Campus Activewear targets mid-teens growth through premiumisation and margin expansion

Investment View and Key Thesis

Motilal Oswal Financial Services published its Campus Activewear company update on October 11, 2026, following an analyst meeting. The broker retained its BUY rating and sees an attractive risk-reward after the share-price correction.

The positive view rests on management’s ambition for mid-teens organic growth, supported by volume-led distribution, premiumisation, deeper market penetration and expansion into newer footwear categories.

Growth Strategy and Execution Priorities

Management is targeting mid-teens growth from the existing portfolio. Key execution initiatives include:

• Linking distributor incentives to volume growth rather than value growth.
• Rationalising the SKU portfolio.
• Increasing manufacturing automation.
• Improving inventory visibility.
• Deepening market penetration, particularly in South India.

Women’s and kids’ footwear are expanding the addressable market. Women’s footwear is growing at more than twice the company average and now contributes 15–16 per cent of sales. Kids’ footwear contributes 5–6 per cent and could double its volume share over the medium term.

Category Expansion and Export Opportunity

Campus Activewear is expanding beyond sports shoes into sneakers, athleisure apparel, performance footwear, and women’s and kids’ categories. It plans to enter court footwear for badminton, padel and pickleball, along with cricket and football. Management is targeting a 3–5 per cent volume contribution from these categories over the medium term.

The Elan range has shown encouraging traction and is attracting a new customer cohort. An open-footwear Elan range is being launched for South Indian markets.

Management also identified export potential following the India–UK FTA and intends to pursue the UK, UAE and Southeast Asia through the Campus brand rather than through white-label manufacturing.

Inorganic Opportunities and Promoter Shareholding

Management is open to inorganic opportunities, including brand licensing and acquisitions, to close gaps in premium footwear. However, any transaction would need to be average-selling-price and margin accretive. Motilal Oswal does not include any inorganic contribution in its estimates.

Management also stated that there is no plan for a promoter stake sale over the medium term.

Financial Forecasts

Motilal Oswal forecasts approximately 7 per cent volume CAGR and approximately 7 per cent average-selling-price CAGR over FY26–29E, resulting in revenue CAGR of approximately 15 per cent. It estimates EBITDA CAGR of 18 per cent and PAT CAGR of 23 per cent over the same period.

The broker builds in approximately 155 basis points of EBITDA-margin expansion over FY26–29E, including approximately 65 basis points of gross-margin improvement from premiumisation and product mix.

Margin Outlook and Near-Term Risks

Management remains confident of year-on-year margin expansion through a better product mix, operating leverage and backward integration benefits. Higher-average-selling-price sneakers, performance footwear and Elan are expected to provide further margin support.

Selective price increases taken in October 2026 are intended to offset raw-material inflation. Management does not plan to reverse these increases if raw-material prices moderate. Raw-material inflation remains a near-term margin headwind, although the price actions are expected to provide a cushion.

Valuation and Target Price

Motilal Oswal values Campus Activewear at 35 times September 2028 estimated EPS of Rs 8.3, deriving a target price of Rs 290 per share. The target implied 47 per cent upside from the report CMP of Rs 197.

Following the correction, the stock was trading at approximately 30 times one-year forward P/E, its lowest level since listing.