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Strong Listing | Campus Activewear debuts with 23% premium at Rs 360

Promoted by Hari Krishna Agrawal in 2006, Campus Activewear is the leading player in the organized sports and athleisure footwear market in India with a 17 percent market share.

May 09, 2022 / 10:00 AM IST
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Lifestyle-oriented sports and athleisure footwear company Campus Activewear started off first day trade with a 23.29 percent premium on May 9, which was on expected lines given the robust IPO subscription and strong position in economy and mid segment with sound management.

The stock opened at Rs 355 on the BSE against issue price of Rs 292, while the opening tick on the National Stock Exchange was Rs 360.

The public issue had received healthy subscription of 51.75 times during April 26-28 with support from investors of all categories. Qualified institutional investors were at the fore by putting in bids 152 times the allotted quota, while non-institutional investors bid 22.25 times the reserved portion. The portion set aside for retail investors was subscribed 7.68 times and employees 2.11 times.

The leading footwear company has mopped up Rs 1,400 crore through its public issue. It was an offer for sale, hence, the company did not receive any money from the public issue. The selling shareholders have received IPO funds.

Promoted by Hari Krishna Agrawal in 2006, Campus Activewear is the leading player in the organized sports and athleisure footwear market in India with a 17 percent market share. Campus is one of the few domestic brands in a category which is primarily dominated by international brands.

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It has one of the widest product portfolio, targeting diverse customer segments through pan-India presence (covers >85 percent of addressable market) and robust omni-channel platform.

Most of analysts had recommended subscribe rating for Campus public issue citing robust financials, and presence in niche sports and athleisure segment with pan-India omni-channel presence.

"Campus with leading market share in India's branded sports and athleisure footwear, is well placed to capture the highly underpenetrated and fast growing footwear segment in India. On 9MFY22 annualised enterprise value/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," Motilal Oswal had said.

India's sports and athleisure footwear market is expected to grow at 25 percent CAGR over FY21-25E, with share of branded products expected to rise to 60 percent versus 56 percent as of FY21.

"Campus plans to capture this growth with enhanced focus on women/kids segment (currently ~15 percent of FY21 revenue); deepening presence in Western/Southern markets (24.5 percent revenue share); sustained focus on premiumization and extension into casual wear," said Motilal Oswal.

Campus business which got impacted by Covid-19 in FY21 has recovered in 9MFY22 with revenue, EBITDA and profit surpassing FY20 levels. It clocked a whopping 403.4 percent year-on-year growth in consolidated profit at Rs 84.80 crore for nine months period ended December 2021, on a revenue of Rs 841.8 crore that increased by 93 percent in the same period.

However, in FY21, profit had fallen 57 percent to Rs 26.86 crore and revenue declined 2.8 percent to Rs 711.3 crore compared to previous year impacted by Covid-led lockdowns.

"We like the single category focus of Campus Activewear and aggressive market penetration. Given its strong position in economy & mid segment, sound management (mix of promoter and professional) and with major capex already incurred and capitalized, Campus to witness a strong growth and improve its return ratios going forward," Asian Markets Securities had said.

"Though Campus priced IPO aggressively (50x PE on FY24E earnings on a higher price band) which leaves little for public investor, we still recommend ‘subscribe’ to its initial public issue from medium-long term view as we consider it as long term structural play in growing sports & activewear market," the brokerage added. "We assign target price of Rs 320 & initiate coverage on Campus."

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first published: May 9, 2022 10:00 am