The Delhi-headquartered Campus Activewear manufactures and distributes a variety of footwear like running shoes, walking shoes, casual shoes, floaters, slippers, flip flops and sandals in multiple colours and styles.
The issue is entirely an offer for sale activity from the promoters and existing shareholders, who will offload 4,79,50,000 equity shares via offer-for-sale (OFS) route.
Hari Krishna Agarwal and Nikhil Aggarwal, promoters of the company, will sell 12.5 million equity shares in the OFS, whereas TPG Growth III SF will offload up to 29.1 million shares and QRG Enterprises up to 6.05 million shares.
50 per cent of the issue will be reserved for qualified institutional investors, another 15 per cent for non-institutional bidders while the rest 35 for retail investors. 2 lakh shares have been reserved for eligible employees.
Campus Activewear sells its products through online platforms and offline stores. It has a pan-India trade distribution network, with over 400 distributors in 28 states and 625 cities. The company also has 18,200 retailers across India.
Campus Activewear saw its online sales jump to around Rs 400 crore, accounting for 37 per cent of total sales in the nine months ended December 2021, primarily driven by small town shoppers.
Ahead of its IPO, the athleisure footwear company garnered about Rs 418 crore from anchor investors ahead of its IPO as the company allocated a total of 14,325,000 equity shares to anchor investors at Rs 292 apiece, said a BSE circular. Investors participating in the anchor round include Abu Dhabi Investment Authority, Fidelity Funds, Nomura, Societe Generale, BNP Paribas Arbitrage and Goldman Sachs (Singapore) and multiple domestic mutual funds.
BofA Securities India, JM Financial, CLSA India and Kotak Mahindra Capital Company are the lead managers to the issue, whereas Link Intime India Private has been appointed as the registrar to the issue.
Brokerages have a mixed opinion on the company, with the majority of them being positive over this issue as it caters to the fast growing segment of the footwear industry but have also raised red flags over rich valuations.
Let us have a look at what brokerages have to say and recommend about the IPO of Campus Activewear:
Choice Broking:
With its established brand and expanded geographical reach, the company is well placed to benefit from the expansion in the market. At the higher price band, its valuations are in-line to the peer average.
“Considering the already rich valuations of the sector and also the current equity market volatilities, we assign a ‘Subscribe with Caution’ rating for the issue,” said the brokerage.
Reliance Securities
Rating: Not Rated
Campus Activewear is the fastest-growing scaled sports and athleisure footwear brand covering more than 85 per cent of the total addressable market, thanks to its focus on design and product innovation, robust omni-channel network and PAN India presence.
The company is the largest and fastest-growing player in a rapidly growing S&A footwear brand in India with continued focus on channel expansion, rising contribution from premium category, but the IPO is aggressively priced and hardly leaves anything meaningful on the table for investors in the medium term perspective.
Angel One
Rating: Neutral
In terms of valuations, the post-issue TTM P/E works out to 93.4x (at the upper end of the issue price band), which is high considering the company’s negative PAT CAGR of 17 per cent over FY19-21.
“However, it has strong brands and a wide range of products but we believe that these positives are captured in the valuations commanded by the company,” it added giving a ‘Neutral’ rating on the issue.
Swastika Investmart
Rating: Subscribe for long term only
It enjoys competitive advantages like integrated manufacturing facilities, strong brand recognition, robust distribution network, said Santosh Meena. Head of Research, Swastika Investmart.
“The company has good growth prospects, good relationships with its dealers & suppliers, a focus on in-house designing, and an enviable supply chain network and being an OFS we recommend this issue for long-term investors only,” he added.
Marwadi Financial Services
Rating: Subscribe
“Considering the TTM as of December 21, EPS of Rs 3.12 on a post issue basis, the company is going to list at a P/E of 93.72 times with a market cap of Rs 8,886.3 crore whereas its peers namely Relaxo Footwear and Bata India are trading at PE of 103x and 357x,” it said.
The brokerage has recommended to subscribe to the issue as the company is the largest sports and athleisure footwear brand having 17 per cent market share in India by value and it is available at reasonable valuation as compared to peers.
Anand Rathi Shares and Stock Brokers
Rating: Subscribe
At the high of the issue price band (Rs 292), the stock is valued at 66x FY20 EV/EBITDA and 142x P/E. In comparison, footwear companies quote at an average EV/EBITDA of 35.7x/29.5x FY23e/FY24e and P/Es of 64x/51x.
The operations in the fast-growing segment, high and rising market share and strong financials are positives, said the brokerage report with a subscribe rating to the issue.
IDBI Capital
Rating: Subscribe
With a foothold of 17 per cent market share in the branded sports and athleisure footwear industry in India and integrated manufacturing ecosystem which aids cost leadership advantage, the company is poised to deliver a sustainable earnings growth in future, the brokerage said in a report.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
