Campus Activewear
Issue Open
Price Band
Issue Size
Credit of Shares to Demat
Issue Close
Bid Lot
Listing Exchange
Cut off time for UPI Mandate Confirmation
Issue Type
Minimum Order Quantity
Allotment Details
Face Value
Listing On
Refunds
Issue
Details
Dates: April 26,
2022, to April 28, 2022
Price Band: Rs. 278
to Rs. 292 per share
Minimum Lot: 51
shares
Minimum
Application Amount: Rs. 14,178 to Rs. 14,892
Total Issue
Size: Up to Rs. 1400 crores (Offer for Sale Rs. 1400 crores)
Objects of
the offer
The objects of the offer are to achieve the benefits of listing the equity shares on the stock exchanges, enhance the company’s brand name and provide liquidity to the existing shareholders.
Pre & Post Shareholding
Corporate Profile & Business
overview
On September 24, 2008, Campus Activewear Limited was formed.
In terms of value and volume, the company is India's leading sports and
athleisure footwear brand in Fiscal 2021. The company provides a diverse range
of designs, colour palettes, pricing ranges, and a compelling product value
proposition.
Campus has been the fastest rising scaled sports and
athleisure footwear brand in India from Fiscal 2019 to 2021 (scaled brands are
those with more than 2 billion in revenue). The company had a 15% market
share in India's branded sports and athleisure footwear business by value in
Fiscal 2020, and this climbed to over 17% in Fiscal 2021. Campus is one of the
few well-established Indian companies in an industry dominated by multinational
names.
As of Fiscal 2021, Campus accounts for more than 85% of
the entire addressable market for sports and athleisure footwear in India. The
company has a large pan-India presence, which helped them sell 1.30 crore and
1.37 crore pairs in the fiscal years 2021 and 9MFY22, respectively.
As of December 31, 2021, their product catalog included
1,433 active styles for men, 241 active styles for women, and 485 active styles
for youngsters and children. The firm owned and operated 5 production
facilities in India, with an installed annual capacity for assembly of 28.80
million pairs. The company has planned to ramp up its capacity for assembly of up to 35.50 million pairs on an annual basis.
Financials
Particular
(Rs. Crs) |
9MFY22 |
FY21 |
FY20 |
FY19 |
Revenue from Ops |
841.84 |
711.28 |
732.04 |
594.87 |
EBITDA |
165.22 |
119.81 |
138.33 |
101.86 |
EBITDA Margin (%) |
19.63% |
16.84% |
18.90% |
17.12% |
Profit After Tax |
84.80 |
26.86 |
62.37 |
38.60 |
PAT Margin (%) |
10.07% |
3.78% |
8.52% |
6.49% |
RoE (%) |
23.72% |
8.99% |
25.64% |
21.32% |
Cash Flow from Ops |
(0.3) |
124.3 |
99.5 |
54.4 |
The company had witnessed a decline in revenue from
operations in FY21 owing to setback suffered from Covid-19 but bounced back in
9MFY22. EBITDA Margin has remained stable in the range of 16-20%, despite the
headwinds faced due to the pandemic. PAT margin has fluctuated between 3-10%,
largely on account of the pandemic, however albeit the affected year, it is on
an increasing trend. ROE was excellent throughout the years in the ranger of
21-26% except FY21. Cash Flow from Operations remained negative for 9MFY22 which
is a bit of a concern inspite of record high revenue from operations. Debt –
equity ratio trend has improved from 0.87x in Fiscal 2019 to 0.43x in 9MFY22.
Strengths
High growth
niche business: As Sports and athleisure footwear is underpenetrated, as
indicated by the low footwear penetration per capita in developed nations and
is predicted to be the fastest-growing market, with a CAGR of 25% between
Fiscals 2021 and 2025, Campus Footwear will be the biggest beneficiary as it is
solely in this segment.
Price: Campus offers footwear in three price ranges: entry-level (MRP under
Rs 1,049), semi-premium (MRP between Rs 1,050 and Rs 1,499), and premium (MRP
beyond Rs 1,500). Premium product revenue contribution to total sales has also
risen over time, from 31.30% in Fiscal 2019 to 40.59% in the nine months ending
December 31, 2021. Their ASP per pair at this time was 481, 509, 546, 533, and
615, respectively.
Geographical
& Demographical Presence: Campus has a presence
all throughout India, with a very strong presence in tier 2 and tier 3 cities. They've
extended and raised their income contribution from metro and tier 1 cities to
their sale of goods over the years, from 16.66% in Fiscal 2019 to 26.89% in the
nine months ending December 31, 2021. For men, women, youth, and children,
Campus provides a broad choice of design, colour, size, and practicality
options. Customer Segment revenue includes 69% from men, 9% from women &
22% from kids.
Omnichannel presence: To give consumers with a seamless experience,
the company's 'omni-channel experience' combines several retail channels,
including physical stores and internet platforms. With 425+ distributors in 664
cities and 19,200 retail touchpoints, the firm is a force to be reckoned with.
Since FY19, the firm has sold over 7 million pairs through Flipkart, Myntra,
and Nykaa's online platforms. As of December 31, 2021, the split of items sold
through online and offline sales was 32.37% and 67.63%, respectively, compared
to 2.87% and 97.13% in Fiscal 2019. This increase in online sales demonstrates
the company's commitment to digital innovation.
Focus on technology: Campus has deployed enterprise resource
planning (ERP), distribution management system (DMS), field force management,
point-of-sale (PoS), e-commerce order management (OMS), and a retailers'
engagement application, among other digitization projects. These technologies
will allow them to acquire data and offer important inputs into the production
and sales processes. The company will use the data generated by these systems
to analyse consumer trends, inventory, and sales positions, as well as plan
their marketing and sales activities.
Risks
Volatile Fluctuations in Financial Metrics: In the past, sales, and financial
indicators such as PAT margin, EBITDA margin, and gross margin have seen
significant fluctuations. Also, Cash Flow from Operations has been negative in
9MFY22. Also, Further Covid waves can dent the operating margins &
profitability in the future as seen in FY21.
Heavy reliance on trade distribution and D2C channels: For the majority of its sales, Campus
relies on trade distribution and direct-to-consumer channels; any delays to
these channels' operations impair its capacity to extend and grow this channel
High Competition: In India, the sports and athleisure footwear business are
fiercely competitive. The company primarily competes against multinational
sportswear brands, local branded manufacturers, and unorganized sector
producers. To compete effectively, company must: I maintain their brands' image
and reputation for innovation and high quality; (ii) be flexible and innovative
in responding to rapidly changing market demands based on brand image, style,
performance, and quality; and (iii) provide consumers with a wide range of
high-quality products at competitive prices.
Seasonality in Revenue: Company’s average selling price ("ASP")
fluctuates moderately throughout the year. Revenues in the third and fourth
quarters have historically outperformed those in the first and second quarters.
The mix of products sold fluctuates greatly from season to season due to, among
other things, seasonal fluctuations. During the warm and rainy seasons, clients
tend to buy more open-toed shoes than closed-toed shoes. Sandals and slippers
are examples of open footwear. Shoes and boots fall under the category of
closed footwear.
Valuations & Conclusion
Company |
RONW |
NAV/Share |
EPS |
Campus Activewear Limited |
8.60% |
10.29 |
3.76 |
Bata India |
-5.08% |
136.79 |
-6.95 |
Relaxo Footwear |
18.54% |
63.29 |
11.74 |
While Bata and Relaxo are focussed into multiple segments,
Campus Activewear solely focuses on the fast-growing sports & athleisure
that is expected to grow at a 25% CAGR till FY25. Given the company’s strong
brand image and recall, omnichannel presence and broad range of products, it
has a strong runway for growth in this underpenetrated segment. Even though the
company’s operations were severely impacted by Covid, the company managed to
maintain healthy return ratios and EBITDA margins, which reflects the company’s
operation efficiency.
Now talking about the risks, the company can face raw
material cost pressure as prices of its key raw material that is Polyvinyl
Chloride (PVC) and Ethylene Vinyl Acetate (EVA) has risen dramatically in past
12 months. Further, even though the company maintains leadership position in
India, it faces significant competition from international brands. Lastly, in
terms of valuation, the post-issue P/E is 77.66x based on Annualized Earnings
of FY22 which indicates that the valuations are quite steep. Considering these
factors and that the overall market sentiment is quite volatile at this time,
only investors with healthy risk appetite can ‘Subscribe for Long Term’.