Campus Activewe.

Campus Activewear reported a strong Q2 FY26 with a 16% year-on-year revenue growth, reaching ₹387 crores. Profit after tax surged by 40%, amounting to ₹20 crores. This performance was primarily driven by a robust 20% growth in the distribution business. The company also saw an improvement in gross margins to 53.9% from 52.8% last year, contributing to a 140 basis points expansion in EBITDA margin to 14%.

The company's premiumization strategy continued to yield positive results, with the saliency of the ₹1,500-plus price point segment improving from 45.2% to 57.2% year-on-year, leading to an ASP improvement of ₹50. The women's category's share in the revenue mix increased from 14.2% to 16.2%, supported by new product development and the onboarding of actor Kriti Sanon as the new brand ambassador. The sneaker portfolio, a key focus area, grew over 100% year-on-year, contributing significantly to premium segment growth.

While the distribution channel showed strong 20% growth, online sales experienced modest growth of 5.7%. This was partly influenced by a timing shift of major festive sales post-GST reforms. A business model realignment with online channel partners, where they directly charge goods transportation, adversely impacted overall revenue growth by approximately 2% but also reduced freight and commission expenses by ₹8 crores. The company maintains healthy channel inventory levels, consistently around 100 days.

Campus Activewear is investing in its future with plans for a new factory at Pant Nagar, focusing on augmenting premium upper capacity. This CAPEX plan, totaling ₹230 crores over three financial years, aims to add 3 lakh pairs per month (36 lakh pairs per year) of upper capacity. The current year's spend in Pant Nagar is estimated at ₹110-115 crores. This investment is strategic to gain better control over the supply chain, especially for high-end premium uppers, and to leverage state-of-the-art technologies for high-quality production.

The company's net working capital days improved to 82 days from 92 days last year. However, current borrowings increased to meet immediate working capital requirements, partly due to higher inventory buildup for the upcoming season and revised payment terms for MSME vendors (from 90 to 45 days). Management expects these borrowings to normalize by the end of the financial year, noting that fixed deposits are also held for arbitrage benefits.

Campus Activewear remains optimistic about future demand, anticipating a boost from recent GST rate reductions. The company aims for double-digit growth for the full year and aspires for EBITDA margins of 17-18% in the steady state, building on the current normalized 16%. EBO expansion, which was paused this year to focus on profitability, is expected to resume at 70-75 stores per year, targeting 500 stores in the next three years. The company is also launching apparel in Q3 and sees exports as a lucrative long-term opportunity.