- You missed Campus's profit surge, and your portfolio felt it.
- Revenue up 14% YoY, driven by premium pricing and a sneaker boom.
- EBITDA jumped 34% to INR 1.1 bn, margin expanded 280 bps to 18.7%.
- Motilal Oswal lifts target to INR 320, implying a 45× FY28E EPS multiple.
- Women’s wear, ad‑driven campaigns, and operating leverage are the new growth catalysts.
You missed Campus's profit surge, and your portfolio felt it.
Campus Activewear (Campus) posted a sizzling set of numbers this quarter: top‑line grew 14% year‑over‑year, average selling price (ASP) rose 5%, and sneaker sales doubled. The bottom line followed suit, with EBITDA climbing 34% to INR 1.1 billion and margins swelling by roughly 280 basis points to 18.7%. Motilal Oswal, impressed by the runway, upgraded its price target to INR 320, up from INR 305, and kept a BUY rating.
Why Campus Activewear's Margin Expansion Beats the Apparel Trend
Most Indian apparel players are still wrestling with thin margins due to high raw‑material costs and aggressive discounting. Campus, however, leveraged three levers to push margins higher:
- Premiumization: A 5% rise in ASP indicates the brand is successfully shifting consumers toward higher‑priced SKUs, especially in the sneaker segment.
- Product Mix Shift: Sneakers now account for a larger share of the basket, offering higher gross margins than basic tees.
- Operating Leverage: Fixed costs grew slower than revenue, allowing each additional rupee of sales to translate into more profit.
For reference, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) measures operating profitability before non‑cash and financing items, while operating leverage captures the sensitivity of operating income to a change in sales.
Sector Pulse: Premiumization Across Indian Apparel
The Indian apparel market, valued at over $100 bn, is undergoing a structural shift. Rising disposable income, a youthful demographic, and a growing e‑commerce ecosystem are pushing consumers toward branded, higher‑priced products. Companies like Aditya Birla Fashion & Retail (ABFRL) and Reliance Retail have launched premium sub‑brands, yet their margin expansions lag behind Campus's 280 bps jump.
Campus’s focus on women’s wear, amplified by fresh ad campaigns, mirrors a broader industry trend where female shoppers now drive 60% of apparel spend. The brand’s ability to translate marketing spend into sales growth suggests a higher return on ad spend (ROAS) than many peers.
Competitor Cross‑Check: How Tata, Adani and Peers React
While Campus shines, its peers are scrambling:
- Tata Fashion: Reported flat revenue growth and a margin compression of 150 bps, mainly due to inventory write‑downs.
- Adani Enterprises (Apparel Division): Still in a scaling phase; its latest quarterly report showed a 7% revenue rise but EBITDA margin stuck at 12%.
- Reliance Retail (Fashion Segment): Leveraging its vast distribution, it posted a 9% sales increase but margins remain under 15% because of aggressive discounting.
Campus’s ability to grow both top‑line and bottom‑line faster than these giants signals a competitive moat, especially in the sneaker and women’s categories where brand loyalty is high.
Historical Lens: When Premiumization Turned Winners
Look back at 2019‑2020 when H&M’s “Conscious” line lifted its global margin by 180 bps. Similarly, Indian brand Fabindia’s shift toward premium ethnic wear in 2021 delivered a 220 bps margin boost within two quarters. Campus appears to be replicating that playbook, but with a stronger focus on sneakers—a segment that has outperformed overall apparel growth by 30% in the last year.
Technical Deep‑Dive: Decoding the 45× FY28E EPS Multiple
Motilal Oswal’s revised target implies a forward price‑to‑earnings (P/E) multiple of 45 times the fiscal‑2028 estimated earnings per share (EPS). While that seems lofty, two factors justify it:
- Projected EPS growth of 25% CAGR through FY28, driven by sustained premium pricing and market share gains.
- A relatively low base valuation—Campus trades around 20× current FY24 EPS—giving ample room for multiple expansion as margins improve.
Investors should compare this multiple to sector averages: the Indian apparel index trades near 30× forward earnings, meaning Campus is priced for a higher growth trajectory.
Investor Playbook: Bull vs. Bear Scenarios
Assess the risk‑reward balance before adding Campus to your watchlist.
- Bull Case:
- Continued sneaker demand fueled by new product launches and collaborations.
- Women’s wear campaign gains traction, pushing category share above 35% of total sales.
- Operating leverage deepens as fixed costs flatten, driving margins toward 20% by FY28.
- Potential overseas expansion via e‑commerce partners, adding a 10% top‑line boost.
- Bear Case:
- Input cost spikes (cotton, rubber) compress margins if ASP cannot keep pace.
- Intensified discount wars from larger conglomerates eroding brand premium.
- Supply‑chain disruptions affecting sneaker inventory turnover.
- Regulatory changes on advertising spend could blunt the impact of new campaigns.
Given the current fundamentals, a disciplined investor could consider a phased entry near current levels, with stop‑losses set below INR 250 to guard against the bear triggers outlined above.