Consumer Industry Trends And Its Impact On Cantabil Retail India Limited (NSE:CANTABIL)

Cantabil Retail India Limited (NSEI:CANTABIL), a IN₨2.49B small-cap, operates in the consumer discretionary industry, whose performance is predominantly driven by consumer confidence, which is linked to employment and wage rates. Purchasing power is also a factor of interest rates and lending standards by financial institutions. These macro elements determine how fast, and how often, consumers buy luxury goods. The sector is also undergoing significant structural shifts resulting from changes in consumer preference, as well as the continued rise in online competition. Consumer discretionary analysts are forecasting for the entire industry, a positive double-digit growth of 16.36% in the upcoming year . Should your portfolio be overweight in the luxury goods sector at the moment? Below, I will examine the sector growth prospects, as well as evaluate whether Cantabil Retail India is lagging or leading its competitors in the industry. See our latest analysis for Cantabil Retail India

What’s the catalyst for Cantabil Retail India's sector growth?

E-retailing is expected to remain the fastest growing sales channel, shifting the retail landscape. Significant number of retail store closures and bankruptcies were an indication of both changing consumer preferences and rising online competition. In the past year, the industry delivered growth of 2.46%, though still underperforming the wider Indian stock market. Cantabil Retail India leads the pack with its impressive earnings growth of 14.55% over the past year. However, analysts are expecting its future earnings growth to be more in-line with the industry average, hovering at 16.27% over the next couple of years.

Is Cantabil Retail India and the sector relatively cheap?

The luxury goods sector's PE is currently hovering around 19.55x, below the broader Indian stock market PE of 25.97x. This illustrates a somewhat under-priced sector compared to the rest of the market. Though, the industry returned a similar 8.35% on equities compared to the market’s 9.56%. On the stock-level, Cantabil Retail India is trading at a higher PE ratio of 49.21x, making it more expensive than the average luxury goods stock. In terms of returns, Cantabil Retail India generated 5.92% in the past year, which is 2.43% below the luxury goods sector.

Next Steps:

Cantabil Retail India's future growth prospect aligns with that of the broader market, however its relative value seems to be above the rest of the industry. This could indicate the price is reflective of factors other than growth. If Cantabil Retail India has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other consumer discretionary companies. If you're looking for growth, it seems other industry peers are also delivering the same rate. However, before you make a decision on the stock, I suggest you look at Cantabil Retail India's fundamentals in order to build a holistic investment thesis.

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
• 2. Historical Track Record: What has CANTABIL's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cantabil Retail India? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.