CAMPUS - Campus Activewear Limited Share Price

During the earnings call, management provided an optimistic outlook for Campus Activewear, emphasizing strong performance and growth prospects despite a challenging environment. For FY25, the company reported a 10% year-over-year revenue growth, reaching INR 1,593 crores. This growth was driven by increased volumes, expansion of distribution, and strong online sales. Management highlighted a significant increase in their sneaker portfolio, achieving 150% growth compared to FY24, which contributed positively to the overall performance.

Key forward-looking points mentioned include:

• Plans to maintain momentum in revenue growth by expanding their retail footprint. In FY25, 30 new stores were opened, bringing the total to 296 in India.
• The launch of over 250 new styles aimed at enhancing product offerings for men, women, and children, supporting family-oriented branding.
• Continued investments in marketing initiatives have strengthened brand awareness, particularly through impactful campaigns aimed at the Gen Z audience.
• The gross margin improved by 20 basis points to 52.3%, while EBITDA margin rose by 120 basis points to 16.1%, reflecting operational efficiencies and cost control measures.
• Management noted that the new Haridwar II facility, which commenced production in March 2025, will support future growth by enhancing manufacturing capacity.
• The company emphasized its focus on operational efficiency, with net working capital days improving from 92 in FY24 to 71 in FY25.

Looking forward, management remains committed to delivering long-term value through innovation and a deep understanding of consumer needs. The expectation is to navigate near-term challenges while positioning the brand for sustainable growth in the subsequent years.

1. Gaurav Jogani: "With regards to the premiumization in your entire segments, we are seeing an ASP decline. Does this only reflect footwear contributions and does not include accessories which could dilute the ASP?"

   Sanjay Chhabra: "Yes, two factors are driving this ASP decline. The mix of open footwear increased, diluting the ASP. We also introduced accessories, like socks, which average around INR 140 ASP, impacting overall ASP."

2. Gaurav Jogani: "Regarding online volumes, has this increase been a conscious effort to drive distribution with more focus on that part of the business?"

   Nikhil Aggarwal: "We focus on all channels strategically. There's no specific effort to maintain online volume numbers"”it's based on demand. The increase is due to higher outright sales in the online business versus the marketplace."

3. Gaurav Jogani: "Regarding the Haridwar facility, will depreciation hit from next year and what is the expected amount?"

   Sanjay Chhabra: "Yes, depreciation will start hitting fully next year. This facility, a INR 21 crore investment, will be amortized over 15 years."

4. Ali Asgar Shakir: "Can you discuss current demand and competitive scenarios and the status of BIS inventory cleanup?"

   Nikhil Aggarwal: "We've made progress with BIS liquidations, but it's slower than expected, affecting margins minimally. Demand is positive in North, East, and West, while South and Central regions remain flat."

5. Ali Asgar Shakir: "What is your projection for sneaker growth moving forward?"

   Nikhil Aggarwal: "Sneaker volume contribution is currently at 8.5%, with 150% growth in FY25. We expect this to continue as our Haridwar facility ramps up production."

6. Umang Mehta: "What was the contribution of open footwear to revenues and volumes this year?"

   Sanjay Chhabra: "Open footwear mix rose from 14.2% to 15.2%, contributing positively to our business while ensuring double-digit momentum continues."

7. Umang Mehta: "Can you quantify the impact of BIS inventory on margins?"

   Sanjay Chhabra: "BIS inventory liquidation has impacted margins by 20 to 40 bps over the fiscal year, which will likely be similar next year."

8. Niraj Mansingka: "How do you foresee market evolution post-BIS inventory clean-up?"

   Nikhil Aggarwal: "Post-cleanup, organized players will benefit significantly, and our manufacturing capabilities position us well to capitalize on demand as the market expands."

9. Priyank Chheda: "With respect to your aggressive advertising spend, will this continue and how will it be funded?"

   Nikhil Aggarwal: "Our ad spends will be maintained around 8.4% of revenue, aimed at building brand equity. We don't see this changing significantly going forward."

10. Gaurav Jogani: "Why has interest expenses increased despite having no debt?"

    Sanjay Chhabra: "The rise in interest reflects the ROU assets from new leasehold premises, including EBOs and warehouses like the new facility in Haridwar."