CANTABIL RETAIL - A Value Pick By EquityAhead Research

NSE CODE: CANTABIL
BSE CODE: 533267
CMP: 40
52 WEEK HIGH/LOW: 135.00 / 39.30
MCAP: 65 Cr.

Investment Thesis

Business: Cantabil which started its journey in year 2000 is engaged in value retail play with diversified product basket. It has two brands, Cantabil and La Fanso. CRIL has a wide range of Denims, T-Shirts, Shorts, and Shirts & Capris in their stores. Recently, Company launched new products for Kids and ladies. Manufacturing and Branding are 2 Cores business of Cantabil.

Expansion:Â With a network of over 400 stores including 50% in north India, Company has presence mostly in north India and some part of west India. Company is working to make it as national brand which requires time and heavy investments in brand-building. As per management, Company is planning to add 200 more retail stores in next 2 years including few major cities. With wide array of retail network, CRIL has strong edge in the highly fragmented and competitive marketplace. CRIL also planning to roll-out its expansion plan in smaller cities in next couple of years.

Financial: Net revenue of the company increased by 88% to Rs 137.3 cr in the year ended FY09 as compared to Rs 73 cr in the year ended FY08. Net Profit of the company increased by 114% to Rs 6.2 cr in FY09 as compared to a net profit of Rs 2.9 cr in FY09. As per future earning, Company valuation is extremely cheap compare with its peers like Pantaloon. Company Total Asset stands @ 92.64 Cr. With BV @ 23.13. It’s trading @ 1.93. Debt has also decreased by big margin after its listing. The financial health for the company looks strong.

Shareholding Pattern & Management: At End of Dec, 2010. Promoters Holding stands @ 52.36. DIIs @ 11.67 and Others @ 35.97. FIIs who bought 7.78% stakes exited in last quarter. Company is managed by veteran promoter Mr. Vijay bansal who has 2 decade of experience in the domain of garment business.

View: At CMP of 40, Stock is trading @ very attractive valuation of less than 4 times for FY11 thanks to market deep correction and negative outlook on retail sector. It Seems most of the negative News has been priced in. The stock can easily double from here on just stable market. One can’t compare Its Financial with its peers due to obvious reasons. Company performance was quite good in last 2 years which is expected to be on line in future too. Few years back, if someone bought Pantaloon like RJ & SM that person would have made exceptional Long term gain. Is Cantabil can be next Pantaloon?? As of Now, Difficult to say, Atleast Financial doesn’t look like. But one can certainly BUY @ 40-35 for time-frame of 12-18 months for Target 60 with capital appreciation of 50%-60%.

Regards – EquityAhead Research !!

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