Motilal Oswal has reaffirmed its BUY rating on Campus Activewear, setting a revised target price of Rs 305, implying a potential upside of approximately 31% from current levels. The brokerage highlights a strong recovery in growth momentum after a muted start to FY26, driven by premiumization, product innovation, and expanding retail reach. Margin expansion, aided by backward integration and favorable GST dynamics, further strengthens the investment case. With new growth levers emerging from apparel expansion and sustained demand in the sports and athleisure segment, Campus is positioned for steady earnings growth over the next three years.

Growth Momentum Reaccelerates After Weak Start

Campus Activewear has staged a notable recovery after a subdued first quarter of FY26, with growth rebounding to mid-teens levels in the latter half of the calendar year. This resurgence has been fueled by a combination of structural and cyclical drivers, including premiumization trends, an expanding retail footprint, and rationalized GST rates.

The sports and athleisure segment continues to benefit from shifting consumer preferences toward lifestyle-driven footwear, positioning Campus as a key beneficiary in a rapidly evolving market landscape.

Premiumization Strategy Driving Revenue Upside

A central pillar of Campus’s strategy is premiumization, which has translated into consistent improvement in average selling prices (ASP). The company has successfully transitioned toward higher-value products, particularly sneakers and fashion-forward offerings.

This upward trajectory in ASP is expected to continue, with an estimated CAGR of around 7% over FY26–FY28. The shift toward premium products not only boosts revenue but also enhances profitability.

Innovation Engine Strengthens Competitive Edge

Campus’s rapid product development cycle—spanning just 60–90 days from concept to launch—has emerged as a key differentiator. This agility enables the company to respond quickly to changing consumer tastes and fashion trends.

The scale of innovation is evident in the number of product launches:

• 270+ new designs introduced in FY25
• 300+ designs in FY24
• 145+ designs already launched in 9MFY26

Recent innovations, including advanced cushioning technologies and performance-driven designs, underscore the company’s focus on blending style with functionality.

Margin Expansion Supported by Structural Efficiencies

Operational efficiencies and backward integration have played a crucial role in margin expansion. The company reported an EBITDA margin of approximately 16% in 9MFY26, marking an improvement of around 140 basis points year-on-year.

This margin expansion is driven by:

• Improved product mix toward premium categories
• Cost efficiencies from backward integration
• Favorable GST structure

These factors collectively enhance operating leverage, positioning Campus for sustained profitability growth.

Retail Expansion and Distribution Strength

The company continues to scale its retail presence, strengthening its omnichannel distribution strategy. Expansion across exclusive brand outlets (EBOs) and multi-brand outlets (MBOs) has improved accessibility and brand visibility.

This broader reach allows Campus to tap into both urban and semi-urban markets, aligning with rising aspirational consumption trends in India’s footwear segment.

New Growth Lever: Entry into Apparel Segment

Campus’s foray into apparel represents a strategic diversification aimed at capturing a larger share of the athleisure wallet. This move complements its core footwear business and opens up cross-selling opportunities.

The apparel segment is expected to:

• Enhance brand positioning as a lifestyle player
• Drive incremental revenue growth
• Improve customer retention through bundled offerings

This expansion could evolve into a meaningful revenue contributor over the medium term.

Financial Outlook: Strong Earnings Trajectory Ahead

Motilal Oswal projects robust growth across key financial metrics over FY25–FY28:

This growth outlook is underpinned by premiumization, operational efficiencies, and category expansion, reinforcing the company’s long-term earnings visibility.

Valuation and Target Price

The brokerage has set a target price of Rs 305, based on a valuation of 45x P/E on March 2028 estimated earnings. This reflects confidence in the company’s ability to sustain high-growth momentum while maintaining margin discipline.

At the current market price of Rs 233, the stock offers an upside potential of approximately 31%.

Key Investment Drivers

• Premiumization tailwinds boosting ASP and margins
• Strong innovation pipeline supporting market share gains
• Retail expansion enhancing distribution reach
• Apparel diversification opening new revenue streams
• Favorable industry dynamics in sports and athleisure segment

Risks to Monitor

Investors should remain mindful of potential risks, including:

• Demand volatility in discretionary consumption
• Execution risks in apparel expansion
• Competitive intensity from established global and domestic brands

Investment View: A Compelling Play on India’s Athleisure Boom

Campus Activewear stands at the intersection of fashion and function, capitalizing on India’s growing appetite for branded, lifestyle-oriented footwear. Its strategic focus on premiumization, innovation, and category expansion positions it well for sustained growth.

With improving margins, scalable operations, and a strong brand recall among younger consumers, the company offers a compelling investment opportunity in the mid-cap retail space.

Investors with a medium- to long-term horizon may consider accumulating the stock, given its favorable risk-reward profile and strong earnings visibility.

Disclaimer: Investors are advised to conduct their own due diligence and consult financial advisors before making investment decisions.