The objective of the Offer is to achieve the benefits of listing the Equity Shares on Stock Exchanges.
Campus ActiveWear Ltd. was incorporated in 2008. The company operates in the segment of sports and athleisure footwear, which is highly under-penetrated – but is expected to be the fastest-growing segment. The company has a value proposition of putting its customer first. 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 Fiscal 2020. It analyses, designs, develops and delivers products keeping the consumer at the forefront and offers a wide range of styles, colours, sizes and functionality options for men, women, kids and children. By the end of 2021, it had 1,433 active styles of footwear for men, 241 active styles for and 485 active styles for children.
As of Fiscal 2021, the company covered more than 85% of the total addressable market for sports and athleisure footwear in India, which is the largest market coverage amongst key sports and athleisure footwear brands. It also managed to increase its market share from 15% in Fiscal 2020 to 17% in Fiscal 2021.
Campus owns and operates 5 manufacturing facilities across India with an installed annual capacity for assembly of 28.80 million pairs as of December 31, 2021. It has a vertically integrated manufacturing capability of producing uppers, shoe soles and assembly of shoes. This strategic blend of in-house and backward integration gives it design, quality and cost control and gives it additional time to market.
Campus ActiveWear sells its products through a mix of online platforms and offline stores and has a pan-India trade distribution network with over 425 distributors in 28 states and 664 cities. It harnesses consumer and channel insights via digitalization of the sales process, resulting in better demand forecasting and faster time to market.
Already well established in tier 2 and tier 3 cities, the company has now expanded its presence to metro and tier 1 cities, where its revenue contribution increased from 16.66% in Fiscal 2019 to 26.89% by the end of Dec 2021. The company launches its two collections of products each year in spring-summer and autumn-winter, allowing them to capture any demand upside and cater to positive sales of certain high-velocity styles. The company launches innovative concepts such as special drops, exclusive collaborations and channel partner exclusive merchandise. It sells footwear across segments such as entry-level (MRP at or below ₹1,049), semi-premium (MRP between ₹1,050 and ₹ 1,499) and premium (MRP at or above ₹ 1,500).
Here are key points that are likely to help the company increase its revenue:
In terms of valuations, the post-issue TTM P/E works out to 93.4x (at the upper end of the issue price band), which is high considering the company’s negative CAGR in profit after tax of close to 17% over FY19-21. The valuation is in line with its peers like Relaxo and Liberty Shoes but that won’t be an even comparison as their offerings are more diverse. Ideally, investors should wait for an opportune time to enter once the valuation turns reasonable.
Let us leave you with a few areas of concern:
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