Why is Campus Activewear Ltd falling/rising?

Recent Price Movement and Market Comparison

Campus Activewear Ltd has demonstrated notable strength in the short term, with the stock appreciating by 8.08% over the past week, substantially outperforming the Sensex’s modest 0.16% gain during the same period. Year-to-date, the stock has risen by 2.98%, contrasting with the Sensex’s decline of 4.17%. This recent momentum is further underscored by a three-day consecutive gain, during which the stock delivered an 8.73% return. Intraday, the share price reached a high of ₹281.05, marking a 10.3% increase from previous levels and reflecting heightened investor interest.

Despite this short-term rally, the stock’s longer-term performance remains subdued. Over the past year, Campus Activewear has declined by 7.47%, underperforming the Sensex, which has gained 5.37%. Over three years, the stock has fallen nearly 30%, while the benchmark index has surged over 36%. These figures highlight the stock’s recent recovery as a potential turnaround rather than a sustained trend.

Fundamental Drivers Behind the Price Rise

The recent surge in Campus Activewear’s share price is largely attributable to the company’s strong quarterly results announced for December 2025. After two consecutive quarters of negative performance, the company reported its highest-ever quarterly net sales at ₹588.61 crores. Operating profitability also reached a record high, with PBDIT standing at ₹110.26 crores and an operating profit margin of 18.73%, signalling improved operational efficiency and cost management.

These results reflect a positive shift in the company’s earnings trajectory, supported by a high return on capital employed (ROCE) of 18.57%, which indicates effective utilisation of capital to generate profits. Additionally, Campus Activewear maintains a conservative capital structure, with a low Debt to EBITDA ratio of 1.27 times, underscoring its strong ability to service debt and maintain financial stability.

The stock’s valuation metrics also contribute to investor interest. With a ROCE of 14.5 and an enterprise value to capital employed ratio of 7.4, the company is trading at a discount relative to its peers’ historical valuations. This attractive valuation, combined with a 27.2% rise in profits over the past year despite a negative share price return, suggests that the market may be beginning to recognise the company’s improving fundamentals.

Technical and Market Sentiment Factors

Technically, Campus Activewear is trading above its key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a bullish trend. The stock’s outperformance relative to its sector by 6.21% today further highlights positive market sentiment. However, it is notable that delivery volumes have declined by nearly 47% compared to the five-day average, indicating some reduction in investor participation despite the price rise. The stock remains sufficiently liquid, supporting trading activity for moderate-sized transactions.

While the recent price action is encouraging, investors should remain cautious given the company’s poor long-term growth record. Over the past five years, net sales have grown at a modest annual rate of 2.60%, and operating profit growth has been similarly restrained at 2.04%. This slow growth has contributed to the stock’s underperformance relative to the broader market indices over the medium and long term.

Conclusion: Why Campus Activewear Is Rising Now

In summary, Campus Activewear Ltd’s recent price rise on 02-Feb is primarily driven by its strong quarterly earnings performance, improved profitability metrics, and favourable valuation compared to peers. The stock’s outperformance against the Sensex and its sector, combined with technical strength above key moving averages, has attracted investor interest despite a decline in delivery volumes. While the company’s long-term growth remains modest and the stock has underperformed over the past year, the latest results suggest a potential turnaround that the market is beginning to price in.

Investors should weigh these positive developments against the company’s historical growth challenges and monitor upcoming quarters for sustained improvement before committing to a long-term position.

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