Campus Activewear Ltd. (May Subscribe)

Campus Activewear is the largest sports and athleisure footwear brand in India in terms of value and volume in FY21. It introduced its brand ‘CAMPUS’ in 2005 and are lifestyle-oriented sports and athleisure footwear company that offers a diverse product portfolio for the entire family. It offers multiple choices across styles, color palettes, price points, and an attractive product value proposition.

Key Highlights

• The company’s business model places the consumer first. It analyzes, designs, develops, and delivers its products keeping the consumer at the forefront. Its core target market is the 14 to 35 age group, which represented 44% of the sports and athleisure footwear market in India as of FY20.
• Campus Activewear Limited has a pan-India trade distribution network, with over 400 distributors in 28 states and 625 cities. The company also has 18,200 retailers across India. The company owns and operates five manufacturing facilities across India with an installed annual capacity for assembly of 25.60 mn pairs as of September 30, 2021.
• It caters to consumer needs across different demographics and price ranges. It covers more than 85% of the total addressable market for sports and athleisure footwear in India as of FY21, which is the largest market coverage amongst key sports and athleisure footwear brands.
• The company’s ‘omnichannel experience’ involves a confluence of multiple retail channels covering physical locations and online channels to provide consumers with a seamless experience. Its consumers are able to visit any channel to experience its brand and products, make selections and comparisons, and purchase the product through their most preferred channel. The integration of its physical and online channels is integral to its ability to remain connected with consumers through all touchpoints in the consumers’ journey.
• Going forward, the company is planning to leverage its brand and leadership position to benefit from the growth in the Indian sports and athleisure market with a focus on women, children, and kids. The company intends to deepen and expand all the various elements of its omnichannel experience such as its trade distribution network, exclusive brand outlet presence and increase its online sales.
• Its existing trade distribution network covers most of North and East India. The company aims to expand its trade distribution network in India by increasing its distribution network in the states it currently operates and Deepening its presence in western and southern regions of India.

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Key Risks

• Seasonal business: The company experiences moderate fluctuations in its average selling price (ASP) during the year. Historically, revenues in the third and fourth quarters have exceeded those in the first and second quarters.
• Major revenue comes from North India

Valuation

Campus Activewear is enjoying a virtual monopoly in branded sports and athleisure footwear in India. Though the prima facie issue appears fully priced, it is worth considering for short to long-term rewards. At the upper end of the price band of Rs 292, the issue is priced at a PE of 78.5x based on annualized FY22 earnings on fully diluted equity. Investors May Subscribe from a medium to long-term perspective.

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