Decent debut for Campus Activewear; lists 22% higher against issue price

Campus Activewear made decent stock market debut as shares got listed at Rs 355, 22 per cent higher against issue price of Rs 292 per share on the BSE on Monday.

However, at 10:01 am; it was down 4 per cent from its listing level and traded at Rs 340.65. The stock has hit high of Rs 364.80 and a low of Rs 339.90 in intra-day trade so far. Around 666,000 equity shares changed hands on the counter. In comparison, the S&P BSE Sensex was down 1.1 per cent at 54,231 points.

Campus Activewear’s initial public offering (IPO) garnered strong response as issue was subscribed 51.75 times. The institutional investor portion of the IPO was subscribed 152 times, wealthy investor portion was subscribed 22.25 times and the retail investors’ portion was subscribed 7.7 times.

The response garnered by the IPO exceeded expectations given the challenging market conditions. Campus Activewear’s Rs 1,400-crore IPO was entirely a secondary share sale by existing shareholders including private equity firm TPG.

Domestic brokerages had recommended their clients to subscribe to the IPO citing favourable valuations compared to other listed peers such as Relaxo Footwear and Bata India.

Campus Activewear is India’s largest sports and athleisure footwear brand. The company manufactures and distributes a variety of footwear like running Shoes, walking Shoes, casual Shoes, floaters, slippers, flip flops and sandals, in multiple colours, styles and at affordable prices. Campus Activewear sells its products through online platforms and offline stores.

Campus is an aspirational Indian brand in footwear category, which caters to economic to mid premium category of footwear. Over the last decade, it has grown its volumes at around 20 per cent CAGR.

“Replicating similar growth trajectory would be a critical factor in sustaining premium valuations”, analysts at ICICI Securities said. The brokerage firm had assigned ‘subscribe’ rating given its niche positioning in a fast growing segment, which would enable it to deliver sustainable profitable growth.

On the contrary, analysts at HDFC Securities believe that the volatile financial parameters of Campus in the past does not guarantee any improvement in the future nor higher returns.

“Reliant on trade distribution and Campus’ direct-to-consumer channels for a majority of its sales, any disruptions to the operations of these channels or its limitations on ability to expand and grow this channel may adversely affect its sales, cash flows and profitability. The sports and athleisure footwear industry is highly competitive, and if Campus fails to compete effectively, its business, results of operations and financial conditions may be adversely affected,” the brokerage firm said.

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