Campus Activewear Limited

Campus Activewear reported a strong Q3 FY26, with operational revenue growing by 14.3% Y-o-Y to INR 589 crores. Profit after tax surged by 37% Y-o-Y to INR 63.7 crores. The company sold approximately 8.3 million pairs during the quarter, with a healthy PAT margin of 10.7%, an improvement of 175 basis points versus last year. The balance sheet remains robust with a Return on Capital Employed of 20% and Return on Equity of 17.6% as of December 25.

The company's ASP increased by 5.2% Y-o-Y to INR 711, driven by a focus on strengthening its product mix and higher saliency of premium SKUs. The Sneaker portfolio, a premium category with an ASP contribution of INR 900-910, doubled in volume, indicating strong consumer adoption. Gross margins improved to 53.1% in Q3 FY26 from 51.2% last year, primarily due to a higher Sneaker mix and other operating revenues.

The Poanta Sahib facility, focusing on upper manufacturing, has fully stabilized. Commercial production of premium uppers also commenced at the Pant Nagar facility in January 2026, enhancing integrated manufacturing capabilities. Over 90% of raw materials are sourced locally, and all assembly is conducted in-house, ensuring compliance and strategic independence within a BIS-regulated environment. The company stated it is well-equipped for future capacity needs and does not require further investment at this time.

Campus Activewear strategically ventured into Athleisure apparel in January 2026. This expansion aims to broaden the addressable market, unlock incremental revenue opportunities, and enhance store productivity. The initial launch is through approximately 60 EBOs, brand.com, Myntra, and Amazon. The pilot results have been very encouraging, with summer apparel collections expected to perform even better.

The company's distribution efforts, coupled with a strong product story, were key drivers of growth. Online channels grew by around 18%, benefiting from a pivot to a market-based model, which provides stronger control and levers. The company has also launched a newer format of super stockists in general trade, leading to a slight reduction in directly mapped distributors. Inventory with channel partners remains healthy at 84 days, within the 80-90 day norm, indicating no channel upstocking.

EBITDA margin expanded by 290 basis points to 19.5%, and PAT margin improved by 175 basis points to 10.7%. This improvement was attributed to seasonality, execution-led higher sales, and efficient leveraging of fixed costs. The company is focusing on consistent phasing^📎 of production and optimizing costs to mitigate inflation, contributing to leverage benefits reflected in the numbers. Ad spends were higher this quarter due to TV and digital campaigns, but remained within the planned budget.

While Campus Activewear demonstrated strong growth, management noted that overall industry demand has not picked up as much as anticipated, even after the GST cut. The company's growth was significantly aided by its focus on ancillary categories like sneakers and women's wear, which helped overcome market stagnation. The GST benefit is expected to provide a tailwind to overall industry demand going forward^⏳.