Cantabil Retail jumps 4% after BoFA Securities Europe SA picks up 2.87% stake

Cantabil is targeting a revenue of Rs 1,000 crore and a net profit of Rs 125 crore by FY26

Shares of Cantabil Retail zoomed nearly 5 percent early on December 11 after BoFA Securities Europe SA picked up a 2.87 percent stake in the company. Bulk deal data showed that 4.67 lakh shares were picked up at an average price of Rs 263 apiece.

At 10:05am, Cantabil shares were trading 4.7 percent higher at Rs 276 on the National Stock Exchange (NSE). So far this year, the stock has rallied over 14 percent, in line with the benchmark Nifty 50, which has surged similarly during this period.

Cantabil Retail designs, manufactures and retails apparel and accessories under the Cantabil brand. Its offerings include menswear, womenswear, kidswear, and accessories and target the mid-premium segment. The company focuses on Tier II and III towns where other brands have a limited presence.

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Over the last five years, the company's revenue and EBITDA has grown by 23 percent and 50 percent, driven by strong store additions. It aims to open 70–80 stores annually and reach 700 stores and Rs 1,000 crore in revenue by FY26.

In the September 2023 quarter, there was a notable increase in net sales for the company, reaching Rs 135.11 crore, reflecting a growth of 16.48 percent over last year, whereas the net sales were Rs 116 crore. Its net profit in Q2 FY23 stood at Rs 7.50 crore, indicating a decline of 19.2 percent on-year.

The company is targeting a revenue of Rs 1,000 crore and a net profit of Rs 125 crore by FY26 and is confident of maintaining operating margin at 30 percent.

In an October 2023 report, Nuvama Institutional Equities stated that Cantabil Retail is well placed to benefit from a robust demand, aggressive store expansion, and category extension in the second half of FY24.

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"If Cantabil Retail can demonstrate steady revenue growth and maintain margin and return ratios, the stock is a strong contender for a valuation re-rating, the brokerage said.

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