Ladies and gentlemen, good evening and welcome to the Campus Activewear Limited's Q2 and HY FY 2027 earnings conference call. Before we proceed on this call, Campus Activewear would like to point out that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It must be viewed in conjunction with our business that could cause future results, performance, or achievement to differ significantly from what is expressed or implied by such forward-looking statements. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the management's commentary. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your phone.
To discuss the results, I am pleased to welcome Mr. Nikhil Aggarwal, Chief Executive Officer, Mr. Uplaksh Tewary, Chief Operating Officer, and Mr. Rakesh Thakur, Chief Financial Officer of Campus Activewear Limited. Thank you, and over to you, sir, for your opening remarks.
Thank you. Good afternoon, everyone, and thank you for joining us for Campus Activewear's quarter two FY 2027 earnings call. I am pleased to share that Campus has delivered another strong quarter, with a revenue growing 16.9% YoY to INR 452 crore, driven by volume growth of 10.2% to 6.3 million pairs, alongside a 6% improvement in ASPs. This performance is particularly encouraging in a relatively subdued consumption environment. More importantly, our growth is increasingly being driven by stronger fundamentals, a broader consumer base, a richer product portfolio, and deeper market penetration. Our continued investments in product innovation, design, and distribution are translating into tangible results. First, we are successfully expanding our consumer base. Our women and kids categories grew by 27% and 34%, respectively, during first half FY 2027, significantly outperforming the overall business.
These categories represent substantial opportunities to expand our addressable market, and we believe we are still in the early stages of unlocking their potential. Second, premiumization is emerging as a powerful structural growth driver. Our products priced at INR 2,000 and above have delivered volume growth exceeding 50% YoY, with their contribution to the overall volumes increasing from approximately 9%- 13%. This reflects growing consumer preference for differentiated design, comfort, and quality. Third, we are strengthening our omnichannel presence. Alongside our traditional distribution network, we are witnessing encouraging traction across emerging digital platforms, including quick commerce and our own brand.com website. Their combined contribution to D2C online revenue has doubled YoY during the quarter. Our strategy is clear: make Campus available wherever our consumers choose to shop, while maintaining a sharp focus on channel productivity and profitability.
Coming to profitability, our material margins remained under pressure due to significant inflation in key input costs. While we have taken calibrated pricing actions, there is an inherent lag between higher input costs flowing through our inventory and the corresponding pricing benefits being fully realized. It is important to distinguish between recovering absolute input costs and protecting a percentage margin. We believe maintaining the right balance between growth, consumer value, and profitability is more important than pursuing aggressive price increases for short-term margin protection. Despite these pressures, we delivered EBITDA growth of 12.5% and PAT growth of over 21% year-over-year, reflecting the resilience of our business. Looking ahead, we expect a meaningful recovery in profitability during second half of the year, supported by the progressive benefits of pricing actions, improving product mix, operating leverage, and continued cost discipline.
We remain confident on delivering a full year FY 2027 EBITDA margin of 17%. Stepping back, I believe Campus is entering an important phase in this growth journey. FY 2027 is about sustaining growth and demonstrating operating resilience despite significant input cost inflation. FY 2028 will be about converting this stronger growth platform into accelerated earnings and improving profitability. We remain committed to building a larger, more diversified, and increasingly profitable Campus while creating sustainable long-term value for our stakeholders. With that, I would like to thank everyone for joining us, and I hand over the call to our CFO, Mr. Rakesh Thakur. He will take you through the financial performance in greater detail.
Thank you, Nikhil. Good afternoon, everyone, and thank you for joining us for the Q2 FY 2027 earnings call. I am extremely pleased to report that we delivered double-digit volume growth in back-to-back quarter one and quarter two consistently, which is taking the H1 growth at 11% combined. For the quarter, the volumes grew by 10.2%. Revenue from operations grew by closer to 17%, which has taken our revenue to INR 452 crore, with steady growth across all the channels. Trade distribution registered growth of 14%, while our D2C online channel grew by 22%. D2C offline grew by 13%, wherein retail, in fact, did pretty well. We sold, like Nikhil mentioned, 6.3 million pairs during the quarter, and ASP has grown by 6% year-on-year. Women's and kids shares in the revenue mix have inched up from 21.7% last year to around 22.7% during this quarter.
Our gross margin, like Nikhil mentioned, are at 51.4% in the current quarter versus 53.9% was in last quarter. We did witness inflationary pressure on material side. Our EBITDA grew by 12.5% year-on-year to INR 62 crore, and our margins stood at 13.5% during the quarter, which is a marginal decline by 50 basis points versus the last year. But we recorded a strong 21.3% growth in PAT, outpacing revenue growth, and PAT stood at INR 24 crore, which is 5.3% during the quarter, an improvement of 20 basis points versus the same quarter last year. That is on P&L side. Our balance sheet remains strong with ROCE improving to almost 22.3% and ROE at 18.5% as of September 26. Our net working capital days have inched up during the quarter because of the season plan built up of inventory for the season in Q3.
I think with this, I will conclude my remarks and open the floor to the moderator for Q&A session. Thank you.
Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star and one on a telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and one again. Participants are requested to use handsets while asking a question. First question comes from Mahesh Tolani from Go Quarter. Please go ahead. Mr. Mahesh, please go ahead with your question, sir. There is no response. The next question comes from Devanshu Bansal from Emkay Global. Please go ahead.
Hi, Nikhil and team. Thanks for the opportunity. Congratulations on good PAT growth in the quarter. Sir, you have shared some interesting insights this time around. I just wanted to check on this kids and performance wear opportunity. As in, what is the current scale of the industry per se, and what kind of market share are we targeting in these segments? Whatever initial thoughts you have, if you could share some sort of insights on that, it will be helpful.
Hi, Devanshu. Can you please clarify again which segment are you talking about?
Kids and performance wear.
Kids and performance, okay. These are absolutely nascent segments. We have just started revamping these segments and very aggressively so, both women and kids. These are pretty much like white ocean, like blue ocean markets for us. There is completely white space, big white space. We believe that there are very few organized players targeting these two segments. Campus definitely has a big right to win given our expertise in both of these segments, especially the sports shoes and the sneaker market, along with performance, where we are entering now also aggressively. Performance is the next growth driver. We have already launched badminton and now in the process of launching cricket and running shoes very soon. This can be a great opportunity for Campus going ahead as a growth vertical.
Our growth vectors have been performing very well, and they have been delivering majority of the growth actually, outperforming the core business. Uplaksh, would you like to add something here?
Yeah, like Nikhil mentioned, we have launched three new business opportunities this year. I mean, apart from performance, there is apparel, which was launched primarily in retail as Stage 1. ÉLAN was the second launch, and now we are entering into performance as the third launch. We have launched this category about 60 days before through our online platform, and the initial results are extremely positive. You can see and order the products on Flipkart and Amazon as well. We believe this will be one of those drivers of disproportionate growth for us because of the white space that Nikhil mentioned. Kids also, we have seen, like you have seen over the last two to 2.5 years, you have seen disproportionate growth coming from women in our business. You will see a similar pattern coming through kids as well.
We have seen the initial nascent stage with disproportionate growth coming from the school shoe category for us for the last two quarters. The same will flow into other ancillary categories of sports shoes as well as smaller kids or kids of a lower age segment as well. The same story that we have delivered with women as a business, we will be delivering with kids in the going ahead session, as well as performance is going to be a very big bet, starting with badminton, moving on to running, football, and cricket as well.
Got it, sir. That's very encouraging. Secondly, I wanted to check some of your peers who play in the value segment have shared very aggressive outlooks in terms of growth. Wanted to check, is this a sector-wide uptick in growth momentum that you are noticing and whether you would also like to sort of provide some medium-term growth outlook for Campus as a whole? That would be helpful.
Our direction remains consistent. We believe to be delivering mid-teen growth.
We are what you deliver, and you continue to deliver on the similar pattern going ahead. We don't see any changes in that future-looking forecast.
For this year?
For this year, yeah.
Just a small follow-up here, because peers like Asics, et cetera, are indicating like 25% kind of growth outlook, right? Wanted to check as in, is this kind of a conservative kind of stance that you are adopting or whether we can see positive surprises on the growth front? Because the opportunity seems to be very large.
We will not leave any opportunity on the table. We are focusing on all segments that we need to address while being financially prudent as well. Our growth has always had a backing of financial prudence behind it. We will take decisions looking at profitability of the category, and we will not run any business for driving revenue without it adding to our bottom line, right? We are very clear on that principle, and wherever we see opportunity, we go aggressive. We are confident of delivering mid-teen growth. Of course, we have a bigger plan for the long term as well. But at the current juncture, for this financial year, we will want to stick to our mid-teen guidance as of now.
Got it, sir. Thanks for taking my questions, and festive greetings to the team. Thank you.
Thank you, sir. The next question comes from Videesha Sheth from Ambit Capital. Please go ahead.
Hi, I hope I am audible. My first question was pertaining to the channel-wise growth. When I see the growth in the trade distribution channel versus the EBO channel, trade distribution accelerated to around 14%, 15% odd, but EBO has probably moderated to 11% due to the festive shift impact. Fair to say that the distribution channel would have seen sufficient inventory for the festive season, and how does Campus specifically think of growth for this channel going forward at primary and secondary level?
The EBO number has a bit of an underlying reason to it, like we have given commentary earlier as well. We were in process of a model transition for franchise, which is now 100% completed. Almost 50 odd stores got converted in quarter two as well, which of course has an accounting where you take the inventory back and then rebuild it. It has an impact of inventory coming in the system and going out again. Hence, the franchise number will start showing double-digit, sorry, significantly higher growth. Just to give a perspective, in the same quarter, our COCO business grew at a like-to-like above 20%. As well as the partners who transitioned in quarter four of last year have shown the growth range of 20%-40% for H1 of this year.
We are very confident that this retail number, which shows a slightly lower number of 13% of retail, that has other channels as well. There are elements within that as well. But we are very, very confident of showing 20%+ growth on the retail front, because that is already what we are seeing. Just the model transition is taking away some of that positive repercussions coming there. But you will see that number improving in the upcoming quarter. And on the trade bill, of course, the seasonality has shifted a bit later. We have seen that happening, same with online, same with offline. But the growth is not driven by this aggressive inventory buildup. It is in line with our standard inventory practices.
You would expect the 15% growth in the trade distribution channel to largely sustain even now going forward?
In that range.
Got it. Second is, if we were to break down the ASP growth of six odd percent into premiumization and even price hikes that would have probably been undertaken, can you call the bifurcation out and even going forward, to what extent do you expect to see this ASP growth shape up?
Our ASPs, we have taken approximately INR 40 of ASP jump in terms of absolute value. INR 13 or INR 12-INR 13 is attributable to the premiumized INR 2,000+ segment, and the balance is the product mix and the MRP increases that we have taken. That is the broad slate of that. Basically, this was enough to offset any increase in raw material inflation that we have witnessed. So that we had accounted for, and that is the kind of increase that we took in the MRPs.
Noted. The third question was on the D2C or the online channel. How different is the portfolio and price points being sold across your own website versus the likes of Amazon, Flipkart, and QC?
I will take the brand.com question first. Brand.com will share almost an 80% portfolio with what the rest of the marketplace operations will be selling. Plus, they will also have access to the retail-exclusive lines, which will only sell between retail and brand.com and will not be offered to the rest of the marketplace ecosystem. Quick commerce is a much more limited set. We were only selling, for example, open footwear on Blinkit for the longest time. Only about 2.5 months , three months, we just introduced about three shoes. Zepto is a portfolio of about eight to nine products across some four open footwear and four closed footwear. So much more limited, tight portfolio available to these products and not the entire gamut that we have to offer between these channels.
The growth that you have seen in your brand.com operations, that would primarily be led by which price points or any particular part of the portfolio, if you would like to call it out?
It will be on similar lines as a marketplace, but the ASP behavior is significantly better than a marketplace operation because we also work on selling more premium and showcasing products like ÉLAN, as well as our retail-exclusive ranges there. So the ASP profile would actually be 8%-10% higher than our marketplace business today. The product that we sell, of course, in 80% of profile matches with what we sell on our partners' commerce as well. The product profile will not be very different, but the new age category that we do, be it apparel, ÉLAN, or performance products, or premium exclusive, will have a higher share on our brand.com as compared to marketplace operations.
Got it. Lastly, if I may, can you call out the festive trends that you're observing at consumer level so far, and how does it compare with the festive last year? If any particular categories or channels are leading, what kind of trends are you observing?
I mean, last year there were multiple inputs that went into the market around this time. Of course, there was a very big GST change that happened in the market, followed by a big festive push. There is no GST, of course, this year. So that one big blip that came into the system at that time doesn't exist this year. But like-to-like, if we compare, we change when we compare our D2C ecosystem, where we are able to compete actively, we are seeing double-digit growth there as well right now.
Got it. Thank you. That's all from my side.
Thank you, ma'am. Participants are kindly requested to ask two questions in the initial round and may join the queue for more questions. The next question comes from Umang Mehta from Kotak Securities. Please go ahead.
Hi. Thanks for the opportunity. My first question was on the new categories, ÉLAN, performance footwear, and even sneakers, if you can add to that. How much would they have contributed in first half in terms of top line or volumes? Any color would be very helpful to understand how that business is shaping up. Thanks.
Please, Umang, since we are a reasonably large organization, whenever a new category is added, when I start comparing it to my existing base of business, everything looks small, right? But within their own rights, they are doing a reasonably good job. We would have sold over 20,000 units of apparel already in the last five, six months, timely through our retail ecosystem. We would sell over 100,000 units of ÉLAN as well in this financial year. So, reasonably successful, and we are not going very aggressive on inventory. We are doing very clean-cut launches, being very clean on channel exclusivity, on where we want to launch these products, and we are seeing very good throughput. So there is no inventory issues of these categories. The partners are happy. There is a very strong brand communication.
You would have seen the Gymshark campaign that we did along with Amazon Prime during the launch of that category. We are planning something similar for kids. Everything is linked to a much larger GTM and not just an ancillary category, which I am trying to pump a new product into the market, right? We are very happy with the results. Badminton is a very recent launch. The numbers might be small, so in this last 30 days, we would have sold maybe 3,000 units only on our online platform, but we are very happy because we launched only about six products there, right? We are seeing very, very good traction, and that gives us the conviction of doubling down on these categories. So there is already an ÉLAN 2.0 coming next month in retail.
If you visit our stores next month, you will see a much more unique profile of ÉLAN coming into our ecosystem. Same with performance. There is already a cricket line coming in January. I mean, all that good is happening because we believe all these small categories have the right to win in itself and will become small sub-BUs in itself in the next couple of years. That is what we are investing behind today. We are not very worried, is it 5% revenue or 3%, but eventually it will be a substantial part of my revenue in the next couple of years. That is what we are going behind. Then on all three categories that I mentioned, performance, ÉLAN, and apparel, all three are PAT categories. We are doubling down and expanding the range and not slowing down.
That should give you confidence that we are very happy and the entire ecosystem is driven towards making these categories significantly larger.
Understood. Sure. The second question was to Nikhil. Nikhil, we have kind of heard some chatters around promoters wanting to sell, and it has been impacting the stock sentiment to some extent. Possible to clarify, how are you thinking about it, and is there any such plans in the immediate future? Thanks.
Hi, Umang. No, there is no plan from the promoter family in the foreseeable future. We do not intend to sell anything right now.
Got it. Sure. Thank you. I will come back in the queue.
Thank you, sir. Dear participants, if you have any questions, please press star and one on your telephone keypad. The next question comes from Bhavesh Jain from DV Investment Advisors. Please go ahead.
Hello, sir. Am I audible?
Yes, sir.
Yeah. Thank you for the opportunity. It is more of a bookkeeping question from my side. So in our balance sheet within other current assets, there was this government authorities of INR 125 crore in FY 2026, which has jumped from INR 72 crore in 2025. Can you just elaborate on what is this related to and how are you planning to realize this amount and in what time?
No, I think, thanks for the question. Broadly, if you look at INR 125 crore, it's largely GST input credit lying in our balance sheet. I think if I split it into two, three parts, see, we are claiming refund from two states, which is HP and U.K. I think that itself is in this month, next month, we will be claiming roughly INR 25 crore. This leaves the balance to INR 100 crore. Within that INR 100 crore, the INR 40 crore is Haryana, rest is different states. But if you would have noticed in last amendment in GST meeting, the council meeting has happened.
I think now on services also you can claim the refund, right? That's really going to help us release, unblock some of the GST input credit. We can claim the refund in both HP and U.K. The second piece is the accumulation which was happening every month on a INR 2 crore, INR 3 crore, that's also not going to happen. And last bit is, you would have seen that our inventory is slightly at an elevated level. As it gets unblocked in next couple of quarters, this number will further come down.
Okay, so any expected timeline when we can realize this amount?
The overall INR 100 crore you are saying or?
Yeah, the overall INR 125 amount.
Yeah, it will take good 12-18 months to unlock this number. Yeah, and broadly-
Okay
inventory coming down, this number will come down significantly by March. Post that, this number will take some time to get unlocked.
Okay. Do we see this figure recurring again in future?
No. I think, like I mentioned that you would have seen that
Yeah, sorry, let me just come in here. I want to just clarify that this accumulated because of the services that we were availing, and there was no law before earlier to use that input credit. Now that we are able to utilize that, there is absolutely no more further accumulation. This number will only come down. So one big chunk will come down post-March after the season and the inventory comes down, and then it will steadily come down over the next six months after that. That is the plan of action from our side.
Okay, ma'am. Thank you so much.
Thank you, sir. The next question comes from Kaustubh Pawaskar from ICICI Direct. Please go ahead.
Yeah. Good afternoon, sir. Thanks for giving me the opportunity. My question is on the margin front. If we look into the first half EBITDA margins, they were around 15%. You, in the call, mentioned that for the entire year, you are expecting EBITDA margins to be around 17%. That indicates that H2, we should expect the profitability to be much better than H1. I just want to understand what confidence does give us so that the H2 should be much better in terms of profitability, considering the fact that the raw material pressure is going to be there maybe for a quarter or two.
Historically as well, our H2 margin profile have always been significantly better than H1 profile. Of course, due to seasonality of our business as well as the operating leverage that kicks in because of it. We believe that our quarters, we are very, very geared up for a very strong quarter three and quarter four. That gives us the confidence that we will be able to sustain and deliver the 17% EBITDA direction that we are offering you right now. Like you mentioned that the input pressure is not going, we believe that eventually this input pressure will also taper off and will flow into our margins at some stage.
Of course, there is no fun in forecasting when that day will happen, but we believe that input pressure with crude also kind of going down southward for the last three days, we believe that that should flow into the ecosystem starting sometime in January. There are multiple work that we are working on to ensure that our margin profiles stay consistent and in line with what our performance and our ASPs are.
Right. Sir, are we-
Yeah, we are not depending on the 17% guidance with respect to the raw material coming down. Okay? This is irrespective of that.
Right, sir. Are we looking for any further price hike in our portfolio or there won't be any further price hike?
It will depend, right? Fortunately, the crude has corrected today, as we see. If it's a change, we don't need to take another price hike. But unfortunately, if it does, then we'll have to take another price hike.
Right. And sir, one clarification. In the initial comment, you mentioned that about INR 2,000 has grown by 50% and the contribution is around 10%, right? In terms of volume. Is it right?
That's right, yeah.
Okay. And sir, where do you expect the contribution of about INR 2,000? I don't want the immediate this thing, but over the next two to three years, since you have been entering into too many categories and the categories of growth, these are most of them are categories of growth. So where do you expect this about INR 2,000 contribution going ahead over the next two to three years?
I mean, I would not want to put a number to it, but all the categories that we are currently focusing on, be it performance, be it ÉLAN, be it sneakers, right? All these are ASP, accretive categories. The best thing about this entire direction that we're talking about is that one of the largest chunk of growth is coming from a general trade business. Our other businesses were already poised to sell higher MRP, higher your D2C businesses or your modern trade businesses were already tuned to selling a higher profile of products. Over the last 18- 24 months, we have seen a very massive growth in the share of premium in our general trade business through our product intervention as well as other trade interventions.
Right? The heartening thing is that that is growing, and we believe that the growth will continue. I mean, I would not want to put a percentage number, but we will see a positive trend going ahead for a significant period of time.
Gotcha. Thank you. Thanks for the—
Thank you, sir. Dear participants, if you have any questions, please press star and one on your telephone keypad. First question comes from Bhavesh Jain from DV Investment Advisors. Please go ahead.
Sir, thank you for the opportunity. Just a remaining follow-up on that balance with government authority figure. Just wanted to ask why the competitors don't see this amount on their balance sheet, and is it specifically related to us?
It is an interesting situation, actually. In our case, most of our portfolio actually sits in the 5% output bracket, and we are the only or one of the very few companies that does such a high A&P spend spend on the brand marketing side, right? Therefore, we accumulate significant amount of input credit on the services side, which we are unable to offset because most of our portfolio sits in the 5% bracket. So that is where the mismatch sort of happened. But now that with the new GST ruling coming in, it will now offset all of that as well. I hope that clarifies.
Yeah. Okay, sir. Thank you. Thank you so much.
Just to add, we are carrying around INR 600 plus crore inventory in our books, right? So you should read it like 15% we are already on an average basis, 15% GST we are paying while buying the material, right? So it will move in line with the inventory level what we are carrying in the books, okay? It will never get zero because always you will be carrying certain level of inventory for the business, right? But it will move in line with the inventory level what we are carrying for the business.
Thank you, sir. The next question comes from Devanshu Bansal from Emkay Global. Please go ahead.
Yes, sir. Hi. Thanks for the follow-up opportunity. Sir, you are sort of-
Hello? Hello, Mr. Devanshu? Sir, there is no response. Dear participants, if you have any questions, please press star and one on your telephone keypad. Again, the question comes from Devanshu Bansal from Emkay Global. Please go ahead.
Hi, apologies. Am I audible now?
Yes, sir.
Yes. Sir, you are pressing pedal on EBO expansion, so obviously a full store requires a good amount of range as well, right? So in terms of display, et cetera. So wanted to check if you could share some thoughts around how you have sort of worked upon that, maybe walking, running, kids, slippers, et cetera. Whatever new initiatives that you have taken will be really helpful.
I mean, we have just recently launched a new format of a retail identity in Roop Nagar in Delhi, which was a new store identity that we have just launched, which was inaugurated by Gautam Gambhir, right? And a lot of images and videos. In case you are in Delhi, would love you to visit that location. It helps you understand how we are trying to communicate and talk to consumers and really bring the products to life. On the product categories that you mentioned, by default, a new retail store today will have sections of all categories that we are focusing on. The early categories of men, women, kids, and within men, running, walking, and lifestyle would remain the way they were.
Along with that, there will be, by default, an apparel section that gets built into the newer store that we open, as well as an ÉLAN section that we build. As of today, we do not have a separate section for performance yet, so we do not have a wide enough portfolio. But eventually, once that category becomes big enough, there will be a separate section for performance footwear as well, right? Kids will get incorporated within the same segment. In case required, we will be adding certain floor units to accentuate the range of smaller kids, which is the one to five-year segment, which is not a very big category in our stores. We already present the six-year to 14-year-old category within our stores quite well. In case we need more space, that will be done through floor unit change.
All these categories will be represented well within our retail ecosystem. Our store sizes will go a bit bigger now. We were working in the 600 sq ft-700 sq ft spaces earlier. Now we will be moving to an 800 sq ft-900 sq ft minimum kind of a site to be able to do justice to all these categories.
Fair enough. Uplaksh, your brand philosophy around comfort, value, at very razor-sharp points sort of applies to apparel as well, as in this is how we are sort of differentiating?
Yeah, absolutely. The same values apply to apparel as well.
Absolutely.
Whatever category we do has to have very high value proposition. That has been the genesis of our entire.
Thank you, Nikhil. Thank you, team, for taking my questions.
Thanks.
Thank you, sir. Dear participants, if you have any questions, please press star and one on your telephone keypad. Dear participants, if you have any questions, please press star and one on your telephone keypad. Thanks, everyone. As there are no further questions, we would conclude this call. In case of any further queries, please reach out to the Campus Activewear Investor Relations team at ird@campusshoes.com. Thank you for joining us, and you may disconnect your lines now.