 "Campus Activewear surges 18% on heavy volumes post March quarter results")
Campus Activewear share price: Shares of Campus Activewear (CAL) surged 18.28 per cent to Rs 295.95 on the BSE in Wednesday's intraday trade, amid heavy volumes, in an otherwise weak market after the company reported a healthy March quarter (Q4FY24) earnings.
The footwear company's profit after tax (PAT) jumped 42.6 per cent year-on-year to Rs 32.7 crore as against a PAT of Rs 23 crore in Q4FY23.
Revenue from operations, too, grew 4.6 per cent year-on-year (Y-o-Y) at Rs 363.9 crore in Q4FY24, owing to renewed focus on trade distribution. However, on a sequential basis, revenues dropped 22.9 per cent from Rs 472 crore due to seasonality effect.
Earnings before interest, tax, depreciation, and amortisation (Ebitda) rose 16.1 per cent Y-o-Y at Rs 66.4 crore, while margin improved 190bps Y-o-Y and 610bps sequentially to 18.3 per cent.
The decline in online-to-offline (O2O)/business-to-business (B2B) channels was offset by growth in the trade distribution (TD) channel and marketplace model. Reductions in factory overhead and lower ad spending resulted in 13 per cent/43 per cent Y-o-Y growth in Ebitda/PAT during the quarter.
"The ongoing weak environment, coupled with the churn in distributors and decline in O2O business partners, has hurt revenue growth. However, soft growth in the TD channel offset the O2O/B2B business declines. Elevated SG&A expense will be a headwind for Ebitda margin improvement," Motilal Oswal Financial Services said in a result update.
"Our channel checks depict 1) prolonged macro headwinds, particularly in the value segment, in the northern belt, as evident from the performances of all players, and 2) increased competitive intensity as other players are offering low average selling price (ASP) products and high channel commissions, which have led to distributor churn. Campus' premiumisation strategy, focusing on the Rs 1,000-2,000 ASP segment, could see headwinds in the current weak environment, where we see down-trading across discretionary categories," the brokerage firm said.
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It has reiterated a 'Buy' rating on the stock with a target price of Rs 295 per share.
Meanwhile, the management has refrained from giving outlook, but it believes the transition phase is largely done and a combination of factors (new launches, increased brand spends, renewed thrust on mid-economy segments, consolidation of distribution channel, tailwinds from BIS implementation over long term) should help revive volume growth. Premiumisation/ASP led growth will be lower as the company has pivoted to the mid/economy segment.
"On the balance sheet side, reduction in debt and receivables is a positive. Volume delivery has lagged expectation; pace of recovery in the same & sustainability of margins will be a key monitorable for the stock in the near term, in our view," analysts at JM Financial Institutional Securities said. The brokerage firm maintained its 'Buy' rating on the stock with a target price of Rs 285 per share.
Campus Activewear is amongst a few established national brands enjoying around 17 per cent market share in the Indian branded sports and athleisure footwear industry which is predominated by international brands.
Campus Activewear owns and operates five manufacturing facilities across India with an installed annual capacity for assembly of 35.8 million pairs as on March 31, 2024. The company has over 300 distributors directly servicing and fulfilling orders of over 23,000 geographically mapped retailers in more than 650 cities at a pan-India level as on March 31, 2024.