Motilal Oswal's research report on Campus Activewear
Campus Activewear (Campus) posted soft revenue growth at 5% YoY (in line) as volume growth remained flat in 1QFY24. However, premiumization led to an improvement in ASP and moderating RM prices resulted in healthy gross margin (GM) improvement of 370bp. The improvement in GM cushioned the adverse impact on PAT, which was flat QoQ (10% beat). While demand is likely to remain weak in the near term, moderating RM prices may help in reviving demand and also improve margin. We model 31% PAT CAGR over FY23-25E led by gradual revenue recovery and margin improvement.
Outlook
Campus’ strong market position and a long runway for growth should result in a recovery by 2HFY24E once market recovers. Reiterate BUY with a TP of INR335 (premised on 51x P/E on FY25E EPS).
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