Campus Activewear, a prominent sports and athleisure footwear company in India, has been witnessing a downward spiral in its share price for the last seven months.
The company, known for its trendy and stylish athletic footwears, has been grappling with challenges including weak demand and poor financial performance, which have exerted downward pressure on its shares, which are reaching new lows.
The company made its stock market debut on May 09, 2022, after raising ₹1,400 crore through its initial public offering (IPO). The IPO received a tremendous response from investors, as it was subscribed by 51.75 times.
After its listing on the NSE with a premium of 23% at ₹359 apiece, the stock experienced a remarkable surge, soaring by 78% in less than six months to reach an all-time high of ₹639 apiece on October 20, 2022.
However, the stock faced challenges, thereafter, resulting in a significant downturn. It has struggled to regain its momentum and has since remained on a downward trajectory, falling to the current market price of ₹308, losing 52% of its value from its peak.
In March 2023 alone, the company's shares corrected by almost 18% following a 7.6% stake sale by private equity firm TPG Global for ₹806 crore through an open market.
The company's recent March quarter earnings, which were released on May 29, left shareholders disappointed, leading to a 15% drop in the stock price over the next two trading sessions, reaching a one-year low.
During the quarter, the company reported a net profit of ₹23 crore, reflecting a 52% decline QoQ while remaining flat YoY. Revenue from operations also experienced a significant drop of 25% QoQ and 1.15% YoY.
Sales volume in Q4 FY23 stood at 5.5 million pairs, a 2.1% YoY decrease compared to 5.6 million pairs in Q4 FY22. The average selling price (ASP) slightly increased to ₹632 in Q4 FY23 from ₹627 in Q4 FY22.
On the operating performance front, the EBITDA fell to ₹57 crore from ₹78 crore, while the EBITDA margin dropped to 16%, a fall of 600 basis points YoY.
"The company earnings were impacted by the subdued market demand, which was further worsened by an advertisement-led 50% jump in SG&A expenses," said brokerage firm Motilal Oswal.
Despite the challenging results, the brokerage remained optimistic about the stock, citing the company's strong market position. It said that the fall in the RM prices will improve margins or pass on the benefits to revive demand.
The brokerage reiterated its 'buy' recommendation on the stock with a target price of ₹425 apiece, indicating an upside of 38% from the stock's previous closing price.
Campus Activewear enjoys a 17% market share in the Indian branded sports and athleisure footwear industry, which is predominated by international brands.
05 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.