Cantabil Retail India Limited (CANTABIL) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Cantabil Retail India Limited Q3 and 9 Months FY '26 Earnings Conference Call. [Operator Instructions] Before we begin, a brief disclaimer. The presentation which Cantabil Retail India Limited has uploaded on the stock exchange and their website, including the discussions during this call contains or may contain certain forward-looking statements concerning Cantabil Retail India Limited business prospects and profitability, which are subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vijay Bansal, CMD, Cantabil Retail India Limited. Thank you, and over to you, sir.

Good evening, everyone. On behalf of Cantabil Retail India Limited, I extend a warm welcome to all participants joining us for the Q3 and 9 months FY '26 Earnings Conference Call. Joining me today are Mr. Deepak Bansal, Whole-Time Director; Mr. Basant Goyal, Whole-Time Director; Mr. Shivendra Nigam, Chief Financial Officer. Mr -- Mrs. Poonam Chahal, Company Secretary; and our Investor Relations adviser from Marathon Capital. We trust you have had the opportunity to review our Q3 and 9 months FY '26 results. The earnings presentation and financial statements are available on the stock exchanges and the company website. We are proud to report another landmark quarter with profit of INR 45.1 crores, reflecting the strength of our strategy, robust 9 months FY '26 performance, including 20% revenue growth, 27% PAT growth and a strong 6.3% same-store growth, SSG, demonstrates the enduring trust of our customers. The recent GST rationalization has provided a meaningful boost to consumer sentiment, further supporting demand across our portfolio. We continue to expand our footprint while deepening customer engagement. We believe that companies with strong brand equity, fast execution and extensive retail reach are best positioned to capture this upstream. Our continued investment in store expansion, product innovation and customer experience provide a solid foundation for the next phase of growth. Importantly, we are progressing well on our Vision 2027 strategic blueprint aim of expanding our retail presence and reach, improving efficiencies and cementing Cantabil's position as a dominant force in India's fashion apparel landscape. I'll now hand over the call to Mr. Shivendra Nigam for giving update on the financial and operational performance of the quarter.

Thank you. Thank you, sir, and a warm welcome to everyone. The stand-alone performance highlights for Q3 FY '26. Revenue from operations for Q3 FY '26 grew by 19% to INR 264.4 crores as compared to INR 222.6 crores in Q3 FY '25. EBITDA for Q3 FY '26 grew by 31% to INR 95.2 crores as compared to INR 72.5 crores in Q3 FY '25. EBITDA margin for Q3 FY '26 improved to 36% as compared to 32.6% in Q3 FY '25. PAT for Q3 FY '26 grew by 31% to INR 45.1 crores as compared to INR 34.4 crores in Q3 FY '25. PAT margins for Q3 FY '26 improved to 17.1% as compared to 15.4% in Q3 FY '24. Now stand-alone performance highlights for 9 months FY '26. The 9 months revenue from operations for 9 months FY '26 grew by 20% to INR 599.1 crores as compared to INR 501.3 crores in 9 months FY '25. EBITDA margins for 9 months FY '26 grew by 27% to INR 186.2 crores as compared to INR 146.4 crores in 9 months FY '25. EBITDA margins for 9 months FY '26 improved to 31.1% as compared to 29.2% in 9 months FY '25. Coming to PAT. For 9 month FY '26 grew by 27% to INR 66.5 crores as compared to INR 52.3 crores in 9 months FY '25. PAT margins for 9 months FY '26 improved to 11.1% as compared to 10.4% in 9 months FY '25. On the operational front, we continue to scale efficiently with a total of 646 stores across the country, covering a total retail area of 8.82 lakh square feet. These results affirm the strength of our business model and our ability to drive consistent high-quality growth. We may now open the floor for Q&A session. Thank you.

[Operator Instructions] the first question is from the line of Pavan from RatnaTraya.

Sir, can you explain, what is the square feet for the mature stores that you have used to calculate the SSG, and what are the revenue per square feet, if you could [indiscernible] that.

So your -- I think voice was not clear. Your question is what is the per square feet sale in terms of mature stores and how -- right?

[indiscernible].

Mr. Pavan. Can you please use your handset?

I'm using my handset. Is it not clear?

Yes sir. Please go ahead.

It's not completely clear. Can you please repeat the question again, please?

What is the square feet area that has been used to calculate the SSG, which is like for the mature stores? And also what is the revenue per square feet of the mature stores that has been used to calculate that particular SSG?

So I can broadly give you the answer. If I'll take my L2L per square feet sales, which we can be considered as a mature, last year, the overall store running for the year, this year, that is INR 100 -- for the quarter, it is INR 1,018 as compared to INR 962 last year. And if I'll take 9 months, it is INR 790 per square feet as compared to INR 743 square feet last year, so which can be taken L2L as a mature store.

That is revenue per square feet. That is the number that you gave us, right, correct?

Yes. revenue per square feet.

What would be the -- and what would be the square feet that you have used to calculate this exactly? Can you [indiscernible].

Square feet area. Agree, agree. What total area is -- our total area is 8.82 lakh square feet, but the question I replied in terms of L2L, that is 7.08 square feet lakhs.

Okay. Got it.

Because for this mature store, I'm taking the definition of L2L and the difference is this one. So new store in last 1 year has been removed.

Right. Okay. Got it. So the answer I got was, it was INR 1,018 revenue per square feet for old stores, correct?

For the L2L. Yes. L2L. Yes.

The next question is from the line of Ankit Shah from White Equity Investment Advisors.

Sir, employee cost is very well controlled. So how are we managing this in spite of the store expansion? Can you help us understand this better and also share the trajectory going forward?

So what I got the question is salary is being maintained, right?

Yes. So employee cost -- yes, salary cost is very well controlled. The salary cost is not growing that fast in spite of the store expansion. So how are we able to manage this and the trajectory going forward?

So our store is approximately 9% to 10%, right? So this is the third quarter. So obviously, with the third quarter, revenue is slightly higher. But overall, 10% is my salary cost at a front-end level. And going forward, the trajectory will be approximately same. So we are controlling in a manner that this is approximately plus/minus 0.5% is a different thing. Otherwise, it's approximately 10%, 9% to 10% and going forward in the same trajectory.

Okay. Can you share the number of stores in the franchise model as of December '25?

The total number of franchisee stores is 131 out of total 646, which is 20%.

Perfect. Okay. And sir, in case of franchise stores, the inventory on their books or is the inventory in our books only, the finished goods inventory for franchise stores?

In all the stores, including franchisee stores in company's book. It's a stock transfer and all the merchandise which is sold to the end user is in company's GST. So including franchisee stores, all 646 stores inventory is coming in company's book.

Perfect. So in case of franchisee, they own or rent the store on their books, but inventory is ours?

All the front-end cost is there. They are getting a fixed commission, net of GST, whatever they are selling in a monthly basis, they are getting a commission, which is in the range of 27% to 28% and all the front-end costs, including rental, salaries of their employees, electricity, all front-end costs to be paid by them. And we are taking the deposit against the inventory what we are supplying.

Perfect. So the commission expense in the annual report, that was about 6% [indiscernible].

Largely that, largely that.

The next question is from the line of Naitik from NV Alpha Fund.

Sir, my question is, we've seen about 5% or 6% of SSG give or take. And with that, we have done almost 26% came as EBITDA margin. So I -- and if I look at your 3Q, it's usually very good in terms of EBITDA margins, both in top line and margins. So I want to understand the seasonality better because if I look at the gross margins, they are not as high, but your EBITDA margins are. So it's clearly not better pricing that you're getting in 3Q, which is leading to this. So I want to understand the seasonality in the margins.

Absolutely. So we need to understand how the sales is growing, right? So always Q3 is better in terms of sales because ticket value due to winter is high. Now the -- you [ emphasis ], the margin is same, 60% margin quarter-on-quarter sale, we have been maintaining, but the store expenses are mostly fixed in nature. So that is why I always see third quarter EBITDA or in fact, PAT margin is always very high because sales is higher and better margin we are getting because mostly fresh sale is also there. October was almost done. So third quarter sales in terms -- or we are maintaining, obviously, the gross margin at the same level. So that is why this quarter, particularly, your EBITDA margin is high.

Got it. So basically, if I were to put it in one sentence, it is because the ticket size is higher, average bill values are way higher compared to other quarters, that business model in the quarter?

Correct. Absolutely, yes.

Perfect. And sir, another question is there were some gratuity provisions or changes made. So have you taken those in the employee cost or we yet to take it or the impact...

All being considered. All the gratuity, employees quarter-on-quarter basis, everything has been considered. There's nothing -- we are already implementing the new labor law code. So everything has been taken care of. Everything is accounted for in these numbers only.

The next question is from the line of Harshit from Anand Rathi.

Congratulations on a great set of numbers. Just a couple of questions from my end. Yes. So just a couple of questions. So what would be the sustainable level of SSG that we are targeting going forward in the next 2 -- 1 or 2 years?

Same. Any of the earlier commentary as well, we are targeting 6% -- 5% to 6%, which is a long-term sustainable number, maybe a couple of quarters up and down, but long-term sustainable number is approximately 6% to 7%.

Okay. And on the GST side, what are the benefits that we have seen in the GST reduction? Have you seen any incremental footfall because of reduction in GST?

So the day, 27th of September, the GST came, we have seen a great momentum. So the October was great. November was superb, right? In fact, seasonality effect was also there, wedding effect was also there. December, it was a little bit came down on a flatter side, but overall quarter is fine. January was the same case, and now it is again picking up. So the momentum is definitely there. GST rationalization has definitely made the changes in terms of overall business, specifically for retail. So the momentum is there, and it looks like a long term.

Okay. And just last couple of questions. Sir, what would be your guidance in terms of revenue and any gross margin expansion going forward for FY '27?

So we are continuously have a target of approximate 20-plus percent in terms of revenue growth. So definitely, this year and next year, our vision statement was clear. By 2027, we are crossing INR 1,000 crores of revenue mark. And in terms of gross margin, yes, 58%, 59%, we are operating, and this is probably a couple of percentage or [indiscernible] percentage may improve. The target is to make the company INR 1,000 crores revenue company by next financial year with a margin of 58%, 59% gross margin.

The next question is from the line of [ Mehul Kataria ] from Insight Advisors.

Congratulations on a great set of numbers, sir. I'm just continuing the previous conversation which you just had with the previous participant, on account of this momentum which you're talking about on the GST measures, which have been -- which has come up, do you think that for the FY '26 or '27, there is any change in guidance in terms of revenues, especially FY '26 for that matter, given the momentum in this quarter continuing?

So that momentum will be continued. We may have an increase a couple of percentage. So always we have been giving the numbers, which we feel is hardly feasible. So this financial year, next financial year, this growth would be maintained, at least this growth will be maintained what we are expecting.

And given this growth momentum, any change in guidance in terms of number of stores opening by the end of this fiscal year as well as any guidance for the next financial year as well?

In terms of?

Number of stores, new stores opening?

New stores opening, as we have already -- always said that we plan to open 75 new stores in a year. And the size of the store is increasing because we are opening the average store size of 1,600 to 1,700 square feet now. So as of now, our target is same. But if we see some very good pickup in the demand in the next quarter, then again, we can plan the store expansion in aggressive manner.

And just continuing on the store expansion, how is the focus with regard to those focused stores for women and kids and all? How is that going along? Is there any specific number you would like to throw on that?

Going along in the same lines, 10% of the stores are exclusive ladies and kids stores and 20% stores are the family stores. So the expansion is going in the same lines, but the area has been increased not only in the family stores, but in the exclusive men's category and the men's and ladies category also, the average store size has been increased.

[indiscernible] You've always been giving the SSG growth, but doing any calculation numbers when you compare these exclusive women and kids wear stores compared to previous years or anything like that, do you have those kind of numbers as well in terms of how -- what growth are you seeing in those kind of stores on a like-to-like basis?

So the overall, if I take in terms of broad picture, right? Approximately, these numbers are same, right? Because, yes, we started, so they are taking maturity. In fact, if I'll take ladies and kids stores, they are -- this is the year where they have been started maturing. So we are expecting more sales, right? So from next financial year, it is better the stores what we have opened for the last 2 years, right? So how they have been behaving. So they are still in the process, but the results in terms of exclusive store is absolutely as per our expectation. So broadly, 6%, 7% in all those category of the stores is feasible, what we are looking at it.

So given the fact that the base of these stores which are getting mature will keep increasing, do you expect that probably with the maturity coming by EBITDA margins to improve further in the next fiscal? I mean do we have -- I mean, just like revenue guidance on the EBITDA margin, would you like to comment upon it as well.

See, last year, if you see in last 2 years, FY '24 was an exceptional year, then in last 2 last year. And then last year, we have shown improvement in the EBITDA margin, 15.8% to 16.7%. And we are extremely hopeful this year, we have to take it back plus 18% [ pre-index numbers. Post-index ] 30% will touch this year. So yes, a couple of percentage of margin improvement in terms of EBITDA is always there. We are targeting that.

And sir, last question, just a bookkeeping question on working capital. If you can just give us an overview about it for currently as well as what do you see expecting in FY '26 to close off?

This year, improvement would have been there. Last year, if you see our inventory days was 121 days. We are expecting it to come down a little bit. But earlier in all our commentaries, and we always mentioned, there is an ideal situation for us -- for the company is somewhere in between 100 and 120 days in terms of inventory and working capital is approximately 100 and 105 days. Considering the MBQ of the stores, what the -- we need to be there on the shelf, all the stuff. So that would be maintained. Not much margin. already the numbers have been controlled in terms of inventory, in terms of working capital, but we keep on working at it. So this year, as compared to last year, some improvement you would be able to see.

The next question is from the line of Shrinjana Mittal from MS Capital.

Congratulations on the great set of numbers.

Thank you.

I have a couple of questions. Shivendra G, can you help us understand like if I look at the realization, the realization has come down from INR 1,400 to INR 1,000, INR 1000, INR 1,100. And how much of the impact can be justified by the GST rate cut?

Once again, sorry, can you please -- how -- INR 1,400, I'm not getting it actually. Can you please repeat it for more clarifying?

So I was just saying, I'm just looking at the realization per piece. The realization per piece has come down year-on-year. There is some impact of GST also, I believe. So I just wanted to understand like what is the blended impact of GST on the final price for us?

Yes. If I look at the -- Yes, if it take the ticket size for the quarter, right, October to November quarter in totality, right, ticket size. So it has not been reduced actually. Overall, 9 months at INR 4,387 is my ticket size. And my average selling price is also INR 1,070 as compared to last year, INR 1,026. So it has improved actually by 4% across.

Okay.

[indiscernible] Because my ASP has been improved as well as volume is, the balance mix is there. We did not have any reduction in terms of selling price and ticket size as well, yes.

Right, right. Just the GST impact, Shivendra G, if you can quantify like in terms of just the final price, how much -- like in terms of realization for us, what would the impact -- what would be the impact?

GST rationalization, right?

Yes, yes.

So what we did, the day, 22nd of September, it came. So whatever the inventory would have been there, as per guidance, they have been passed on and whatever the GST benefit has been there to the consumer, right, whatever the inventory we had. And then we have taken care of in terms of pricing as well going in Q1. So that rationalization impact, you can see customer momentum was there. We have noticed immediately in the 9 days of September, October, November. Obviously, it came down in the month of December and January. Now it has again started picking up. The momentum is positive, what we can see. And going forward also look like INR 2.5 lakh crores of money has been given, pumped in by the government itself in last 1 year for end consumer. So consumption would definitely have to boost, no doubt about it.

Right, right. One more question, Shivendra G. The e-commerce sales number, can you share for this quarter? And what was it for the same quarter last year?

Yes. So overall, same e-commerce, that billing method has been changed. So overall volume growth is approximately for 9 months is 11.4% in terms of e-commerce. However, the -- even after change in this billing method, the value has been increased for 5%. So our target is to take it to -- last year, we closed it at 6.2%. And this year, 7% approximately, we ended.

So just in terms of absolute value, what would that number be in terms of absolute sales of e-commerce?

[indiscernible] We have already -- INR 37 crores in 9 months.

0 INR 37 crores in 9 months. And for this quarter, December quarter, particularly, what could that number be? And how -- what was it last year?

So my December quarter number was INR 17.7 crores.

Okay. And this was last year -- for last year?

I think INR 16 crore something. I just need to recheck. So because that was also already having a higher value for Myntra and what I explained last year as well, billing method exchange.

Right, right. Yes, billing method exchange. Understood. Understood. Yes. Just one last question, if I can squeeze in. You mentioned, we have a 25% growth plan. So out of this 25%, 5% would be SSSG growth and 20% would be led by store expansion. Is that how we are thinking?

So yes, we are continuously at the rate of 20% and minimum target we are having at 20%. Obviously, it will improve, right? It may go up to 22%, but 25% looks a little bit later on side. And this includes 6%, 7% approximately same-store sales growth and the balance would be coming from the store expansion as well as e-commerce segment because e-commerce is operating as of now at 6%, then next year by the -- when the [ INR 1,000 crores ], we are targeting 8% to 10%. A lot of things have been happening in e-commerce. So 6%, 7% out of this 20% from the same-store sales growth and balance 13%, 14% would be a mix of store expansion as well as e-commerce.

The next question is from the line of Anand Mundra from Soar Wealth.

Congrats on good results.

Thank you.

Sir, I wanted to check what is the impact of the new labor code on the P&L, sir?

So just another participant been asked. So in new Labor Code, we have already been compliant with earlier one. Our basics was always been 50%. There is some correction in a few cases were there, which has been taken care of. Our gratuity is accordingly that. So all the compliances are mostly in place. If there is any gap, my auditor is also in contact with us, we will take care of that. However, largely 99%, all the compliances has been done. We are already in line with that.

Okay. So there is no onetime expense because of it? That we're already compliant of?

No, no. That's [indiscernible]. Yes.

Okay. Sir, second question is what is the profitability of family store versus our traditional men's store? What is the profitability difference sir?

Anand G, the EBITDA is 2% higher in the family stores than the men's stores. So we have a better profitability in the family stores than the only men's stores because the rental per square feet comes down in the family stores and the sales vis-a-vis doesn't come down that much. So profitability is higher in family stores.

Okay. That is good to know, sir. So that -- in that case, sir, are we opening more family stores incremental as compared to traditional stores? Or how do you plan this?

So we want to open more family stores, but sometimes it depend upon the availability also because we don't want to let go of a good property if it is of a smaller size. So we many times open the only men's or men's, ladies store also. But if there is a right opportunity and the good opportunity, definitely, we hope for a family stores. And in the future, also, our focus would be more on the bigger stores only.

Okay. Sir, in one of the slides, you mentioned that 50% is repeat customer. So what was this number, say, 3, 4 years back, sir?

Sir, I noticed our data as well. The year of COVID, I remember, '21 FY, my repeat was 44%. And every year, we are noticing 2%. And so it started in 4 years back, 44%. And approximately, it is operating as of now, 50% to 52%. So very finely balanced, new customer is coming approximately a couple of percent maybe [Foreign Language] But largely, the fine balance will maintain of 50-50.

Understood, sir. Sir, one last question on online sales. So what is the process? We sell it to all the e-commerce website, and they can return back to us if they are not able to sell or it's on...

Yes, because inventory -- all the inventory is there with us. We have our own warehouses and all the inventory is made like through our own WMS software. And so we don't send the inventory to the marketplaces. It's with us only.

Okay. So whenever there is an order on the website, the bill will be generated from your end?

Yes, yes. The dispatch is done through our own warehouses, and we are also operating through omnichannel. So the dispatch is also done through our stores.

Okay. And what is the return, sir, in online sales, sir?

Well, the industry standard is something around 30%. So we also have a return percentage of around 32%, 33%, and we are trying our best to just get it down around that 30% mark.

Okay. And sir, with respect to our pricing in online as compared to offline, is it similar, sir? Or online, we are giving more discount or I don't know. Any thoughts on that, sir?

No, no. The pricing is very much similar, and we also try to maintain the parity between the discounts. It's just that sometimes the portals give the discount from their own pockets whenever there's a sale or during some sale period. Otherwise, from the brand level, the discounting is pretty much the same.

The next question is from the line of Ankit Shah from White Equity Investment Advisors.

Sir, we reported 18% volume and value growth. So as such, we've not reported any pricing growth. Can you explain this a little bit?

Sir, this is for the quarter or 9 months we are discussing?

Yes. This is for the quarter.

We reported 18% volume growth for this quarter and our revenue growth is also similar.

The 18% is the quantity growth? Total. Total quantity growth.

Yes, sir. That's the number.

So have we not taken any price hikes during the year? Or is this because of larger contribution from accessories or low pricing products? Can you kind of explain that?

So in this case -- in this quarter, if you say, we have 18% of the quantity growth, right, in totality. However, the price -- because yes, the pricing for the quarter itself, if I take exclusively, that's not on that much higher side.

Yes. The pricing is not that higher compared to the same quarter last year. So last year, same festive season, third quarter. And this year's festive season, third quarter, the pricing has not changed as per the reported number. So what would be the reason for it? So either you've taken a price hike, but accessories, et cetera, have brought down the price per piece? Or is there something else, if you can shed some light on that?

Yes, there is a change in the mix, obviously, because my ASP for the quarter, this is what we are talking about company as a whole, not L2L. Let's say, my ASP is almost same. Last year, it was approximately INR 1,492 and this year, INR 1,491 the change in the mix is there. Ankit, You are right.

Okay. so we are selling more of lower-priced products or slightly cheaper products are selling more?

It's hard to quantify because it's a mix, right? So it's a -- mix has always been there. The GST changes are also there, that is also impacting a little bit of because October and November, we completely passed on to the customer because old inventory was there, which we are selling. So mostly volume growth, that is also very important, but the volume growth is totally there. And pricing growth is almost visible in terms of ASP. Last year, my ASP was INR 1,339 and this year, my ASP was INR 1,349. So only marginal difference. Very important point, we have increased very good in terms of basket size.

So even the order value has broadly remained the same. Okay. They have improved slightly, yes. You're right.

We say order value because market prices increased, so my order value from the ticket size has increased from INR 4,500 to INR 4,900. So it's a positive price. [indiscernible] INR 4,900 price increase is there.

Yes, yes. I agree with you. Yes, that's right. Sir, just wanted some clarification. When we are reporting this volume, does this volume includes the accessories piece, right?

Yes. That is accessories and apparel. Accessories is also. All the company as a whole number is there. It includes accessories, ladies, everything, all the categories.

Okay. Okay. So one question I had was on the branding side. So we've done very well in terms of efficient retailing, even in a early entry in some Tier 2, Tier 3 cities, and we're doing well that side. But what are we doing for branding? I mean, if you take, for example, Peter England or Louis Philippe, garments et cetera, there, the focus on branding is quite there. So we can see those brands around. But our logos are not visible in terms of advertising, et cetera. So can you share your thoughts around this in terms of your plans for the medium term for the company from 3- to 5-year perspective? Is there any thinking on this side?

So our branding goes both in the traditional way and the digital marketing. So we are doing both kind of ads. So for the new stores, we are doing aggressive advertisement campaigns and for the old stores, we are doing majorly SMS campaigns. But our main strength lies in the location of the store because location of the store is such a good location that we don't need much marketing support. The segment size is big, the store facade is good. But yes, when it comes to the future, we're planning to go for some aggressive advertisement campaign like brand ambassador kind of thing. But there's no plan in the short term. Maybe after a year or 2, we go with that kind of branding.

The next question is from the line of [ Tanmay Roy ], an individual investor.

Actually, most of my questions has been answered. I just wanted to check like how you are seeing that next Q1 shaping up? Because remember last Q1, it was like completely washed out and we got a negative SSG. So how this quarter is shaping up? Do you think we'll be able to maintain that 5%, 6% of the same-store sales growth?

So this we are discussing Q1 FY '27, right?

Yes, yes.

So it looks positive because last year also, we have a positive number in that. That's why '26 Q1 also, we had a positive number. Yes. The growth for my...

'26 Q1, it was minus 1.3%, I think, SSG.

No, Q1 of FY '26?

Yes.

No, it was -- Q1 FY '26 was -- it was very good, actually, 1.3%, Q1 FY '26.

No. [indiscernible] Just now I opened the PPT and it was saying like minus 1.20%, maybe you can...

Maybe last year, maybe FY '25, you are talking about FY '25. Q1 FY '25 was minus. So Q1 FY '26 was positive, and we are expecting better Q1 FY '27 as well. It would be...

Okay. Q4 and Q1 are the best quarters for us, right? So...

In terms of -- yes, Q3 in terms of EBITDA margin and sales as well. And Q1 is also good. Q2 is slightly pressure side. That's all the quarter are good.

Okay. So -- and as per the long-term goal, we are looking at 20% growth like which is current...

20% growth. 20%-odd something.

which is currently 800-something, so maybe around INR 160 crores extra for the next year, I mean, '27.

Yes, INR 1,000 crores is on the card, definitely. 20-plus-percent...

With the margin of -- PAT of margin of how much you are expecting?

We are expecting a PAT margin because of GST rationalization and everything, plus 12%, maybe 13%, we'll look at it. But whatever we are selling, it is definitely going to improve a couple of percentage.

The next question is from the line of [ Arpan Rathore ] from Insight Advisory.

Congratulations on a great set of numbers. I have a couple of questions. Sir, my first question is how do we track fashion. Can you tell us more about how the changes in merchandise, which we do?

So we have been majorly doing the basic kind of clothing. But yes, we are introducing some fashionable garments also for the younger generation. So this year into the testing phase. So as we get the response, we will increase the share of the fashionable garments in the total collection.

Okay. So we expect this to be more prominent from Q2 onwards or Q2 FY '27?

Yes. After Q2 FY '27 only, we will be -- we may be increasing. But as we haven't like tested the waters completely, so let the outcome -- let us to conclude about it, then only we will be able to give the clear picture.

Sure. Sir, this is more of a qualitative question. You see the competition is not doing great. And we have been consistently doing a good set of numbers. Just any secret sauce which we should know, the numbers have been really great when I compare other companies in the fashion segment. Obviously, I understand there is no direct competition. But otherwise, we are doing good, better than all of them so far. Any secret recipe or secret sauce which you would want to tell?

Secret sauce, one should always be kept secret. It should not be revealed.

Sure, continue doing that. My other question is now that we -- since we have been doing great in terms of numbers and profitability, obviously, we are generating a good amount of free cash flow. The company has been consistent in paying dividend. But can we look at incremental dividend in terms of percentage? Or secondly, considering that now that we have the recipe, why can't we accelerate our store expansion and rather than 20% growth, why do we look at 30% growth or there about?

So store expansion you never -- store expansion never been constrained due to the availability of the capital of the funds. So we have been doing expansion to the best of our opportunities coming in the retail sector. So -- but yes, because we're increasing the size of the stores, the expansion can be a little faster.

So if you see that coming back to this question, we have increased continuously our retail area. Numbers may be tricky, but now opening the bigger stores. So in last 1 year, December to December, if you compare again, 1.44 lakh square feet of area has been added. Now we are opening the bigger stores. Plus earlier also, I said there are 10% approximately renewals are due because we have 600-plus stores now. So we are opening more, but at the net side, it took some time lesser. However, the square feet is [indiscernible].

Sure. And any -- so India has signed a couple of trade deals. The European trade is more relevant considering that it opens up the textile and all opportunities. So any thoughts there though there, do we -- we do our own branded stuff only. Any thoughts there going to Europe once it opens up?

So in single brand, there is already 100% FDI allowed in India. So I don't there will be much competition coming. But if it will be coming, yes, we are very much prepared to tackle it. And with the kind of marketing putting we have, like we have 650 stores, 300 cities. So it will not be easy for any new brand to compete us at all the places and at all the locations.

Sir, my question was reversed. Are we looking at an export opportunity?

We are doing in Nepal, in the market established, we are looking at it. Let's say the better opportunity comes because master franchisee can only be given so that inventory risk can be eliminated. So -- but not immediately, you'll be able to see later on. So very focused areas we have. But yes, that is open.

Great, sir. Once again, congratulations on a very good set of numbers. All the best for future quarters.

Thank you so much, sir. Thank you.

The next question is from the line of Anand Mundra from Soar Wealth.

Sir, I wanted to understand about our gross margin. What is the reason for the improvement in this quarter, sir?

So same thing, Anand G. Whenever in quarter 1, you see the margin...

I'm comparing, sir, Q3 to Q3, sir. Last year Q3, our COGS was 39%. This year, it is 36.9%, so 2.4% improvement.

2% improvement is there. So yes, some correction in pricing as well, plus as you can see a little bit involvement is there. It's a mix of those. Some correction of pricing is also there.

Okay. And sir, one suggestion, if I -- on Slide 12, we have given COGS. And when we are giving gross margin or COGS in Slide number, Slide number, sir, 33, they are not matching because over here, raw material expenses are only taken. Over there, something else is also clubbed into COGS. So if I want to compare FY '25 numbers with YTD FY '26, I can't. Correct?

I'll check it and come back to you on this. I'll check it, come back. Maybe some clerical error would have been there. I'll check it and come back to you on this.

Okay. And one last question on this. What is your gross margin guidance for, say, this year, sir, or including -- it's similar to last year or will be slightly improvement, sir?

A couple of -- we will be able to see some improvement, maybe 1%, but some improvement would have been there.

[Operator Instructions] The next question is from the line of Hitaindra Pradhan from Maximal Capital.

So my first question is on a few data points. You Made a few data points. So what was your rental cost for the 9 months?

Total rental cost for the 9 months, right?

Yes, yes.

Sir, this is approximately -- I'll just give you the exact figure, might be around INR 74 crores.

INR 74 crores, yes. Okay. And the ESOP cost?

Which one?

Any ESOP cost that is part of the P&L adjustment?

No ESOP cost.

Okay. And this would be, sir, for the full year, it would be -- what would be the rental cost?

Rental cost for the full year would be approximately INR 95 crores -- approximately INR 95 crores to INR 100 crores. Last year, it was, INR 83 crores. This year, it would end up approximately INR 100 crores.

Understood, sir. And sir, I think in the beginning of the call, like you answered the -- regarding the mature store like the -- what was the space and the [ ASP ] was coming around 6%. And the space growth was somewhere around, I think, 20%, 22% or 25%, somewhere around that number. So sir, I just wanted to understand for our new stores which have been opened in last year. So how are they ramping up? And what is the expectation like what is the current sales per square feet on the new stores? And what is our expectations of them ramping up eventually? And what is the time line for them to come to the mature store level?

Earlier also, whenever we are opening the maturity period for the store, we are considering as 2 to 2.5 years and that is also over a payback period, 2 to 2.5 years. So as I just explained, my matured store, if it's [indiscernible] that has been grown from INR 743 to INR 790. However, my overall company per square feet is INR 746 as compared to INR 790. So you can say new store delivery is approximately INR 675 you can say. And over a period of time, when it has been matured, it is coming to the maturity level in 2 to 2.5 years.

Got it, sir. And sir, again, to reiterate previous participants point, most of the players have kind of struggled to post good numbers this quarter, citing the festive mix and the overall winter demand oriented issues. So sir, again, I just want to understand what kind of helped you achieve good overall SSG and overall numbers this quarter? I mean, was it due to your geographical mix, which is skewed towards North and West or your product positioning? If you can just give a little bit more color on that?

So we have ASP of like INR 1,050 and most of the brands are either above this ASP or below this ASP. Very few brands are operating in this kind of ASP. So we have that competition. We have very good efficiency in the operations and company long-term fundamentals have kept very strong. So all these things over a period of time have made up these numbers. So it's not a -- just a functioning of 1 quarter or 2 quarters. It's a long-term vision and the long-term [indiscernible].

No, sir, that makes sense. Just wanted to see if you see any kind of demand softening in any of your -- like geographically or any Tier 1, Tier 2 mix. By the way, you are present in mostly in Tier 2, Tier 3 cities? Or what is our mix, if you can guide us?

So our mix is the 20% stores are in Tier 1, 40% in Tier 2 and 40% in Tier 3 towns. And demand has been good in all the Tier 1, 2, 3 towns. So there is no particular category which is delivering more and other category delivering less. So we are not seeing any demand slowdown necessarily, witnessing slowdown. Every region is contributing equally.

Got it, sir. And in your adjustment, sir, like again, previous participant pointed -- asked, I just want to again push you on that. So sir, this is -- this business is about finding the trains or catching the trains and keeping very fresh inventory in the shops. And also sir, what has been your strategy around that? I mean, do you do it -- do you use any kind of tech platforms? Or do you [indiscernible] your strategy and how do you achieve that? How do you execute on that to have fresh inventory, fresh trends in your stores?

So trend forecasting has been done with the research, both online and offline research. So we have a team of designers, merchandiser who do this activity every season. So trends have been done, forecasting, and we believe that the more we refresh our inventory faster, the better will be the sales. So we have a vision to be that more than 1 year inventory should be at the fresh stores. So we are trying to bring down the aging inventory in the stores. So that's why the results are getting better day by day because we are moving towards the better rotation of the inventory at the stores.

Yes. Sir, what is your internal target to churn out the inventory or like if you suppose the inventory doesn't get sold off. So how soon you basically churn them out and replace with new inventory, new kind of close and all? What is your internal metrics for that?

So any cloth which is getting 1 year old, you move it to the FOs and the online space because online space is also post the clearing, the leftover inventory.

But you keep the clothes for 1 year in your stores. You don't want it [ sitting ] within a quarter or 2 quarters like that.

1 year.

1 year, We are keeping it.

Okay. Okay, sir. And final question is, what was your -- like I didn't get the part where you mentioned the working capital and the inventory days. Working capital days was 100 to 120 days, if I caught that right. What was the inventory days this year, last year?

Inventory FG, finished goods inventory days target is last year, 120, we are trying to came it down, and you will be able to see some lesser number. Working capital, that is net of creditors, that would be approximately 100 to 105 days. So working capital, 100 to 105 days and inventory days is in between 110 to 120 days.

And what is your target, sir? Or do you want to [indiscernible].

So this is the target because considering our MBQs and my shelf requirement, my ideal number is 120 days. 4, 5 days, we may came it down, but there is no drastic change you'll be able to see because I have to keep 5 piece per square feet in my shelf and back end, 2 piece to 7 piece is the -- my requirement. And considering it's the cost, INR 3,000 per square feet is the cost. So very simple. If you take it to 9 lakh today square feet of the space, INR 270,000. So that is INR 270 crores. That's inventory. So that would be there, 120 days.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments.

To conclude, 9 months FY '26 has demonstrated our commitment towards annual targets for the FY '26. Our results reflect the enduring strength of the Cantabil brand, the disciplined execution of our teams and the growing appeal of our products among consumers across India. The first 9 months of FY '26 have been encouraging, marked by robust financial performance. As we enter the final quarter, we remain focused on delivering long-term value to our shareholders and with a resilient business model and healthy balance sheet, we remain confident in our ability to sustain our growth trajectory. We thank you all for your time today and for your continued trust and support in Cantabil Retail India Limited. We look forward to engaging with you in the upcoming quarters. We hope we have been able to answer your queries. Please feel free to reach out to our CFO or IR team for any clarifications or feedbacks. Thank you all.

Thank you, sir. On behalf of Cantabil Retail India Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.

Thank you so much, sir. Thank you everyone.