, caters to a wide customer base, positioning it as a comprehensive fashion destination.

Financial Outlook and Management Commentary

Management's guidance reflects strong confidence in future performance. The company expects to achieve over INR850 crore in revenue for FY26, representing a 20% year-on-year growth. By FY27, Cantabil aims to cross the INR1,000 crore revenue mark. PAT margins are projected to be between 11% and 12% for FY26, further improving to 12% to 13% in FY27. The company plans to close FY26 with approximately 675 stores. The footwear segment, a newer addition, is targeted to achieve INR30 crore in sales for FY26.

Cantabil's commitment to efficiency is evident in its goal to reduce costs and maintain a healthy EBITDA margin of 28% to 30%. The company's zero-debt status for the past 4-5 years is a significant green flag, indicating robust financial health and disciplined capital allocation. Any borrowings observed are typically for seasonal working capital needs, particularly for winter inventory build-up. The recent GST rationalization, with the benefit being passed on to consumers, is also expected to boost footfall and sales momentum.

Segmental Performance and Market Dynamics

The company's revenue split by product category for FY25 highlights the dominance of men's wear, contributing 81% of the total revenue. Women's wear accounted for 11%, accessories for 5%, and kid's wear for 3%. This breakdown underscores the established strength in men's apparel while also indicating growth potential in other segments, particularly women's and kid's wear, which are areas of increased focus for new store openings.

Cantabil's integrated manufacturing facilities, spread across 2 lakh sq. ft. in Bahadurgarh, Haryana, can produce 1.8 million garments annually. The company fulfills 60% of its production requirement internally, with the remaining 40% sourced from job workers. While there are no immediate plans for further factory expansion, the proportion of job work is expected to increase to support growth. The e-commerce channel, which saw sales increase to 6.2% in FY25 from 5.7% in FY24, is targeted to contribute 8% to 10% of sales in the next two years, with a focus on profitable online market presence across major platforms.

Cantabil Retail India Limited's H1 FY26 performance establishes a solid foundation for sustained growth. The company's disciplined execution, strategic expansion, and focus on efficiency, coupled with a positive demand environment, position it well to achieve its Vision 2027 goals and continue creating long-term value for all stakeholders.