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Campus Activewear Ltd

| Q3 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤6th Feb 26

Summary : Campus Activewear delivered strong Q3 FY'26 results driven by premiumization, expanded distribution, new product categories like Athleisure, and effective marketing, despite a challenging demand environment.

Management Perspective positive : Management expressed being "thrilled to see" campaign resonance, "pleased to share" manufacturing stabilization, and having a "high degree of confidence" in future growth.

Concall Report Analysis & Insights

Business Overview

  1. Q3 FY'26 revenue surged 14.3% Y-o-Y to INR 589 crores.
  2. Profit after tax (PAT) grew 37% Y-o-Y to INR 63.7 crores.
  3. Average selling price (ASP) increased 5.2% Y-o-Y to INR 711.
  4. EBITDA margin improved 290 basis points to 19.5% in Q3 FY'26.
  5. Gross margins were 53.1% due to higher sneaker mix and operating revenues.

Future Growth Prospects

  1. Expanding design expertise into full-scale Athleisure apparel.
  2. Ventured into Athleisure apparel in January 2026, broadening market.
  3. Committed to making high-quality, design-forward footwear accessible.
  4. Exploring export opportunities as a low-cost producer.
  5. Focus on disciplined execution and customer-centric innovation for long-term value.

Management Insights

  1. "We continue to demonstrate strong performance driven by widening distribution and strengthening product mix."
  2. "Our Sneaker portfolio has doubled in volume, validating strong consumer adoption."
  3. "The 'You Go, Girl' campaign resonated strongly, improving women's category mix."
  4. "Our manufacturing ecosystem is compliant and strategically independent within BIS-regulated environment."
  5. "We have a high degree of confidence on the way forward as initiatives are materializing."

Signs of Skepticism

  1. Analyst questioned sustainability of growth trends given past volatility.
  2. Analyst inquired about the actual impact of GST price cuts on consumer prices.
  3. Analyst asked for specific contribution data from new categories (women, sneakers) to growth.
  4. Analyst noted that industry demand has not picked up as much as expected.

Risk Factors

  1. Forward-looking statements involve known and unknown risks and uncertainties.
  2. Industry demand has not picked up as much as anticipated.
  3. Business is dependent on seasonality, festivals, and marriage seasons.
  4. Quarterly gross margins can be volatile due to product mix and seasonality.

Good To Know

  1. Launched 'You Go, Girl' brand campaign featuring Kriti Sanon in Q3.
  2. Poanta Sahib facility for upper manufacturing is fully stabilized.
  3. Commenced commercial production of premium uppers at Pant Nagar in January 2026.
  4. Over 90% of raw materials sourced locally, all assembly in-house.
  5. Online business pivoted from outside-based to market-based model.

Key Drivers

  1. Strong sneaker portfolio growth.
  2. Women's category mix improved.
  3. Online channel growth accelerated.
  4. GST rationalization positively impacts performance.

Key Analyst Discussions

Market Trends & Consumer Behavior

  1. Robust demand during festive season accelerated performance.
  2. Trend of premiumization continues to play out positively.
  3. Demand has improved slightly post-GST cut but is still not as per industry expectations.
  4. New categories like sneakers and women's helped overcome market demand stagnation.

Financial Highlights

  1. Q2 and Q3 combined growth was around 15% at a blended level.
  2. ASP increase of 5% was driven by improved channel and product category mix.
  3. GST cut from 18% to 5% resulted in a 5%-6% MRP reduction at consumer level.
  4. Online platform business model adjustment had an approximate INR 10 Cr impact on topline.
  5. Ad spends were higher in Q3 due to TV and digital campaigns, aligning with seasonality.

Product Composition

  1. Sneaker portfolio volume nearly doubled, contributing to premiumization.
  2. Women's and kids' share in revenue mix improved from 18.7% to 22%.
  3. Higher sneaker mix and other operating revenues improved gross margins.
  4. Q3 sees higher premium mix, Q1 focuses more on open footwear.
  5. Sneakers' value proposition is largely fashion and look-and-feel driven.

Strategic Considerations

  1. Growth driven by widening distribution, product mix, and strong execution.
  2. State-specific strategies formulated for distribution channels.
  3. Athleisure apparel launched in 60 EBOs, brand.com, Myntra, and Amazon.
  4. EBO strategy focuses on profitability, correcting footprint before further expansion.
  5. Replenishment model uses DMS and digital apps for inventory management.
Campus Activewear Ltd (CAMPUS) Concall Report Analysis & Insights | Dhanarthi