Campus Activewear Q2 Results Review - Strong Growth Albeit On Lower Base; Margins Weak: Motilal Oswal

Motilal Oswal Report

Campus Activewear Ltd. delivered 29% YoY revenue growth (8% beat) on a lower base, driven by 36% YoY volume growth.

However, Ebitda (13% miss) and PAT (23% miss) were weaker as margin was impacted by higher discounts in retail meet/online channel, non-BIS inventory liquidation, and higher advertisement spends ahead of festive sales.

Despite weaker margins in H1 FY25 (~13.4%), management expects FY25 margins to be higher than FY24 levels (14.6%), fueled by operating leverage benefits with strong sales momentum in H2.

We cut our FY25-26 revenue estimates by 2-3% and PAT estimates by 6-8%. We build in a CAGR of 13%/21/34% in revenue/Ebitda/profit after tax over FY24-27. We reiterate our Buy rating with a target price of Rs 360 based on 55 times Dec-26 price/earnings.

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