Event Participants
Executives
3 Nikhil Aggarwal, Uplaksh Tewary (referred to as Uplaksh Tiwari in intro), Neeraj Gupta
Analysts
7 Abhishek Shankar, Ajay Nandwar, Avinash, Devanshu Bansal, Prerna Jhunjhunwala, Shraddha Kapadia, Umang Mehta, Vidisha Seth
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue Growth (YoY) | 12.2% | Reported growth impacted by |
| Volume Growth (YoY) | 11.7% | Drove by strong school shoes recovery (~50% growth contributing ~40% of volume growth), partially offset by franchise model transition |
| EBITDA Margin | 15.9% | Stable YoY despite absorbing minimum wage increases ( |
| PAT Growth (YoY) | 17.7% | Outpaced revenue growth on stable margins and operating leverage |
| ASP Growth | ~5% underlying | 8% MRP hike implemented; reported ASP suppressed by ~2.5% from GT accounting change and ~2% from school shoes mix shift (DIP to stock-on transition) |
| School Shoes Revenue Growth | ~50% | Exceptional recovery; business fully transitioned from DIP to stock-on, higher ASP and margin-accretive |
| Franchise Store Count | 158 stores | Fully transitioned from outright to SOR model; ~25%+ de-growth in franchise revenue this quarter due to accounting change |
| EBO Stores Opened (Q1) | 18 stores | Highest in last 6-8 quarters; ~8 new franchise partners added, increasing master franchisees from ~8-9 to ~16 |
| Sneaker Contribution | 12-13% of volumes | Targeting ~30% growth in sneaker category for FY27 |
| Capacity | 31 million pairs | Reduced from 36 million pairs due to shutdown of ~4-5 million DIP capacity (archaic technology, unviable economics) |
| Inventory Build | Highest-ever Q1 production; highest-ever July production month | Strategic build ahead of festive season; supported by record distributor meet orders |
Geographic & Segment Commentary
School Shoes: Exceptional quarter with ~50% YoY revenue growth. Full migration from DIP to stock-on model, which carries higher ASP and better margins. School shoes represent ~40% of volume growth this quarter but diluted blended ASP by ~2% due to category's inherently lower price points; this normalization will taper from Q2.
Sneakers: Now 12-13% of volumes with strong growth trajectory. Management guiding ~30% category growth for FY27 as investments in Haridwar, Pantnagar, and Baddi facilities scale production. Base is now significantly larger, moderating from previous ~100% growth rates.
Franchise/FOFO: Complete transition of 158 stores from outright to SOR model, giving Campus control over inventory, discounting, and replenishment. Transition caused ~25% de-growth in franchise revenue this quarter (temporary). New SOR model driving EBO expansion - 18 stores opened in Q1, highest in 6-8 quarters. Targeting 90-100 net store additions in FY27. Franchisee ROI ranges 18-30%.
Open Footwear: Slightly lower growth (~4-5% lower than other categories) due to LPG supply constraints from government restrictions during geopolitical tensions affecting hot-cold machine technology for sandals. Not a demand issue.
Company-Specific & Strategic Commentary
Elan by Campus Launch: New neo-casual footwear brand launched ~2 months ago, selling at ₹1,899-₹2,599 price points - highest end of portfolio. Currently in ~100-110 own stores plus Amazon, Myntra, and brand.com. Initial response extremely positive with new product set already locked for festive season.
MRP Price Increase: 8% across key categories effective April 1, in line with or slightly above industry. RM inflation fully absorbed; no further hikes planned. As raw material prices taper, benefit should flow to P&L. Company willing to accept modest volume impact given brand strength; management confirmed no resistance in market.
Brand Identity Refresh: New logo launched publicly in May (on products since December). Aimed at connecting with younger audience. Well received per management.
Distributor Meet: One of largest-ever meets held; record orders received providing strong festive season visibility.
Manufacturing Consolidation: DIP capacity reduced by ~4-5 million pairs (archaic technology); stock-on remains core portfolio with strong capacity. New plants at Paonta Sahib and Pantnagar commissioned and ramping up, contributing ₹2.5 crores additional depreciation.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth (FY27) | Mid-double digit | Split between ASP recovery (6-7% targeted from Q2 onwards) and high single-digit volume growth. Management confident, backed by festive inventory build and record distributor orders |
| EBITDA Margin (FY27) | 17-19% band | CEO "100% confident" of delivering; assumes RM stabilization, ASP recovery, and cost discipline |
| ASP Growth | 6-7% from Q2 onwards | Will emerge as school shoes share normalizes and GT accounting base effect drops off from July; residual inventory at old prices depletes by Q2 |
| Volume Growth (FY27) | High single digit, not double digit | CEO explicitly said double-digit volume growth cannot be promised; growth driven by women/kids, sneakers, school shoes |
| EBO Expansion (FY27) | 90-100 store additions | Higher than FY26 anomaly; SOR model attracting new partners; 18 stores already opened in Q1 |
| Employee Costs (FY27) | Proportionate to last year as % of sales | 10% annualization/increments plus 5% new hiring impact already absorbed in Q1; no additional cost expected |
| Sneaker Growth (FY27) | ~30% volume growth | Base now larger after years of ~100% growth |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Inflation | RM pressures began in March due to geopolitical situation; 8% MRP hike has fully absorbed current inflation. Management expects RM prices to taper, which would provide margin upside. If volatility persists, could pressure margins or require additional measures |
| Geopolitical Uncertainty | LPG supply restrictions impacted sandals production (hot-cold machine technology); broader supply chain volatility noted. Government restrictions led to production lag in open footwear category |
| Minimum Wage Increases | Statutory wage revisions resulted in ~₹5 crores additional costs in Q1; another ~₹5 crores in other expenses. Already absorbed; management expects no further increases |
| Demand Elasticity Concerns | 8% price hike in economy segment raised analyst concerns about volume impact. Management noted no resistance seen, but secondary sales show some tapering due to geopolitical factors, Maharashtra/Gujarat floods, and overall demand softness |
| Inventory Risk | Highest-ever production build ahead of festive; if festive demand disappoints, inventory could require discounting, pressuring margins. Management expresses confidence based on distributor meet orders and demand tracking |
| Franchise Model Transition | Transition to SOR model caused 25% de-growth in franchise revenue this quarter; if execution issues arise in new model, could impact channel growth. Early signs positive (Rajasthan fully transitioned in March showing strong SSG) |
| Unorganized Competition Stress | RM inflation and working capital pressures constraining smaller/unorganized competitors; while this creates opportunity for organized players, supply disruption could affect overall category demand |
Q&A Highlights
Price Hike Impact and Elasticity
- Question: With 8% MRP hike (above industry), what gives comfort that volumes won't be impacted given economy segment elasticity? (Vidisha Seth, Ambit Capital)
- Answer: Price hike was necessary due to RM inflation from March geopolitical situation plus minimum wage impacts. Effective April 1, no further revisions. Volume has grown despite hikes with no market resistance observed. RM inflation fully absorbed; as volatility subsides, benefits will flow back to P&L without lowering MRPs. (Nikhil Aggarwal)
Franchise SOR Model Transition Impact
- Question: What drove lower volume growth vs. the weak base quarter? (Vidisha Seth, Ambit Capital)
- Answer: Two temporary factors suppressed growth: (1) Walmart/Flipkart/Myntra GT charges accounting change effective July 2025 - ~2-2.5% impact; (2) Complete transition of 158 franchise stores from outright to SOR model - ~25%+ de-growth in franchise business this quarter, ~2-2.5% impact on revenue. Combined ~4.5-5% impact, which will normalize from Q2. (Uplaksh Tewary)
Price Point Portfolio Gap
- Question: Sub-₹1,500 segments de-grew at 7% CAGR over two years - is this intentional? (Avinash, Motilal Oswal)
- Answer: No intentional exit from any price points. Sub-₹1,500 remains core shoe business. The 8% hike shifted products from ₹1,499 to ₹1,649 reporting buckets naturally. Share shift toward closed shoes (higher ASP) also affected the mix. No curtailment; gaps being addressed before season begins. (Uplaksh Tewary, Nikhil Aggarwal)
School Shoes Contribution and Growth Outlook
- Question: With 50% growth in school shoes, how much contributed to volumes, and will positivity fade in coming quarters? (Umang Mehta, Kotak Securities)
- Answer: School shoes contributed ~40% of volume growth this quarter, which will normalize from next quarter. Full year targets: mid-double digit revenue growth, ASP of 6-7% returning from Q2, balance from volume. CEO confirmed 100% confidence in 17-19% FY27 EBITDA margin band. (Nikhil Aggarwal, Umang Mehta)
Sneaker Portfolio Performance
- Question: How has sneaker portfolio performed post-Pantnagar/Haridwar production ramp-up? (Avinash, Motilal Oswal)
- Answer: Sneakers contribute 12-13% of volumes. Targeting ~30% growth this year (down from previous ~100% growth due to larger base). Investments in Haridwar, Pantnagar, and Baddi aligned with category growth. Product launches and category growth in sync. (Neeraj Gupta)
Minimum Wage and Other Expense Breakdown
- Question: Is minimum wage impact in other expenses or staff costs? (Umang Mehta, Kotak Securities)
- Answer: Other expenses include ₹5 crores for minimum wage increase, ₹2.5 crores for advertising/marketing (distributor meet, logo launch), and ₹2.5 crores indirect costs for new plants (Paonta Sahib, Pantnagar). Total HR impact includes 10% annualization/increments plus 5% new hiring. (Neeraj Gupta)
Elan Launch Reception
- Question: How has Elan been received and what role will it play in premiumization? (Shraddha Kapadia, SMIFS Ltd)
- Answer: Elan launched ~2 months ago, selling in ~100-110 own stores plus Amazon, Myntra, brand.com at ₹1,899-₹2,599 price points - highest in portfolio. Extremely positive initial response; new product set locked for festive. Category addresses consumers who previously wouldn't consider Campus, with potential for significant ASP and brand equity impact. (Uplaksh Tewary)
Festive Season Readiness and Demand
- Question: What's your demand visibility after building inventory ahead of festive? (Shraddha Kapadia, SMIFS Ltd)
- Answer: Inventory builds are strategic to ensure availability during festive when production capacity is constrained (10 days of factory shutdown during Chhath Puja/Diwali). Demand has seen some tapering due to geopolitical factors and Maharashtra/Gujarat floods. Management's demand reading remains positive; distributor meet gave strong production visibility. Secondary sales tracking mechanism in place. (Uplaksh Tewary)
EBITDA Growth vs. Revenue Growth Differential
- Question: Revenue growth at 15-16% (adjusted) but EBITDA growth only 11% - why the gap? (Devanshu Bansal, Emkay Global)
- Answer: Non-recurring/structural costs absorbed: minimum wage increases (₹5 crores in other expenses), new plant depreciation (₹2.5 crores), HR costs (10% annualization plus 5% new hiring). Walmart accounting change is purely presentation - no EBITDA impact. All costs baked in; no additional costs expected for rest of year. (Nikhil Aggarwal, Uplaksh Tewary, Neeraj Gupta)
Store Expansion Strategy
- Question: With accelerated Q1 openings, will FY27 and future years see higher store additions? (Prerna Jhunjhunwala, Elara Securities)
- Answer: FY26 was an anomaly with corrections. Targeting 80-120 stores (90-100 likely) in FY27. SOR model is helping attract partners - ~8 new master franchisees added, taking total to ~16 (from 8-9). Rajasthan was first fully transitioned state (March) showing very strong SSG results. Partnership model requires minimum 5-6 stores per partner; company doesn't pay rent for FOFO stores - franchisees handle agreement, rent, and operations while Campus controls inventory and discounting. (Nikhil Aggarwal, Uplaksh Tewary)
Gujarat Growth and Cannibalization Question
- Question: How does franchise expansion impact GT trade business - doesn't it cannibalize? (Ajay Nandwar, Individual Investor)
- Answer: No price competition between channels - EBOs use differentiated product and experience lens. Gujarat franchise business is ~75% of trade business there, with 60+ stores opened since 2021 (1.5 stores/month). Franchise expansion has positive ramification on GT - GT in Gujarat grew 20-25% higher than rest of country during same period, with double-digit growth still maintained. Franchise builds brand credibility attracting more GT partners. (Uplaksh Tewary)
Price Hike and Competitive Position
- Question: Is 8% hike in line with industry, and does reduced competitive intensity give confidence? (Devanshu Bansal, Emkay Global)
- Answer: Other players have taken similar or slightly lower hikes. Company delivered reasonable volume growth post-hike, giving brand confidence. Secondary tracking shows some demand taper but management attributes this to temporary factors. Direct-to-consumer channels show strength: marketplace mid-double-digit growth, COCO SSG up 20%+, brand.com grew over 100% YoY. Some unorganized/smaller competitors facing working capital stress and production constraints - potential opportunity for organized players. (Nikhil Aggarwal, Uplaksh Tewary)
Key Takeaway
Campus Activewear delivered a resilient Q1 FY27 with 12.2% revenue growth, 11.7% volume growth, stable 15.9% EBITDA margins, and 17.7% PAT growth despite absorbing minimum wage hikes, geopolitical supply chain disruptions, and plant ramp-up costs. Growth was dampened by 4.5-5% from two temporary accounting/model transitions - Walmart GT charges netting (2-2.5%) and franchise SOR conversion (~2-2.5%) - implying normalized growth of ~15-16%. Management remains confident in FY27 guidance of mid-double-digit revenue growth with 6-7% ASP recovery from Q2 and high single-digit volume growth, anchored by the 8% MRP hike, school shoes DIP-to-stock-on transition, and 17-19% EBITDA margin target. Strategic priorities include Elan premium brand launch (₹1,899-₹2,599 price points), 30% sneaker growth, women/kids momentum, and 90-100 EBO openings under the new SOR franchise model. Key watch points include festive demand recovery given some secondary sales tapering, RM price trajectory for margin upside, and successful digestion of record-high inventory built ahead of the season.
Transcript incomplete - no standalone financial statements or segment-wise breakdown tables were included in the transcript; all financial metrics extracted from management commentary and Q&A discussion.