Cantabil margin drops 10.05 points as costs outpace revenue growth
Revenue rose 7.20% QoQ, but expenses grew 23.33%; management also reported negative same-store sales growth of 2.03% in Q2FY27.
Filed 13 Nov 2026, 15:40 IST · after market close · Cantabil Retail India Ltd (CANTABIL)
Key takeaways
- Standalone operating margin fell 10.05 percentage points QoQ to 23.16% as expenses grew 23.33%, faster than revenue at 7.20%.
- Standalone net profit declined 56.83% QoQ to Rs 7.05 cr despite a 33.19% fall in interest expense, as operating profit fell 25.23% and depreciation rose 7.30%.
- Other income contributed 40.31% of pre-tax profit, while operating margin remained 12.1 percentage points above the median for 335 Consumer Discretionary peers.
Price around the results
Revenue grew, but earnings fell sharply
Standalone revenue increased 7.20% QoQ, but operating profit fell 25.23%, leaving net profit down 56.83% to Rs 7.05 cr. The earnings decline came despite interest expense falling 33.19%, because higher operating costs and depreciation more than offset the revenue increase. The presentation reported same-store sales growth of -2.03% for Q2FY27.
Expense growth drove the 10.05-point margin contraction
Expenses grew 23.33% QoQ against 7.20% revenue growth, which reduced operating margin by 10.05 percentage points to 23.16%. Depreciation increased 7.30%, while the lower interest cost provided only a partial offset. Other income represented 40.31% of pre-tax profit, making reported profit quality weaker than operating profit alone suggests; the tax rate eased just 0.44 percentage points.
Store expansion continues despite weak same-store sales
The presentation said the company added 23 net stores in Q2FY27, taking the network to 690 stores. Management said it is targeting 725 stores, online sales of 8%-10% within the next two years and revenue of Rs 1,000 cr. Management also said it is increasing its focus on exclusive women's and kids' wear stores and improving store ambience and display.
Margin remains above the sector median
Cantabil's standalone operating margin of 23.16% was 12.1 percentage points above the 11.06% median for 335 Consumer Discretionary peers that had reported the quarter. The results were filed after market close on 13 Nov 2026, so there is no reported market reaction to assess here.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹192 cr | ₹179 cr | +7.20% |
| Other income | ₹4 cr | ₹3 cr | +22.03% |
| Expenses | ₹147 cr | ₹119 cr | +23.33% |
| Operating profit | ₹44 cr | ₹59 cr | -25.23% |
| Operating margin (%) | 23.16% | 33.21% | — |
| Interest | ₹9 cr | ₹14 cr | -33.19% |
| Depreciation | ₹30 cr | ₹28 cr | +7.30% |
| Profit before tax | ₹9 cr | ₹21 cr | -57.09% |
| Tax | ₹2 cr | ₹4 cr | -58.04% |
| Net profit | ₹7 cr | ₹16 cr | -56.83% |
| EPS (₹) | ₹0.84 | ₹1.95 | -56.92% |
Operating margin of 23.16% compares with a Consumer Discretionary sector median of 11.06% across 335 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company is targeting online sales of 8%-10% within the next two years.
- The company aims to increase its store network to 725 stores from 690.
- The company has set a revenue target of ₹1,000 crores.
Expansion
- The company added 23 net stores in Q2 FY27, taking its total store count to 690.
- The company operates a manufacturing facility with capacity to produce 18 lakh garments annually.
- The company says it can increase production within the available manufacturing space.
New initiatives
- The company is increasing its focus on exclusive women's and kids' wear stores.
- The company plans to improve store ambience and display.
Problems & risks
- Same-store sales growth was negative 2.03% in Q2 FY27.
- A Myntra billing-system change affected absolute online revenue growth numbers in FY26.
What to watch
- Whether standalone operating margin holds above 23.16% after the 10.05-percentage-point QoQ decline.
- Whether same-store sales growth improves from -2.03%.
- Progress toward management's stated 725-store network target from 690 stores and its 8%-10% online-sales target.