Campus Activewe.

Campus Activewear reported a healthy 10% YoY revenue growth to INR 1,593 crores for FY25, driven by higher volumes (up 12.3% to 24.9 million pairs). Q4 FY25 revenue grew 11.5% to INR 406 crores, with volumes up 7.8% to 6.2 million pairs. The company achieved significant margin expansion in FY25, with gross margin improving by 20 bps to 52.3% and EBITDA margin rising by 120 bps to 16.1%, primarily due to procurement efficiencies and disciplined cost control.

Growth was fueled by expanded distribution (up 9% in FY25, 9.6% in Q4), accelerating online sales (up 11.7% in FY25, 15.2% in Q4), and the launch of over 250 new styles. The company expanded its retail footprint by 30 new stores, bringing the total EBO count to 296. Management highlighted strong execution in expanding distribution reach to 23,000 outlets in Q4 FY25, up from 19,600 last year, with a target to add 1500 counters annually to tap into the 40-45k overall market universe.

Despite overall premiumization efforts, FY25 ASP declined by 2% to INR 639 per pair, primarily due to a conscious strategic decision to increase the mix of open footwear (from 14.2% to 15.2%) and higher accessory sales, which have lower ASPs. However, Q4 FY25 ASP improved to INR 658 from INR 636 last year, driven by higher ASP in distribution and online channels. Management emphasized maintaining gross margins (52.3% in FY25) as the key metric despite mix shifts.

The sneaker portfolio demonstrated impressive growth of 150% in FY25, contributing approximately 8.5% to total volume. To support this growth, the Haridwar II facility commenced commercial production in March 2025 for manufacturing high-quality uppers for sneakers, representing an investment of INR 21 crores. This additional capacity is expected to benefit the company's sneaker volume contribution and overall growth in FY26, with management anticipating continued strong traction in this segment.

FY25 EBITDA margin expanded by 120 bps to 16.1%, and PAT margin expanded by 130 bps to 7.5%, driven by lower SG&A (after provisions in prior year) and disciplined cost control. Q4 FY25 PAT margin saw a slight depletion to 8.5% from 8.9% last year, attributed to higher depreciation from the impairment of outdated DIP lines (INR 2 crores). Management reiterated an aspiration to achieve an EBITDA margin of 17-19% in the coming year, supported by NPD and cost control.

Campus Activewear remains a debt-free company, with strong return ratios: ROCE of 22.3% and ROE of 17.2% as of March 31, 2025. Net working capital days improved significantly from 92 in FY24 to 71 in FY25, reflecting a focus on operational efficiency and inventory management. The company also went live with SAP on April 4, 2025, to streamline operations and enhance inventory control, laying the foundation for scalable growth. Interest expense increased in Q4 due to ROU assets from new leasehold warehouses and the Haridwar II facility.

The liquidation of non-BIS inventory was slower than anticipated, but management stated it is under control, expecting a 20-40 bps margin hit in the coming year as a routine liquidation budget. Despite a challenging macro environment and subdued consumer demand, management sees positive momentum and expects industry growth to resume, especially benefiting organized players, as BIS implementation progresses. They noted a significant drop in imported goods volume from China due to BIS.