Cantabil FY26: Margin expansion, steady SSG, and a bigger store engine

Cantabil Retail India Limited closed FY26 with a mix of scale and improved profitability. Revenue from operations rose to INR 852.6 crore, up 18% year on year. Operating leverage was visible in EBITDA, which increased 29% to INR 264.3 crore, taking EBITDA margin to 31% from 28.4% in FY25. PAT grew 28% to INR 95.8 crore, with PAT margin improving to 11.2%.

The quarter also reflected this momentum. In Q4 FY26, revenue from operations was INR 253.5 crore, up 15% versus Q4 FY25. EBITDA grew faster than revenue, up 34% to INR 78.1 crore, while PAT increased 30% to INR 29.2 crore. The company attributed the record performance to disciplined cost management, scale efficiencies, and sustained traction across its portfolio.

Operational metrics in the investor presentation indicate a business that is growing with improving unit economics. For FY26, same store sales growth was 5.24%, sales per square foot (per month) was INR 768, and inventory days reduced to 126 from 141 in FY25. Average bill value improved to INR 4,415 (from INR 4,014), while average selling price rose to INR 1,101 (from INR 1,051). Management stated on the call that the company intends to maintain at least 5% to 6% same store growth, and that early months in FY27 were tracking similarly.

FY26 performance: operating leverage shows up in margins

The reported financials show that Cantabil’s profitability improved faster than revenue. Gross margin for FY26 was INR 514.8 crore, up 22%, while EBITDA increased 29%. The company highlighted that gross margin percentage has been trending up, reaching about 60% in FY26. Management reiterated a long-term target of maintaining gross margin at around 60%, with normal variation.

The company also presented a pre Ind AS 116 view to help investors assess underlying store economics. Under the pre Ind AS 116 view, FY26 EBITDA was INR 162.1 crore, up 35% from INR 120.2 crore in FY25, with EBITDA margin at 19.0% (vs 16.7%). This distinction matters because reported EBITDA includes Ind AS 116 effects, which shift rental expense into depreciation and finance cost.

Store network: growth, renewals, and the shift to larger formats

Cantabil ended FY26 with 652 stores across 308 cities in 21 states, supported by a retail area of 9.15 lakh square feet. The company added 53 stores in FY26 and 7 in Q4. The presentation also provides a longer store trend: total stores increased meaningfully over FY22 to FY26, while the mix has moved more towards COCO stores. In FY26, the presentation shows 526 COCO stores and 126 FOFO stores.

During the earnings call, management clarified why net store count can differ from gross openings. A significant share of stores come up for renewal after about nine years, and there can be closures or non-renewals for performance reasons. Management indicated that store openings have been ahead of target on a gross basis, but net additions depend on the renewal cycle.

A key strategic choice is the move toward larger stores and a greater family-store mix. Management explained that average store sizes have stepped up over the last few years, and that the last two years’ average opening size was about 1,700 square feet. They also stated that larger family stores tend to deliver around 1.5 percentage points higher EBITDA margin than mens stores, supporting the push toward bigger formats.

Online channel and category expansion: controlled growth, not at any cost

Digital sales remain a relatively small but strategic contributor. The investor presentation states online sales were about 6% in FY26, similar to FY25, with a stated target to reach 8% to 10% in the next two years. Management noted that Myntra’s billing system change affected absolute revenue growth numbers, even as volumes grew.

The company is also scaling accessories-led categories, with footwear called out explicitly on the call. Management stated footwear sales rose from INR 10 crore in FY25 to INR 14 crore in FY26. For FY27, management indicated an intention to increase footwear contribution to about 3% to 4% by the end of the year, with growth expected largely through online channels due to better traction there.

On kidswear, management indicated it is currently about 2% to 3% of total sales and could rise to around 4% to 4.5% in FY27, supported by the opening of more family stores where kidswear is carried.

Capital allocation and balance sheet: debt free stance, selective deployment of surplus

Cantabil’s balance sheet in the presentation shows borrowings at zero as of March 2026. Lease liabilities remain material due to the store network, with lease liabilities of INR 482.6 crore (non-current) and INR 61.5 crore (current). On the call, management discussed lease cash outflows: around INR 100 crore in FY26 and an expectation of about INR 108 crore to INR 110 crore in FY27, with FY26 actual rental cost stated at about INR 99 crore.

One notable disclosure in FY26 is INR 25 crore under loans. Management clarified this was an inter-corporate loan to a non-related party, deployed due to surplus funds, with a stated return of around 12% for about one year. They indicated it could be closed within the year.

The company also commissioned a new corporate office and dedicated e-commerce warehousing set-up. Management said the new building is an 11-storey facility with multiple floors used for corporate office and four floors dedicated to e-commerce warehousing, automated with a warehouse management system. This set-up will cater to online sales, while offline warehousing remains separate. Management estimated lease savings of about INR 1.5 crore to INR 2 crore annually from moving out of the earlier leased office, with benefits expected from Q2 or Q3.

What Vision 2027 implies for FY27 and beyond

Cantabil’s Vision 2027 targets are clearly articulated in the investor presentation: store network expansion from 652 to 725, increased reach from 308 to 330 cities, and a revenue target of INR 1,000 crore. The company also intends to maintain healthy EBITDA margins of about 28% to 30%, and improve store ambience and inventory rotation to support higher single digit same store growth.

Management’s tone in the call was confident on sustaining the core levers: maintain gross margin around 60%, keep same store growth at 5% to 6% as a base, and continue expanding with an emphasis on larger stores. The company also highlighted that it remains debt free and funds expansion through internal accruals.

The near-term monitorables are also clear from the discussion. Input costs have seen some hike, and management indicated price increases would be a mix of passing some cost to customers and absorbing some internally. The online channel has external dependencies through marketplace policies, as seen in the Myntra billing change. And the inter-corporate loan is a balance sheet line item investors are likely to track for counterparty risk.

Overall, FY26 reflects disciplined execution: expansion with improving margins, better working capital metrics, and a defined Vision 2027 roadmap. If the company sustains its stated gross margin and same store growth ranges while scaling stores and online, the FY27 narrative is likely to remain centered on controlled growth and steady profitability.