The stock rallied 5.81% on February 02, 2026, closing at ₹269.60, as investors reacted positively to the quarterly results. Over the past week, shares have surged 8.08%, significantly outperforming the Sensex's modest 0.16% gain during the same period. Yet this near-term enthusiasm appears disconnected from the company's fundamental challenges, particularly its anaemic five-year growth rate and deteriorating technical positioning.
Despite the quarterly strength, Campus Activewear's longer-term performance remains deeply concerning. The company has delivered a paltry 2.60% annual sales growth over the past five years, whilst operating profit has expanded at just 2.04% annually during the same period. This sluggish expansion stands in stark contrast to the premium 63.48x price-to-earnings multiple the market currently assigns to the stock, raising legitimate questions about valuation sustainability.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3 FY26) | 588.61 | Highest | 63.68 | Highest | 18.73% |
| Jun'22 | 337.71 | -4.15% | 28.66 | -27.64% | 18.26% |
| Mar'22 | 352.34 | -18.73% | 39.61 | -27.61% | 22.26% |
| Dec'21 | 433.55 | +220.44% | 54.72 | +2663.64% | 21.41% |
| Jun'21 | 135.30 | -50.82% | 1.98 | -80.22% | 11.01% |
Financial Performance: Record Quarter Delivers Mixed Signals
Campus Activewear's Q3 FY26 performance represented a significant milestone, with net sales reaching ₹588.61 crores, the highest quarterly revenue in the company's history. Net profit of ₹63.68 crores similarly marked a record high, whilst operating margins expanded to 18.73%, demonstrating improved operational efficiency.
The company's profit before tax less other income stood at ₹80.56 crores in Q3 FY26, another quarterly peak. Earnings per share reached ₹2.08, the strongest quarterly EPS on record. These metrics suggest the company has successfully navigated near-term operational challenges and capitalised on favourable market conditions during the quarter.
However, the quarterly strength must be contextualised against the company's multi-year trajectory. For the full year ending March 2022, Campus Activewear reported net sales of ₹1,194.00 crores, representing 67.90% year-on-year growth. Yet this impressive expansion followed a 2.90% contraction in FY21, when sales fell to ₹711.00 crores from ₹732.00 crores in FY20. The company's growth pattern has been notably inconsistent, with periods of strong expansion interspersed with stagnation or decline.
Profitability metrics paint a more nuanced picture. The company's profit after tax margin for FY22 stood at 9.00%, a substantial improvement from the 3.70% margin achieved in FY21. Operating margins excluding other income reached 20.20% in FY22, up from 16.30% in the previous year. These improvements demonstrate enhanced cost management and operational leverage, though margins remain below the 23.64% peak achieved in March 2021.
Capital Efficiency: Strong ROE Offset by Growth Concerns
Campus Activewear's return on equity of 19.33% represents a key strength, indicating the company generates robust returns on shareholder capital. This figure compares favourably to the footwear sector average and demonstrates effective capital deployment. The company's return on capital employed stands at 16.50%, further confirming its ability to generate value from invested capital.
The balance sheet reveals a company with manageable leverage. Net debt to equity averaged 0.47 over recent periods, whilst debt to EBITDA stood at 1.63 times. These conservative leverage metrics provide financial flexibility and reduce refinancing risk. Long-term debt declined from ₹66.44 crores in March 2021 to ₹45.17 crores in March 2022, demonstrating disciplined debt management.
Quality Concern: Deteriorating Working Capital Metrics
The company's debtors turnover ratio for the half-year period fell to 9.92 times, the lowest level on record. This deterioration suggests lengthening collection cycles and potential strain on working capital management. Additionally, interest costs in Q3 FY26 reached ₹7.30 crores, the highest quarterly interest expense observed, raising questions about debt servicing efficiency despite overall low leverage levels.
Campus Activewear's sales to capital employed ratio of 1.55 times indicates moderate asset efficiency. Whilst not exceptional, this metric suggests the company generates reasonable revenue relative to its capital base. The five-year EBIT to interest coverage averaged 7.06 times, providing adequate cushion for debt servicing obligations.
The Growth Paradox: Premium Valuation Meets Anaemic Expansion
The most glaring disconnect in Campus Activewear's investment case emerges when examining growth rates against valuation multiples. The company's five-year sales compound annual growth rate of just 2.60% ranks amongst the weakest in the footwear sector. Operating profit growth has been similarly lacklustre at 2.04% annually over the same period.
This tepid expansion stands in jarring contrast to the stock's premium valuation. At 63.48 times trailing twelve-month earnings, Campus Activewear trades at a significant premium to its peer group average of approximately 49 times. The price-to-book value ratio of 9.90 times similarly exceeds the sector average of roughly 7.30 times, suggesting the market has priced in substantial future growth that historical performance fails to support.
The company's PEG ratio of 2.35 reinforces concerns about valuation sustainability. This metric, which compares the P/E ratio to earnings growth rate, suggests investors are paying an expensive premium relative to the company's growth trajectory. Conventional wisdom suggests PEG ratios above 2.00 indicate overvaluation, particularly for companies without clear catalysts for accelerated expansion.
| Metric | Campus Activewear | Sector Average | Assessment |
|---|---|---|---|
| 5-Year Sales CAGR | 2.60% | Higher | Below Peers |
| 5-Year EBIT CAGR | 2.04% | Higher | Weak Growth |
| P/E Ratio | 63.48x | ~49x | Premium |
| Price-to-Book | 9.90x | ~7.30x | Elevated |
| PEG Ratio | 2.35 | <2.00 | Expensive |
Industry Positioning: Outperforming Weak Sector
Campus Activewear's relative performance within the footwear sector provides some consolation for investors. Over the past year, the stock declined 7.47%, whilst the broader footwear sector plummeted 27.83%. This 20.36 percentage point outperformance demonstrates relative strength, though both figures remain deeply negative.
The footwear sector has faced headwinds from changing consumer preferences, increased competition from international brands, and margin pressure from rising input costs. Campus Activewear's ability to outperform peers during this challenging period speaks to its brand positioning and operational execution, even as absolute returns disappoint.
The company's market capitalisation of ₹7,915.00 crores positions it as the fourth-largest player in the peer group. This mid-tier positioning provides sufficient scale for operational efficiency whilst maintaining growth optionality, though execution remains the critical variable.
| Company | P/E (TTM) | Dividend Yield | ROE | Debt/Equity | Price/Book |
|---|---|---|---|---|---|
| Campus Activewear | 63.48 | 0.39% | 19.33% | 0.47 | 9.90 |
| Metro Brands | 72.48 | 1.93% | 20.30% | 0.38 | 15.53 |
| Bata India | 58.35 | 1.05% | 15.43% | 0.53 | 7.20 |
| Relaxo Footwear | 56.22 | 0.79% | 11.32% | -0.01 | 4.47 |
| Redtape | 38.38 | 0.19% | 21.73% | 1.05 | 8.09 |
| Sreeleathers | 21.61 | N/A | 5.76% | -0.02 | 1.03 |
Relative to peers, Campus Activewear demonstrates competitive return on equity at 19.33%, second only to Redtape's 21.73% amongst major players. However, the company's elevated P/E multiple of 63.48 times exceeds most peers, with only Metro Brands commanding a higher multiple at 72.48 times. The price-to-book ratio of 9.90 times positions Campus Activewear in the middle of the peer range, suggesting neither extreme overvaluation nor compelling value.
The company's dividend yield of 0.39% trails sector peers, with Metro Brands offering 1.93% and Bata India providing 1.05%. This lower yield reflects management's preference for capital retention over shareholder distributions, a strategy that requires demonstration of superior reinvestment opportunities to justify the trade-off.
Valuation Analysis: Premium Difficult to Justify
Campus Activewear's current valuation metrics suggest the stock trades at expensive levels relative to fundamentals. The enterprise value to EBITDA multiple of 32.55 times significantly exceeds historical norms for footwear manufacturers, typically ranging between 15-25 times for established players with proven growth trajectories.
The enterprise value to sales ratio of 4.99 times similarly indicates premium pricing. Whilst this multiple can be justified for high-growth, capital-light businesses, Campus Activewear's 2.60% five-year sales CAGR fails to support such elevated valuation. The EV to capital employed ratio of 7.07 times suggests the market values the company's asset base at a substantial premium to book value, requiring sustained return on capital employed above current levels to justify.
The stock's valuation grade has fluctuated significantly over recent quarters, transitioning from "Fair" to "Attractive" and back to "Expensive" multiple times since December 2024. This volatility reflects the market's uncertainty about appropriate valuation levels given the company's mixed fundamental performance. Currently classified as "Expensive" since September 2025, the valuation grade suggests limited upside potential at prevailing prices.
Campus Activewear's latest dividend of ₹0.30 per share, with an ex-dividend date of September 10, 2025, provides minimal income support for investors. The 0.39% dividend yield offers little compensation for holding the stock through periods of price volatility, particularly given the elevated valuation multiples.
Shareholding Pattern: Institutional Confidence Waning
Analysis of shareholding patterns reveals subtle but concerning trends in institutional investor behaviour. Promoter holdings have declined marginally from 73.86% in September 2024 to 72.11% in December 2025, a cumulative reduction of 1.75 percentage points over five quarters. Whilst this remains a controlling stake, the directional trend suggests gradual promoter dilution.
| Quarter | Promoter % | FII % | MF % | Insurance % | Other DII % |
|---|---|---|---|---|---|
| Dec'25 | 72.11% | 6.15% | 10.59% | 0.23% | 0.89% |
| Jun'25 | 72.13% | 6.66% | 11.18% | 0.27% | 0.34% |
| Mar'25 | 72.14% | 6.61% | 10.52% | 0.26% | 0.34% |
| Dec'24 | 73.84% | 5.36% | 10.26% | 0.36% | 0.78% |
| Sep'24 | 73.86% | 5.67% | 10.62% | 0.36% | 0.83% |
Foreign institutional investor holdings declined from 6.66% in June 2025 to 6.15% in December 2025, a reduction of 0.51 percentage points quarter-on-quarter. This decrease follows earlier expansion from 5.36% in December 2024, suggesting FIIs are trimming positions after brief accumulation.
Mutual fund holdings similarly contracted from 11.18% in June 2025 to 10.59% in December 2025, a decline of 0.59 percentage points. The broader trend shows mutual fund ownership fluctuating within a narrow 10.26%-11.18% band over the past five quarters, indicating neither strong conviction nor wholesale abandonment.
Insurance company holdings have diminished from 0.36% in September 2024 to just 0.23% in December 2025, reflecting reduced institutional interest from this investor category. Other domestic institutional investor holdings increased notably from 0.34% to 0.89% in the most recent quarter, though this category represents a small absolute stake.
The combined institutional holding of approximately 17.86% remains relatively modest for a listed company of Campus Activewear's size. The lack of substantial institutional ownership may contribute to higher stock price volatility and reduced liquidity during periods of market stress.
Stock Performance: Near-Term Strength Masks Long-Term Underperformance
Campus Activewear's stock price performance presents a tale of two timeframes. Recent momentum has been decidedly positive, with the stock surging 8.08% over the past week and 2.98% over the past month. These gains substantially outpaced the Sensex, which returned 0.16% and declined 4.78% over the same respective periods. The positive alpha of 7.92% over one week and 7.76% over one month demonstrates strong relative strength.
| Period | Campus Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +8.08% | +0.16% | +7.92% |
| 1 Month | +2.98% | -4.78% | +7.76% |
| 3 Months | -3.51% | -2.71% | -0.80% |
| 6 Months | +0.92% | +1.32% | -0.40% |
| 1 Year | -7.47% | +5.37% | -12.84% |
| 2 Years | +2.04% | +13.29% | -11.25% |
| 3 Years | -29.90% | +36.26% | -66.16% |
However, extending the time horizon reveals deeply troubling underperformance. Over the past year, Campus Activewear declined 7.47% whilst the Sensex advanced 5.37%, resulting in negative alpha of 12.84 percentage points. The two-year return of 2.04% similarly lagged the Sensex's 13.29% gain by 11.25 percentage points.
The three-year performance proves particularly damaging for long-term investors. Campus Activewear has plummeted 29.90% over this period, whilst the Sensex surged 36.26%. The resulting negative alpha of 66.16 percentage points represents catastrophic underperformance that has destroyed substantial shareholder value.
The stock's beta of 1.35 indicates higher volatility than the broader market, with a 35% amplification of market movements. Combined with annualised volatility of 29.31% over the past year, Campus Activewear qualifies as a high-risk investment. The negative Sharpe ratio confirms that investors have not been compensated for this elevated risk, receiving negative risk-adjusted returns.
Technical Analysis: Bearish Trend Signals Caution
Technical indicators paint an increasingly bearish picture for Campus Activewear. The stock entered a bearish trend on February 02, 2026, at ₹257.10, transitioning from the previous mildly bearish classification. This deterioration in technical positioning suggests weakening momentum despite the recent price surge.
The MACD indicator shows bearish signals on both weekly and monthly timeframes, whilst Bollinger Bands similarly indicate mildly bearish conditions across both periods. The KST indicator confirms bearish momentum on weekly and monthly charts. Only the Dow Theory provides a mildly bullish signal on the weekly timeframe, with most other indicators neutral or negative.
Moving average analysis reveals the stock trading above its 5-day (₹250.53), 20-day (₹253.14), 50-day (₹260.68), 100-day (₹268.32), and 200-day (₹268.91) moving averages. Whilst this positioning typically suggests strength, the proximity to longer-term averages indicates limited cushion before encountering resistance.
The stock currently trades at ₹269.60, approximately 14.40% below its 52-week high of ₹314.95 and 25.40% above its 52-week low of ₹215.00. The 52-week low provides immediate support, whilst the 20-day moving average area around ₹253.14 represents initial resistance on any pullback.
Investment Thesis: Quality Company, Questionable Value
Campus Activewear presents a paradoxical investment case. The company demonstrates several quality attributes, including strong return on equity of 19.33%, healthy return on capital employed of 16.50%, and conservative leverage with net debt to equity of 0.47. Zero promoter pledging and a clean balance sheet further support the quality thesis.
However, these quality metrics clash sharply with the company's growth profile and valuation. The anaemic 2.60% five-year sales CAGR and 2.04% operating profit CAGR raise fundamental questions about the company's ability to compound shareholder value at rates justifying current multiples. The PEG ratio of 2.35 quantifies this disconnect, suggesting investors are paying 2.35 times more than growth rates warrant.
The company's overall quality grade of "Average" reflects this mixed picture. Whilst Campus Activewear operates a sustainable business with adequate financial metrics, it lacks the exceptional characteristics commanding premium valuations. The quality grade deteriorated from "Good" prior to May 2024 to "Average" subsequently, suggesting structural challenges have emerged.
The short-term financial trend classification of "Positive" based on Q3 FY26 results provides some optimism. Record quarterly sales, profits, and margins demonstrate operational capability when conditions align favourably. However, the bearish technical trend and one-year underperformance of 12.84 percentage points versus the Sensex temper enthusiasm.
Key Strengths & Risk Factors
KEY STRENGTHS
- Strong return on equity of 19.33% demonstrates excellent capital efficiency and profitability relative to shareholder funds
- Record Q3 FY26 performance with highest-ever quarterly sales of ₹588.61 crores and net profit of ₹63.68 crores
- Conservative leverage profile with net debt to equity of 0.47 and debt to EBITDA of 1.63 times provides financial flexibility
- Zero promoter pledging eliminates concerns about forced selling or financial distress at the promoter level
- Outperformed footwear sector by 20.36 percentage points over past year, demonstrating relative competitive strength
- Adequate interest coverage with EBIT to interest ratio of 7.06 times ensures comfortable debt servicing
- Operating margins reached record 18.73% in Q3 FY26, indicating improved operational efficiency and cost management
KEY CONCERNS
- Anaemic five-year sales growth of just 2.60% annually raises serious questions about long-term growth sustainability
- Operating profit expansion of only 2.04% annually over five years indicates structural growth challenges
- Expensive valuation with P/E of 63.48x and PEG ratio of 2.35 difficult to justify given weak growth trajectory
- Three-year stock return of -29.90% versus Sensex gain of 36.26% represents catastrophic 66.16 percentage point underperformance
- Deteriorating working capital metrics with debtors turnover ratio falling to 9.92 times, the lowest on record
- Bearish technical trend with negative signals across MACD, KST, and Bollinger Bands on multiple timeframes
- Declining institutional ownership with FII and mutual fund holdings contracting in recent quarters signals waning confidence
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained quarterly revenue growth above ₹550 crores demonstrating Q3 FY26 performance was not an aberration
- Operating margin expansion beyond 19% indicating structural improvement in cost efficiency
- Acceleration in five-year sales CAGR above 8-10% to justify current valuation multiples
- Increased institutional ownership from current 17.86% showing renewed investor confidence
- Improvement in debtors turnover ratio above 12 times addressing working capital concerns
RED FLAGS
- Quarterly revenue falling below ₹500 crores indicating Q3 FY26 strength was temporary
- Operating margins declining below 17% suggesting cost pressures re-emerging
- Further contraction in institutional holdings signalling loss of investor confidence
- Continued deterioration in working capital metrics with debtors turnover falling further
- Technical breakdown below 200-day moving average of ₹268.91 confirming bearish trend
The Verdict: Tactical Strength Cannot Overcome Strategic Weakness
Score: 48/100
For Fresh Investors: Avoid initiating positions. Whilst Q3 FY26 results impressed, the company's structural growth challenges and expensive valuation create an unfavourable risk-reward profile. The 2.60% five-year sales CAGR cannot justify a 63.48x P/E multiple, whilst three-year underperformance of 66 percentage points versus the Sensex demonstrates consistent value destruction.
For Existing Holders: Consider using near-term strength to exit positions or reduce exposure. The recent 8.08% weekly rally provides an opportune window to realise gains before technical deterioration accelerates. The bearish trend classification and negative institutional flows suggest limited upside potential from current levels.
Fair Value Estimate: ₹215-230 (20-25% downside from current ₹269.60)
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
