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Motilal Oswal Report
Campus Activewear (Campus)'s 4QFY23 performance was weak. Its revenue/PAT growth stood flat YoY hit by subdued market demand, which was further worsened by advertisement-led 50% jump in SG&A expenses that resulted in 600bp contraction in EBITDA margin. Moderation in RM cost was the key silver lining, which led to 300bp improvement in gross margin (GM).
Given the weak near-term demand outlook, aggressive footprint expansion and marketing spends, we cut our FY24E/FY25E EPS by 12%/11%. We model 41% PAT CAGR as well as 19% revenue CAGR over FY23-25E and 90bp EBITDA margin improvement on FY22 base. Campus's strong market position and a long runway for growth should see recovery by 2HFY24E once market recovers. Reiterate BUY with a TP of INR425 (premised on 55x P/E on FY25E EPS).
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