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Cantabil RetailQ1 FY24

Cantabil Retail Q1 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹240P/E: 20.6Market Cap: ₹2.0K CrSector: Textiles & Apparels

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3
  • The company expects approximately 18%-20% revenue growth for the current financial year and similar growth in the coming years.
  • Target is to reach around Rs. 1,000 crore in revenue by FY26, implying a CAGR of about 20%-22%.
  • They plan to add 80 new stores this year and 80 next year, contributing to growth.
  • Same-store growth (SSG) is targeted at around 5%-7% annually, though actual may be around 3%-5% considering recent challenges.
  • E-commerce business, which grew over 300% in Q1 FY23 to Rs. 6.4 crores, is expected to contribute about 6%-7% of total sales, aiming for Rs. 45-50 crores annually.
  • Demand outlook is strong for Q3 and Q4 due to wedding, Diwali, and winter seasons, with Q1 being a lean quarter seasonally.
  • West region shows faster growth due to recent expansions, while North region contributes larger absolute revenue.

See what Cantabil Retail management said on margin guidance — free account, 30 seconds.

Fundraise plans

  • There is no mention of current or future plans for fundraising through debt or equity in the transcript.
  • The company is focused on organic growth via store expansion and backend capacity enhancement.
  • CAPEX plans include enhancing the existing Bahadurgarh factory capacity but no heavy CAPEX or new financing is planned beyond the current and next financial year.
  • Expansion to new regions like South India is planned only after saturation in North, East, and West regions, indicating a measured growth approach without immediate large funding needs.
  • Overall, the company appears to be funding growth through internal accruals and efficient capital management rather than seeking external fundraising.

See what Cantabil Retail management said on order book — free account, 30 seconds.

Capex plans

Yes
  • Current CAPEX investments are focused on backend and supply chain infrastructure, including an office cum supply chain facility.
  • Capacity enhancement is underway at the Bahadurgarh factory, increasing output from 15 lakh pieces to 18-20 lakh pieces annually.
  • CAPEX spent this financial year and planned for next financial year mainly support backend capacity enhancement and fabricating units.
  • No immediate plans to acquire more land or launch heavy investments for new factories; current land and facilities are adequate for expansion goals.
  • Strategic store expansion plans involve increasing store count from ~460 to around 700 in 3 years, supported by enhanced backend capacity rather than new manufacturing CAPEX.
  • Backend investment and capacity upgrades will continue over this and next financial year but no heavy CAPEX planned beyond that period.
  • Store-level CAPEX per store is approximately Rs. 22-25 lakhs with overall per store gross investment about Rs. 50 lakhs including inventory.

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Margin guidance

Category 3
- The company targets a revenue growth of approximately 18%-20% for the current financial year and going forward (Page 14). - By FY26, aiming for total revenue across Rs. 1,000 crore (Page 14). - EBITDA margins projected to be maintained around 19%-20% pre-Ind AS (Page 6). - Gross margins targeted to sustain at around 54%-55% annually (Page 6). - PAT margin expected to be around 12%-13% (Page 6). - The company is optimistic about a positive demand outlook in Q3 and Q4 due to festive and winter seasons leading to better sales (Page 14). - Same-store growth (SSG) target maintained at around 5% for the full year, with some flexibility (Page 12). - E-commerce business, showing rapid growth, expected to contribute around 6%-7% of total sales, driving future revenue (Page 17). - Expecting stable ASP and improving sales per square foot over the year (Page 12). Overall, management remains confident of sustainable growth in earnings and margins.

Order book

The transcript does not explicitly mention the current or expected order book or pending orders for Cantabil Retail India Limited. However, relevant operational and business insights include: - The company is expanding its retail footprint aggressively with plans to add about 70 to 80 stores per annum. - Manufacturing capacity includes a state-of-the-art factory in Bahadurgarh, Haryana, capable of producing approximately 15 lakh garments annually. - Two-thirds of the production is managed internally; one-third is outsourced to fabrication units. - Inventory days are maintained around 135-140 days, with about 20% as work-in-progress. - E-commerce sales are growing, contributing around 6% currently, linked with 200 stores serving as warehouses for quick delivery. - Demand for the second half of the year is expected to be strong due to the wedding and winter seasons. No specific pending order book value or detailed order backlog is provided in the available transcript.

How does Cantabil Retail rank vs peers in Textiles & Apparels?

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