Campus Activewear IPO – Is this good or bad for investment?

Campus Activewear IPO – Is this good or bad for investmentCampus Activewear IPO (Campus Activewear Limited IPO) Details

New Delhi based Campus Activewear is coming up with an IPO now. This IPO would open for subscription on 26th April, 2022. Campus Activewear Limited is one of the largest sports and the athleisure footwear brand in India. Company is generating stable revenue growth in the last 3+ years. Should you invest in Campus Activewear IPO? Is this good or bad for investment?

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About Campus Activewear Limited

Company is the largest sports and athleisure footwear brand in India in terms of value and volume in Fiscal 2021. Company introduced brand CAMPUS in 2005 and are life style oriented sports and athleisure footwear company which offers a diverse product portfolio for the entire family.

It offers multiple choices across styles, color palettes, price points and attractive product value proposition.

Campus Activewear Limited IPO – Issue Details

IPO Opening Date 26-Apr-22
IPO Closing Date 28-Apr-22
Issue Type Book Built Issue IPO
Face Value Rs 5 per equity share
IPO Price band Rs 278 to Rs 292 per equity share
Lot Size 51 Shares
Listing at BSE and NSE
Total Issue Size Rs. 1400.14 Crores
    OFS     Rs. 1400.14 Crores
Employee Discount Rs 27 per share

Campus Activewear IPO RHP

What are the competitive strengths of Campus Activewear Limited?

1) It is India’s largest sports and athleisure footwear brand and fastest growing scaled sports and athleisure footwear brand with a robust product portfolio across the demand spectrum.

2) Sustained focus on design and product innovation facilitating access to the latest global trends and styles through its fashion forward approach.

3) Difficult to replicate integrated manufacturing capabilities supported by a robust supply chain.

4) Robust omnichannel sales and distribution network with pan-India presence and move to premium category.

5) Strong brand recognition, innovative branding and marketing approach.

6) Company has experienced management team.

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What are the Objects of the IPO Offer?

Campus Activewear IPO Size is Rs 1,400 Crores and these proceeds are OFS.

Under Offer for sale (OFS), these funds would go to selling shareholders and company would not get any proceeds from the issue.

Who are the promoters of Campus Activewear Limited?

Hari Krishan Agarwal and Nikhil Aggarwal are the promoters of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years and 9 months.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY19 FY20 FY21 9M ending Dec-21
Total Assets 5,056 7,192 6,848 8,847
Revenues 5,967.0 7,341.2 7,150.8 8,439.5
Profit After Tax 386.0 623.7 268.6 848.0
Profit % 6.47% 8.50% 3.76% 10.05%

Why to invest in Campus Activewear IPO?

Here are the positive factors in this company.

1) Company is one of the largest sports and the athleisure footwear brand in India.

2) Company has sustained business focus on product design and innovation. Even such business is difficult to replicate in terms of its manufacturing capabilities with robust supply chain. It has strong brand recognition.

3) Company has generated stable revenue growth in the last 3 years and 9 months. Its revenues were at Rs 596.6 Crores in FY19 Vs. 715 Crores in FY21. There was dip in FY21 revenues compared to FY20 majorly due to covid pandemic. Its revenues for 9 months ended Dec-21 again zoomed to Rs 843.9 Crores.

4) While company margins have dipped in FY21 compared to FY20/FY19 (due to covid pandemic), its margins zoomed to Rs 84.8 Crores for 9 months ended Dec-21.

Risk Factors of investing in Campus Activewear IPO

1) The entire IPO proceeds is offer for sale (OFS). Such OFS would go to selling shareholders and company would not get benefitted.

2) Company revenues and financial parameters are volatile and fluctuating in the past. Such volatility might continue in future too.

3) Company is relying on trade distribution and its direct to consumer channels for the majority of its sales. Any disruption to the operations to these channels may adversely affect its sales, cash flows and margins.

4) Company is into sports and athleisure footwear industry, which is highly competitive. If they fail to compete effectively, its business, results of operations and financial condition may be adversely affected.

5) Covid pandemic had an adverse effect on business and is uncertain in the future too.

What is Campus Activewear IPO GMP today?

GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market.

Currently Campus Activewear IPO GMP is around Rs 47.

Campus Activewear Limited IPO Valuation

1) Campus Activewear IPO price band is Rs 278 to 292 per share.

2) If we consider last 3 years weighted average EPS of Rs 1.34 and the upper price band of Rs 292, P/E works out to be 218x.

3) Similarly, if we consider FY2021 EPS of Rs 0.88 and the upper price band of Rs 292, P/E works out to be 332x.

4) If we consider 9 months ending Dec-21 EPS and annualize it P/E works out to be 78x.

5) Means company is asking IPO price in the P/E ratio of 78x to 332x.

As per the RHP, there are listed peers like Relaxo Footwear trading at P/E 98x. While it might not be appropriate to consider only one peer that too, which is not apple to apple comparison, one can assume that the IPO price is fully priced.

Campus Activewear IPO dates for subscription, Allotment and Listing

Offer Open 26-Apr-22
Offer close 28-Apr-22
Finalization of Allotment 04-May-22
Initiation of Refunds 05-May-22
Credit to Demat Account 06-May-22
IPO Shares Listing Date 09-May-22

How to buy Campus Activewear IPO online through Zerodha?

You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.

You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.

Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to Console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘Campus Activewear Limited IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

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Campus Activewear IPO Review – Should you invest or avoid?

Campus Activewear is one of the India’s leading sports and athleisure footwear. Company has generated strong revenue growth for 9 months ended Dec-21 post covid affect.

Company margins were dropping in the last 3 years. However, has significantly improved for 9 months ended Dec-21. Do you think that companies declare high profits before coming for an IPO? Even I think so.

Its issue price is fully priced.

Considering all positive and risk factors, investors can invest in this IPO for medium to long term perspective.

Do you agree with my views?

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Suresh KP

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