Weak market condition and high ad spent continues

Company

11 Mar 2024 | 5 Min Read

Campus Activewear's revenue remained flat YoY, recovering from a weak performance in 2QFY24.

The company experienced a decline in EBITDA margins due to high SG&A expenses.

Potential earnings vulnerability is expected in the next few quarters, leading to a decrease in EBITDA/PAT estimates for FY25.

Despite the stock's significant correction, Campus Activewear's market position and growth opportunities suggest a potential recovery in FY25.

The company lost market share in UP/Bihar but gained market share in other states.

Marketing spend increased in 3QFY24, driven by events like big billion days.

The company has repaid debt and reduced working capital days.

Campus Activewear is focusing on recovering lost volumes in O2O/B2B channels and expanding its marketplace segment.

The company's premiumization strategy may face headwinds due to the economic downturn and customer downgrading.

EBITDA and PAT declined YoY due to higher SG&A expenses.

The company's performance aligns with market sentiments in the FMCG sector.

Gross margins and volume declined YoY, while ASP increased.

Financial estimates for FY24 and FY25 have been adjusted, with a revenue/PAT CAGR of 14%/40% over FY24-26E.

The company's valuation is based on a 55x PE on FY26 EPS.

Key takeaways from management commentary include revenue recovery, market share changes, and the current market environment.

Financial ratios and cash flow statements provide further insights into the company's financial performance.