India’s largest and fastest growing sports and athleisure footwear brand
with a robust product portfolio across the demand spectrum:
CAL is the largest sports and athleisure footwear brand in India in terms of value
and volume for FY21. They sell their products across price points, geographical
locations, and demographics, using their ‘omnichannel experience’. Therefore,
CAL is able to cater to the varied requirements of consumers as well as provide
them with the ease of purchasing the products using the channel most suited to them.
Sustained focus on design and product innovation:
The company has adopted a fashion forward approach to retailing to ensure that they
have a faster design conceptualization to production cycle. They launch various
new styles of footwear with different features such as shock absorption and reflect
technology across different price categories every year. They are able to launch
their products within 120 to 180 days from the date of product conceptualization.
For instance, they have launched 2,580 new designs from FY19 to 9MFY22.
Difficult to replicate integrated manufacturing capabilities supported by robust
supply chain:
CAL has control over quality and access to production planning which leads to faster
turnaround times. Sole manufactured for complex, premium products are controlled
by them to control quality, turnaround time and protect their intellectual property.
For generic manufacturing, which is volume based and easier to manufacture, they
outsource it with little impact on manufacturing timelines and pressure on turnaround
times. They are entitled to preference in capacity allocation and turnaround times
and undertake 100% inspection of all soles for quality control.
Robust omni-channel sales and distribution network with Pan-India presence:
The company provides their consumers an ‘omnichannel experience’ that
enables brand discovery and products sales & marketing through physical locations
and varied online channels. They have established a sales network with Retail touch
points among 28 states and 664 cities Pan India. CAL is a leading Footwear brand
on Flipkart, Myntra & Nykaa. By means of their omnichannel approach, they offer
a holistic experience to their consumer throughout the purchase cycle. Their omnichannel
experience is media agnostic, involving, either or both, offline and online interactions,
resulting in seamless product discovery, evaluation, purchase, and post purchase
experience.
Strong brand recognition, innovative branding, and marketing approach:
CAL is a strong brand that has consumers trust, as evidenced by their leadership
position in the sports and athleisure footwear industry in India. They have spent
a considerable amount of time conceptualizing and implementing unique brand awareness
and marketing strategy to move from stand-alone trade led marketing to direct-to-consumer
marketing. They have highlighted their brand as being aspirational, accessible,
and affordable fashion. They have launched an integrated marketing campaign combining
various online and offline means for targeting consumers.
Incorporated in 2005, Campus Activewear Limited (CAL) is India's largest sports and athleisure footwear brand. The company manufactures and distributes a variety of footwear like Running Shoes, Walking Shoes, Casual Shoes, Floaters, Slippers, Flip Flops and Sandals, available in multiple colours, styles and at affordable prices. Campus Activewear sells its products through online platforms and offline stores. Campus Activewear Limited has a pan-India trade distribution network, with over 400 distributors in 28 states and 625 cities. The company also has 18,200 retailers across India. The company owns and operates five manufacturing facilities across India with an installed annual capacity for assembly of 25.60 million pairs as of September 30, 2021.
CAL is catering to the fastest growth segment of the sports & athleisure footwear market. Campus had an approximately 15% market share in the branded sports and athleisure footwear industry in India by value for FY20, which increased to approximately 17% in FY 2021. The sports and athleisure footwear industry is expected to grow at a CAGR of 16%, set to reach ~Rs 2.14 lac crore by FY25 from ~Rs 1.4 lac crore in FY20. With its diverse product portfolio, established brand name, strong distribution network, and growing digital presence, we believe Campus is well placed to capitalize on domestic opportunities. However, at the upper price band of Rs 292, the IPO is valued at 12x of FY21 sales which is in-line with peer-set valuation. Also, the issue is purely an OFS and company will not get any capital from this issue. All proceeds will go to such selling investors. Hence, we recommend investors to SUBSCRIBE ONLY with LONG TERM VIEW.
Peer comparison (Rs crore) | FY19 | FY20 | FY21 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Company | Revenues | EPS | ROE (%) | Revenues | EPS | ROE (%) | Revenues | EPS | ROE (%) | PS ratio |
Campus Activewear | 595 | 1 | 21% | 732 | 2 | 26% | 711 | 1 | 9% | 12 |
Metro Brands | 1217 | 6 | 23% | 1285 | 6 | 12% | 800 | 2 | 8% | 19 |
Bata India | 2931 | 26 | 21% | 3056 | 25 | 18% | 1708 | (7) | -5% | 14 |
Relaxo Footwear | 2292 | 9 | 19% | 2410 | 12 | 19% | 2359 | 12 | 21% | 12 |
Use of Proceeds:
The total issue size is of Rs. 1,400 crore is fully an OFS constituting offer for
sale of up to 4.79 crore equity shares by investors. Company will not get any capital
from this issue. All proceeds will go to such selling investors.
Book running lead managers:
JM Financial, BofA Securities, CLSA India, Kotak Mahindra Capital
Management:
CAL is run by Hari Krishan Agarwal, Chairman and Managing Director of the company.
He has over 37 years of experience in the footwear industry in India. He is well
supported by an experienced senior management team.
Yr End March (Rs Cr) | FY19 | FY20 | FY21 |
---|---|---|---|
Net Sales | 595.00 | 732.00 | 711.00 |
Material Cost | 321.00 | 380.50 | 374.00 |
Employee Cost | 43.00 | 57.00 | 55.00 |
Other Expenses | 131.00 | 159.00 | 166.00 |
EBITDA | 100.00 | 135.50 | 116.00 |
EBITDA Margin | 17.00% | 19.00% | 16.00% |
Depreciation & Amortization | 14.00 | 23.00 | 33.00 |
EBIT | 86.00 | 112.50 | 83.00 |
Other Income | 2.00 | 2.00 | 4.00 |
Interest & Finance Charges | 21.00 | 17.00 | 17.00 |
Profit Before Tax - Before Exceptional | 67.00 | 97.50 | 70.00 |
Tax Expense | 28.00 | 36.00 | 43.00 |
Net profit for the year | 39.00 | 61.50 | 27.00 |
Net Profit Margin | 7.00% | 8.00% | 4.00% |