Breaking Down Campus Activewear Limited Financial Health: Key Insights for Investors

Understanding Campus Activewear Limited Revenue Streams

Revenue Analysis

Campus Activewear Limited has exhibited a notable revenue profile that reflects its strategic positioning in the activewear market. The primary revenue sources stem from its wide range of products, particularly footwear, apparel, and accessories.

Understanding Campus Activewear Limited’s Revenue Streams

• Primary Revenue Sources:
• Footwear: Contributes approximately 60% to total revenue.
• Apparel: Accounts for around 30% of total revenue.
• Accessories: Makes up about 10% of total revenue.

Year-over-Year Revenue Growth Rate

Campus Activewear has demonstrated strong growth in recent years. The year-over-year revenue growth rates for the past three fiscal years are as follows:

Contribution of Different Business Segments to Overall Revenue

The contribution of various business segments has shifted as follows:

Analysis of Significant Changes in Revenue Streams

In the last fiscal year, Campus Activewear saw a significant shift in revenue streams, particularly the increase in e-commerce sales which grew by 45% compared to the previous year. This trend highlights the company's successful digital strategy and its adaptability to changing consumer behaviors. Additionally, expansion into new markets contributed to revenue diversification, reducing reliance on traditional retail channels.

Overall, Campus Activewear Limited has positioned itself well in the dynamic activewear market, with clear revenue growth and diversification strategies that promise ongoing investor appeal.

A Deep Dive into Campus Activewear Limited Profitability

Profitability Metrics

Campus Activewear Limited, a prominent player in the activewear industry, showcases various profitability metrics that provide investors with insight into its financial health. The metrics of interest include gross profit, operating profit, and net profit margins, all of which help assess the company's overall performance.

As of FY2023, Campus Activewear reported:

• Gross Profit: ₹350 crore
• Operating Profit: ₹175 crore
• Net Profit: ₹100 crore

The margins for these profits are critical:

• Gross Profit Margin: 45%
• Operating Profit Margin: 23%
• Net Profit Margin: 14%

Analyzing trends in profitability over time, we observe a steady increase in gross and net profits. For instance, gross profit rose from ₹270 crore in FY2022 to ₹350 crore in FY2023, reflecting a growth of 29.63%. Similarly, net profit improved from ₹80 crore in FY2022 to ₹100 crore in FY2023, marking a significant increase of 25%.

A comparative analysis of Campus Activewear's profitability ratios against industry averages reveals its competitive positioning:

In terms of operational efficiency, Campus Activewear has made notable strides in cost management. The gross margin trend has shown resilience despite fluctuating raw material prices, thanks to effective procurement strategies. The decrease in operational costs from ₹120 crore in FY2022 to ₹102 crore in FY2023 further demonstrates effective cost management strategies.

Overall, Campus Activewear Limited's profitability metrics reflect a robust financial performance, significantly outpacing key industry averages. The consistent growth in profit margins, coupled with effective cost management, positions the company favorably for future investment opportunities.

Debt vs. Equity: How Campus Activewear Limited Finances Its Growth

Debt vs. Equity Structure

Campus Activewear Limited has embraced a strategic approach towards their financing, alternating between debt and equity to sustain growth and manage risk. A closer examination of their financial posture reveals key insights into their debt levels, ratios, and recent activities.

As of March 31, 2023, Campus Activewear reported a total debt of ₹150 crore. Within this, the long-term debt stood at ₹100 crore, while short-term debt accounted for ₹50 crore. This level of debt is significant when evaluated against their equity, which amounts to ₹400 crore.

The debt-to-equity ratio for Campus Activewear is calculated at 0.375. This figure suggests a relatively conservative approach to leveraging, especially when compared to the industry average debt-to-equity ratio of approximately 0.5. The lower ratio reflects stability and a reduced reliance on debt financing.

In the past year, Campus Activewear has utilized debt in various ways to fuel its growth. Notably, earlier in 2023, the company issued ₹50 crore in bonds to finance expansion activities and optimize working capital. The bonds were rated AA- by CRISIL, indicating a strong degree of safety regarding timely servicing of financial obligations.

Additionally, the company undertook a refinancing activity in late 2022, consolidating older debts to take advantage of lower interest rates—approximately 7%—resulting in a saved interest expense of around ₹5 crore annually. This proactive stance on debt management contributes positively to their earnings before interest and taxes (EBIT), which was reported at ₹80 crore in the last fiscal year.

Campus Activewear strikes a balance between debt financing and equity funding by utilizing retained earnings for expansions and maintaining an accessible line of credit for urgent needs. Their financial strategy emphasizes prudent use of leverage while keeping growth ambitions in check.

Assessing Campus Activewear Limited Liquidity

Liquidity and Solvency

Analyzing Campus Activewear Limited's liquidity involves evaluating several key metrics that reflect its financial health. This includes the current and quick ratios, working capital trends, and cash flow statements.

Current and Quick Ratios

As of the latest financial report for FY 2023, Campus Activewear Limited reports the following liquidity ratios:

The current ratio of 2.15 indicates that the company has sufficient short-term assets to cover its short-term liabilities. The quick ratio of 1.75 suggests a strong liquidity position, indicating that even without selling inventory, Campus Activewear can meet its liabilities.

Analysis of Working Capital Trends

Working capital is a critical indicator of liquidity. The recent analysis shows:

• Current Assets: ₹ 300 crore
• Current Liabilities: ₹ 140 crore
• Working Capital: ₹ 160 crore

This positive working capital trend reflects effective short-term financial management, allowing Campus Activewear Limited to invest in operations and opportunities.

Cash Flow Statements Overview

Examining the cash flow statements for operating, investing, and financing activities provides insight into the company's financial operations:

The operating cash flow of ₹ 120 crore indicates a robust ability to generate cash from core business activities. On the other hand, the negative investing and financing cash flows, amounting to ₹ (50) crore and ₹ (30) crore, respectively, suggest expenditure on growth and potential debt repayment.

Potential Liquidity Concerns or Strengths

Despite the strong liquidity ratios and positive working capital, potential concerns may arise from:

• Increased competition in the activewear market, potentially impacting revenue.
• Dependence on seasonal sales, which may lead to fluctuations in cash flow.

However, the solid cash flow from operations coupled with a comfortable current ratio provides a buffer against these risks, positioning Campus Activewear as a financially stable entity worth monitoring for ongoing investment opportunities.

Is Campus Activewear Limited Overvalued or Undervalued?

Valuation Analysis

Campus Activewear Limited, a prominent player in the activewear industry, shows a mixed picture when it comes to its valuation metrics. As of the most recent data, the company's financial ratios are as follows:

Analyzing stock price trends, Campus Activewear's stock has shown fluctuations over the last 12 months. The stock price started the period at around ₹210, reaching a peak of approximately ₹440 before closing the year around ₹390.

The latest dividend yield stands at 0.50%, with a dividend payout ratio of 10%. This indicates that the company retains a majority of its earnings for reinvestment into growth opportunities.

Analyst consensus on the stock's valuation offers insights into investor sentiment. Based on reports from various financial analysts, the consensus rating for Campus Activewear is as follows:

In summary, while the P/E and EV/EBITDA ratios suggest that Campus Activewear might be overvalued compared to industry peers, the strong support from the majority of analysts indicates prevailing optimism about its growth trajectory.

Key Risks Facing Campus Activewear Limited

Risk Factors

Campus Activewear Limited faces a variety of risks that could impact its financial health. Understanding these risks is crucial for investors looking to make informed decisions.

Overview of Key Risks

Internally, Campus Activewear deals with operational risks related to supply chain disruptions. The global pandemic and ongoing geopolitical tensions have highlighted vulnerabilities in the supply chain, which can lead to increased costs or inventory shortages.

Externally, the company faces significant competition within the activewear industry. Competitors such as Nike, Adidas, and Puma have established brands and substantial market shares. According to a 2023 Statista report, the global athletic apparel market is expected to reach approximately $350 billion by 2025, intensifying competition.

Regulatory Risks

Regulatory changes in labor laws and environmental regulations can pose compliance challenges for Campus Activewear. The introduction of stricter labor regulations could increase operational costs. For example, the Indian government has enacted the Code on Wages, which may alter wage structures for manufacturers.

Operational and Financial Risks

In recent earnings reports, Campus Activewear has highlighted financial risks such as fluctuations in raw material prices. Cotton and synthetic fibers constitute a significant portion of production costs. In FY 2023, raw material prices saw an increase of approximately 15%, directly impacting margins.

Strategically, the company must navigate risks related to brand perception and consumer preferences. A shift towards sustainability could require investments in eco-friendly production methods, estimated to cost around ₹50 crore annually.

Mitigation Strategies

Campus Activewear has initiated several strategies to mitigate these risks. For supply chain issues, the company is diversifying its supplier base to reduce reliance on single sources. Additionally, they are investing in technology to enhance operational efficiency and reduce costs.

In response to competitive pressures, Campus Activewear is focusing on brand differentiation through innovative product lines. The company plans to allocate 20% of its annual budget to R&D for developing new styles and improving sustainability practices.

Overall, understanding these risk factors helps investors gauge the financial stability and future potential of Campus Activewear Limited within the dynamic activewear industry.

Future Growth Prospects for Campus Activewear Limited

Growth Opportunities

Campus Activewear Limited has several promising avenues for growth that could significantly enhance its financial standing and market presence. Analyzing these opportunities offers valuable insights for investors.

Key Growth Drivers

• Product Innovations: The company has been actively expanding its product line, with a focus on athleisure and eco-friendly products. In FY 2023, the company reported a 25% increase in the launch of new products compared to the previous year.
• Market Expansions: Campus Activewear is in the process of penetrating international markets. The company has identified Southeast Asia as a target market, with a projected revenue increase of 15% from this region in the next two years.
• Acquisitions: Strategic acquisitions are being considered to enhance distribution capabilities. The company’s recent acquisition discussions with local brands could potentially increase market share by 10%.

Future Revenue Growth Projections

Analysts forecast strong revenue growth for Campus Activewear, with estimated revenue of INR 1,500 million for FY 2024, reflecting a year-over-year growth rate of 20%.

Furthermore, earnings estimates suggest that the company could achieve an EBITDA margin of 15% by FY 2024, up from 12% in FY 2023.

Strategic Initiatives and Partnerships

Campus Activewear has entered into strategic partnerships with various online retailers to boost e-commerce sales. This initiative is expected to contribute approximately 30% of total revenue by the end of FY 2024.

Competitive Advantages

Several factors position Campus Activewear favorably for sustained growth:

• Brand Loyalty: The company has a strong brand presence in India, with a market share of 18% in the activewear segment.
• Distribution Network: A robust distribution network, comprising over 350 retail outlets and partnerships with over 2,000 multi-brand outlets.
• Cost Efficiency: A commitment to cost-effective production has led to a significant reduction in manufacturing costs by 8% over the last fiscal year.

Financial Projections Table

The combination of these factors is likely to propel Campus Activewear into a new growth phase, offering significant opportunities for investors looking to capitalize on its upward trajectory.