Campus Activewear is a lifestyle-oriented sports and athleisure Footwear Company that offers a diverse product portfolio across styles, colour palettes, price points and an attractive product value proposition
Largest sports and athleisure (S&A) footwear brand in India
Campus Activewear (Campus) is the largest S&A footwear brand in India, both in terms of value/volume in FY21 with market share of 17%. It has one of the widest product portfolio, targeting diverse customer segments through pan-India presence (covers >85% of addressable market) and robust omni-channel platform.
Sustained focus on premiumization
Campus has increased its focus on metro and Tier 1 cities with 22% of revenue in H1FY22 (vs. 17% in FY19). Further contribution of D2C channel (direct to consumer) has risen sharply to 39% (vs. 6% in FY19). These strategies have helped the company to gradually increase premium products share to 37% (H1FY22) from 31% in FY19 and has resulted in 7.6% CAGR increase in aggregate ASP (average selling price) over FY19-H1FY22.
Further diversification to capture growing market
India's S&A footwear market is expected to grow at 25% CAGR over FY21-25E, with share of branded products expected to rise to 60% vs 56% as of FY21. Campus plans to capture this growth with enhanced focus on women/kids segment (currently ~15% of FY21 revenue); deepening presence in Western/Southern markets (24.5% revenue share); sustained focus on premiumization and extension into casual wear.
Campus business which got impacted by Covid-19 in FY21 has recovered in 9MFY22 with revenue/EBITDA/PAT surpassing FY20 levels. EBITDA margins expanded to 19.4% in 9MFY22 and is further expected to improve with rising D2C share and premiumization. Robust growth in 9MFY22 would result in RoE/RoCE expansion to 30%/22% in FY22 annualized basis. Working capital days improved to 67 days in FY21 from 123 days in FY19 resulting in improved cash flows.
INR14bn IPO consists of entirely OFS (by promoters and investors), which would result in promoter stake reducing to 74.1% from 78.2% pre-IPO. The market cap post listing would stand at INR89bn.
Valuation & View
Campus with leading market share in India's branded S&A footwear, is well placed to capture the highly underpenetrated and fast growing footwear segment in India. On 9MFY22 annualised EV/Sales basis Campus is valued at 8.1x and seems reasonable compared to ~10x for both Bata and Relaxo. Given Campus' presence in niche S&A segment with pan-India omni-channel presence, along with strong financials, we suggest investors to Subscribe to the IPO.
(Courtesy: Motilal Oswal financial Services)