Campus activewear is the largest
sports and athleisure footwear brand in India in terms of value and volume in FY
2021.The company is primarily engaged in the manufacturing, distribution and
sales of sports and athleisure footwear products.
Campus activewear is a
lifestyle-oriented sports and athleisure footwear company that offers a diverse
product portfolio for the entire family. Company offers multiple choices across
styles, color palettes, price points and an attractive product value
proposition.
The company has an approximately
15% market share in the branded sports and athleisure footwear industry in
India by value for FY2020, which increased to approximately 17% in FY2021. It
is one of the very few established Indian brands in a segment which is
primarily dominated by international brands.
The Indian footwear retail market
is expected to grow at a CAGR of 21.6% from FY2021 to FY 2025, being one of the
fastest growing discretionary categories from FY 2021 to FY 2025. Specific
industry segment of sports and athleisure footwear is highly under penetrated,
as evidenced by the extremely low footwear penetration per capita as compared
to developed economiesand is expected to be the fastest growing segment, with a
CAGR 25% between FY2021 and FY2025.
Company covers more than 85% of the
total addressable market for sports and athleisure footwear in India as of FY2021,
which is the largest market coverage amongst key sports and athleisure footwear
brands.
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 FY 2020. Company’s target segment is growing due to a
combination of factors such as the transition from the unorganized to organized
sector driven by enhanced preference for branded and quality footwear,
increasing health awareness, rising levels of disposable income in India,
favorable trends in Indian demographics such as increasing population of young
adults and the growing demand for women’s footwear.
Company has adopted a fashion
forward approach to new product launches to ensure faster design conceptualization
and product commercialization cycle. Company is typically able to launch its
products within 120 to 180 days from the date of product conceptualization.
Company follows a nimble, fashion
forward and segmented approach to curate its product lines. Company launch its
products under the following, (1) Flagship collection: launch two collections
each year, namely spring-summer and autumn-winter, (2) In-season replenishment:
capture any upside demand and cater to positive sales of certain high velocity
styles through additional production of high-selling pieces, (3) Design fast
track: These are a part of special drops and limited-edition product design
initiatives, and (4) Never Out Of Stock: these models are always available in
stock and continuously replenished.
Company launched 583 new designs in
FY2021. Its product portfolio is extensive with 1,433 active styles for men,
241 active styles for women and 485 active styles for kids and children as on
December 31, 2021. Company offers one of the widest portfolios of footwear
products among sports and athleisure footwear brands in India in terms of SKUs
as of September 30, 2021.
Company has over 425 distributors
directly servicing and fulfilling orders of over 19,200 geographically mapped
retailers at a pan-India level as on December 31, 2021. Of these approximately
19,200 retailers, its internal sales force of 152 employees has direct field
coverage of approximately 11,300 retailers as on December 31, 2021. The
remaining approximately 7,900 retailers are covered through its distributor
‘feet on street’ initiative, which further depends on distributor management
system, sales force activation application and retailers’ engagement application
to streamline engagement with them.
Company owns and operate five
manufacturing facilities across India with an installed annual capacity for
assembly of 2.88 crore pairs as on December 31, 2021. Its manufacturing
facilities have installed capacity to manufacture 48 lakh footwear uppers and 1.08
crore footwear soles annually as on December 31, 2021. Manufacturing facilities
gives ability to manufacture 37.50% of its requirements of soles and 16.67% of
footwear uppers in-house and 100% in-house assembly of all its products.In
addition to in-house manufacturing capacity, company created a large fabricator
and sole ancillary supplier network in India.
Company has vertically integrated
manufacturing ecosystem. During the nine months ended December 31, 2021,
company (i) set up additional footwear assembly lines at its manufacturing
facilities in Dehradun, Uttarakhand and Baddi, Himachal Pradesh; (ii) additional
manufacturing capacity at its sole manufacturing facility at Ganaur, Haryana;
and (iii) additional manufacturing capacity at its uppers manufacturing
facility at Haridwar, Uttarakhand. This has allowed greater control over
manufacturing process, product quality, costs and improved time to market for
product launches.
Company is open to increasing its
portfolio of brands through acquisitions to provide consumers with
differentiated offerings.
Offer and its objects
The IPO will be complete offer for
sale of Rs 1400.14 crore on upper price band, by existing shareholders-Hari
Krishan Agarwal, Nikhil Aggarwal, TPG Growth III SF, QRG Enterprises, Rajiv
Goel and Rajesh Kumar Gupta.
Up to 200,000 Equity Shares will be
reserved for employees.
Price band for the IPO is Rs 278 to
Rs 292 per equity share of face value Rs5 each.
Company will not directly receive
any proceeds from the Offer, and all the Offer Proceeds will be received by the
Selling Shareholders, in proportion to the Offered Shares sold by them.
Promoters of the CompanyareHari
Krishan Agarwal and Nikhil Aggarwal.Promoters and promoter groupholds an
aggregate of 238,009,004equity Shares, aggregating to 78.21% of the pre-Offer
issued and paid-up Equity Share capital.The post IPO shareholding for the same
is expected to be around 74.10%.
The issue, through the book-building process, will open on 26
April 2022 and will close on 28 April 2022.
Strengths
Company is largest and the fastest growing scaled sports and
athleisure footwear brand (scaled brands are brands with over Rs 200 crore of
revenue in FY 2019) in India over FY 2019 to FY 2021. Company had approximately
15% market share in the sports and athleisure footwear industry in India by
value for FY2020, which increased to approximately 17% in FY 2021.
Company offers one of the widest portfolios of footwear
products among sports and athleisure footwear brands in India in terms of SKUs
as of September 30, 2021. It covers more than 85% of the total addressable
market for sports and athleisure footwear in India as of FY 2021.
New launches in premium category has enabled the company to
increase the volume of premium products sold over the years. Company sold 21.3
lakh, 20.4 lakh, 28.1 lakh, 15.6 lakh and 37.9 lakh premium footwear products
in FYs2019, 2020 and 2021 and nine months ended December 31, 2020, and December
31, 2021, respectively. The revenue contribution from premium products to total
sale of goods has also increased over the years from 31.30% for FY 2019 to
40.59% for nine months ended December 31, 2021.
For FYs2019, 2020 and 2021 and nine months ended December 31,
2020 and December 31, 2021, ASP (average selling price) per pair was Rs 481, Rs
509, Rs 546, Rs 533 and Rs 615, respectively. It reflects an increase in ASP by
27.77% between FY 2019 and nine months ended December 31, 2021.
Company has expansive pan-India reach that enabled it to sell
1.22 crore, 1.43 crore, 1.30 crore, 0.8 crore and 1.36 crore pairs in FYs 2019,
2020, 2021 and nine months ended December 31, 2020, and December 31, 2021,
respectively. It has expanded its presence in metro and tier 1 cities and
increased revenue contribution from metro and tier 1 cities to total sale of
goods from 16.66% for Fiscal 2019 to 26.89% for nine months ended December 31,
2021.
Company cater to consumer needs across different demographics
and price ranges. Ithas a strong presence in the category for men which
contributed 83.41%, 83.24%, 87.62%, 87.28% and 83.27% of total sale of goods in
Fiscals 2019, 2020 and 2021 and nine months ended December 31, 2020 and December
31, 2021 respectively.
Company has experienced management team, its chairman has
over 37 years of experience in the footwear industry in India. Further, its
senior management team is a professional team with a combined experience of
over 125 years in FMCG, retail, technology and consulting businesses.
Company’s fashion forward approach to retailing has led to
faster design conceptualization and product commercialization cycle. Company is
typically able to launch its products within 120 to 180 days from the date of
product conceptualization.
Company’s omnichannel network has
resulted in enhanced accessibility across markets. Its omnichannel experience,
coupled with D2C channel scale-up, helped unlock new consumer bases while
accelerating portfolio premiumization.
Company’s fabricator and sole
ancillary supplier network enables it to balance high capital expenditure costs
and protect its design intellectual property. Also it is difficult to replicate
integrated manufacturing capabilities supported by robust supply chain
Company has rolled out financing
options for its distributors by assisting them in obtaining financing through
select banks as channel partners. These efforts have resulted in receivables
days being reduced from 110 days in Fiscal 2019 to 41 days in the nine months
ended December 31, 2021. As of December 31, 2021, 51 distributors representing
18.05% of its sale of goods in Fiscal 2021 have signed up for channel
financing.
Weaknesses
There have been volatile fluctuations
in company’s revenues and financial parameters such as profit after tax margin,
Earnings before interest, taxes, depreciation and amortization (EBITDA) margin
and Gross margin in the past. For instance, profit after tax margin decreased
significantly from 8.52% in Fiscal 2020 to 3.78% in FY2021, there is no
guarantee that these will improve in the future.
Company is reliant on its trade
distribution and direct-to-consumer channels for a majority of total sales, any
disruptions to the operations of these channels may adversely affect sales. For
nine months ended December 31, 2021, Trade Distribution contributed 67.71% of
total volume sold, Direct-to consumer (online) 28.81% and Direct-to consumer
(offline) 3.48%.
The sports and athleisure footwear
industry is highly competitive in India. Company compete primarily against
international sportswear brands, local branded manufacturers and manufacturers
from the unorganized sector. Failure to compete effectively may result in a
decline in revenues and profitability.
Company’s success depends on its
ability to identify, originate and define sports and athleisure footwear trends
as well as to anticipate, gauge and react to changing consumer demands for
footwear in a timely manner. The failure of the new product lines to gain
market acceptance could adversely affect business.
As of FY2021 and the nine months
ended December 31, 2021, the sales of its products were primarily concentrated
in North India as a whole, and therefore success is closely tied to the general
and local retail market and economic conditions of North India as a whole,
which are outside of company’s control.
Company has entered into related
party transactions in the past, such related party transactions may potentially
involve conflicts of interest with equity shareholders. In FYs 2019, 2020, 2021
and for period December 31, 2020 and December 31, 2021, the aggregate amount of
such related party transactions (excluding transactions within the Group) was Rs
20.44 crore, Rs 19.73 crore, Rs 7.68 crore, Rs 5.76 crore and Rs 6.49 crore,
respectively.
Company’s operations are
labor-intensive, it needs contract labor for a majority of manufacturing
requirements. Any inability for independent contractors to procure laborers for
facilities or any other shortage in contract laborers may require the company
to employ laborers directly which may result in higher costs and reduced
margins. Company has spent Rs 37.40 crore, Rs 59.50 crore, Rs 64.00 crore, Rs
40.91 crore and Rs 77.66 crore constituting 6.29%, 8.13%, 9.00%, 9.38% and
9.23% of total revenue from operations in FYs 2019, 2020, 2021 and nine months
ended December 31, 2020 and December 31, 2021, respectively, towards wages and
compensation paid to contract labor.
Company allows its trade
distribution customers to return products if there are any manufacturing
defects, subject to return policy. If the rate of merchandise returns increases
significantly its financial condition and operating results could be harmed.
Company’s online sales are
dependent on sales channels controlled by third party online market places. Any
significant changes to business arrangements with these market places may
impact revenue from operations. Sale of goods generated from online sales was Rs
16.91 crore, Rs 57.23 crore, Rs 150.16 crore, Rs 93.86 crore and Rs 271.59
crore, which accounted for 2.87%, 7.83%, 21.15%, 21.56% and 32.37% of total
sale of goods for FYs2019, 2020 and 2021 and nine months ended December 31,
2020, and December 31, 2021, respectively.
Company is reliant on its production
sites for the manufacturing of products. Any unscheduled or prolonged
disruption of manufacturing operations, including any shortage or
non-availability of electricity, fuel or water or an increase in fuel prices,
could adversely affect business.
Company has limited control over the
ultimate retail sales by its distributors and retailers. These distributors and
retailers may cease to sell products or damage its market standing on account
of factors such as design failures, competitive pressure and slow offtake of
products.
Company may face credit risks in
the ordinary course of business. For FYs 2019, 2020 and 2021 and nine months
ended December 31, 2020 and December 31, 2021, total trade receivables amounted
to Rs 162.01 crore, Rs 144.31 crore, Rs 98.19 crore, Rs 98.17 crore and Rs 122.26
crore, representing 51.81%, 33.44%, 25.63%, 28.27% and 21.76% of total current
assets, respectively.
Valuation
For FY 2021, consolidated
sales were down by 2.84% to Rs 711.28 crore compared to FY 2020. OPM decreased
by 230 bps to 16.31% which led to 14.85% decrease in operating profit to Rs
116.01 crore. Other income increased 83.20% to Rs 3.80 crore, while interest
cost rose 3.96% to Rs 17.16 crore and depreciation increased 41.80% to Rs 32.71
crore.PBTdecreased 29.17% to Rs 69.94crore.Tax expenses for FY2021 was of Rs
43.08 crore compared to tax expense of Rs 36.39 crore in FY2020. Minority
interest for FY2021 was negative Rs 0.01 crore compared to positive Rs 0.77
crore in FY2020, Net profit went down 56.37% to Rs 26.87 crore.
For 9M FY2022, consolidated
sales were up by 93.01% to Rs 841.84 crore compared to 9M FY2021. OPM increased
by 770 bps to 19.38% which led to 220.05% increase in operating profit to Rs
163.11 crore. Other income decreased 36.51% to Rs 2.10 crore, while interest
cost rose 5.03% to Rs 13.53 crore and depreciation increased 73.62% to Rs 37.73
crore.PBTincreased 479.47% to Rs 113.96crore.Tax expenses for FY2021 was of Rs
29.15 crore compared to tax expense of Rs 2.83 crore in FY2020. Minority
interest for FY2021 was negative Rs 0.78 crore compared to negative Rs 0.02
crore in FY2020, Net profit rose 407.74% to Rs 85.58 crore.
The TTM EPS on post-issue equity works out to Rs 3.10. At the
upper price band of Rs 292, P/E works out to 92.95.
As of 21 April
2022, its listed peers such as Bata India trades at TTM P/E of 360.07, Relaxo footwear
trades at TTM P/E of 103.93 and Metro Brands trades at TTM P/E of 83.33. For FY2021,
Campus Activewear OPM and ROE stood at 16.31% and 8.60%, respectively, compared
to 9.49% and negative 5.07% for Bata India, 21% and 18.54% for Relaxo footwear,
21.44% and 8% for Metro Brands, respectively.
Campus Activewear:
Issue highlights
|
For Offer for Sale Offer size (in Rs crore)
|
|
- On lower price band
|
1333.01
|
- On upper price band
|
1400.14
|
Offer size (in no of shares )
|
47,950,000
|
Price band (Rs)
|
278-292
|
Minimum Bid Lot (in no. of shares )
|
51
|
Post issue capital (Rs crore)
|
|
- On lower price band
|
152.163
|
- On upper price band
|
152.163
|
Post-issue promoter & Group shareholding
(%)
|
74.10
|
Issue open date
|
26/04/2022
|
Issue closed date
|
28/04/2022
|
Listing
|
BSE, NSE
|
Rating
|
45/100
|
Campus Activewear: Restated
Consolidated Financials
|
|
1903
(12)
|
2003
(12)
|
2103
(12)
|
2012
(9)
|
2112
(9)
|
Sales
|
594.87
|
732.04
|
711.28
|
436.18
|
841.84
|
OPM (%)
|
16.82%
|
18.61%
|
16.31%
|
11.68%
|
19.38%
|
OP
|
100.03
|
136.25
|
116.01
|
50.97
|
163.11
|
Other inc.
|
1.82
|
2.07
|
3.80
|
3.31
|
2.10
|
PBIDT
|
101.86
|
138.33
|
119.81
|
54.28
|
165.22
|
Interest
|
21.17
|
16.51
|
17.16
|
12.88
|
13.53
|
PBDT
|
80.69
|
121.82
|
102.65
|
41.40
|
151.69
|
Dep.
|
14.37
|
23.07
|
32.71
|
21.73
|
37.73
|
PBT
|
66.32
|
98.75
|
69.94
|
19.67
|
113.96
|
Share of Profit/(Loss) from
Associates/JV
|
-
|
-
|
-
|
-
|
-
|
PBT before EO
|
66.32
|
98.75
|
69.94
|
19.67
|
113.96
|
Exceptional items
|
-
|
-
|
-
|
-
|
-
|
PBT after EO
|
66.32
|
98.75
|
69.94
|
19.67
|
113.96
|
Taxation
|
27.73
|
36.39
|
43.08
|
2.83
|
29.15
|
PAT
|
38.60
|
62.37
|
26.86
|
16.84
|
84.81
|
Minority Interest
|
0.19
|
0.77
|
(0.01)
|
(0.02)
|
(0.78)
|
Net Profit
|
38.41
|
61.60
|
26.87
|
16.86
|
85.58
|
EPS (Rs)*
|
1.3
|
2.0
|
0.9
|
#
|
#
|
* EPS is annualized on post issue
equity capital of Rs 152.163 crore of face value of Rs 5 each
|
|
|
# EPS is not annualized due to
seasonality of business
|
|
|
|
|
EO: Extraordinary items. EPS is
calculated after excluding EO and relevant tax
|
|
|
|
Figures in Rs crore
|
|
|
|
|
|
Source: Capitaline Corporate
Database
|
|
|
|
|
|
|