Campus Activewear Reports Strong ROCE Amid Declining Profit Trends

Campus Activewear, a midcap player in the consumer durables sector, is currently navigating a challenging financial landscape. The company has demonstrated high management efficiency, boasting a return on capital employed (ROCE) of 19.99%. This strong performance metric highlights its effective use of capital to generate profits.
Despite this efficiency, Campus Activewear has faced difficulties in recent quarters. The company's operating profit has declined at an annual rate of 3.33% over the past five years, and its latest financial results reflect a concerning trend. In the most recent quarter, the profit after tax (PAT) fell by 31.4% to Rs 14.30 crore, while net sales decreased by 7.0% to Rs 333.29 crore.

On a positive note, the company maintains a low debt-to-EBITDA ratio of 1.18 times, indicating a solid capacity to manage its debt obligations. Additionally, institutional investors have increased their stake in Campus Activewear by 2.09% in the last quarter, now holding 17.48% of the company. However, the stock has underperformed the broader market, generating a return of just 4.03% over the past year compared to the BSE 500's 16.96%.