Campus Activewear's Q2 FY26: Stepping Up Growth and Strategic Expansion

Campus Activewear Limited, a prominent player in India's sports and athleisure footwear market, has delivered a robust performance in the second quarter of fiscal year 2026 (Q2 FY26). The company reported a significant 16% year-on-year (YoY) increase in revenue from operations, reaching INR 386.6 crore. This impressive top-line growth was complemented by a remarkable 40% YoY surge in Profit After Tax (PAT), which stood at INR 20.1 crore. Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) also saw a healthy rise of 32.3% YoY, amounting to INR 55.0 crore. These results underscore the effectiveness of the company's distribution-led strategy and its unwavering focus on high-growth categories.

The quarter's performance was primarily propelled by the robust momentum in the distribution business, which registered a strong 20% YoY growth. While online sales experienced a more modest 5.7% growth, influenced by the timing shift of major festive sales post-GST reforms and an accounting change for freight and commission, the overall trajectory remains positive. Management noted that the accounting change alone adversely impacted overall revenue growth by approximately 2%. A key highlight was the outstanding performance of the premium segment (products priced above INR 1,500), whose saliency improved significantly from 45.2% in Q2 FY25 to 57.2% in Q2 FY26, contributing to an improved Average Selling Price (ASP) of INR 672 per pair.

Strategic Initiatives and Market Penetration

Campus Activewear is not just focusing on numbers; it is strategically investing in its future. A significant initiative is the planned new factory at Pant Nagar, aimed at augmenting premium upper manufacturing capacity. This investment is part of a 3-year roadmap, with an estimated INR 110-115 crore allocated for the current financial year. The new facility is expected to add approximately 3 lakh pairs per month (36 lakh pairs annually), bringing state-of-the-art technologies in-house for IP protection, superior quality, and improved cost efficiency. This move aligns with the company's observation of increasing demand for premium sneakers.

The company is also making concerted efforts to broaden its appeal across diverse demographics. Actor Kriti Sanon has been brought on board as the new face for the women's category, a move designed to enhance design language and deliver innovative products tailored for women. This strategy has already yielded positive results, with an encouraging improvement in the women's category mix and a 2% uptick in market saliency for women's and kids' segments. Furthermore, Campus Activewear is piloting an apparel segment in Q3 FY26, launching in about 60 Exclusive Brand Outlets (EBOs) to gauge consumer response, signaling a potential new vertical for diversification.

Expanding Reach and Operational Efficiency

Campus Activewear's omni-channel platform continues to be a cornerstone of its strategy. The company boasts a pan-India distribution presence with over 28,000 retail touchpoints across 700+ districts and 28 states. It maintains a dominant online presence, being a leading footwear brand on major e-commerce platforms like Flipkart, Myntra, and Amazon, with 1.6 million pairs sold online in Q2 FY26. The company is also developing its offline D2C presence through large format stores and a growing EBO network.

Despite a slight slowdown in EBO expansion this year to prioritize profitability and optimize store levels, the company plans to resume aggressive growth, targeting 70-75 new stores annually to reach approximately 500 EBOs in the next 2-3 years. This expansion will provide a strong foundation for future growth and premiumization. Operationally, the company's net working capital days improved to 82 days from 92 days in the prior year, demonstrating efficient management despite higher inventory build-up for the upcoming festive season. While borrowings increased to meet immediate working capital needs, management expects normalization by year-end, leveraging arbitrage opportunities with higher fixed deposit rates.

Outlook and Vision

Campus Activewear remains optimistic about its future trajectory. The company aspires for double-digit growth for the full fiscal year, driven by anticipated demand spur from GST benefits, sustained momentum in the premium segment, and expanded distribution and manufacturing capabilities. Management is also strategically exploring export markets, viewing it as a proper go-to-market strategy rather than a one-off. With partnerships in Sri Lanka and Morocco, the company aims to build a sustainable international revenue stream, capitalizing on India's competitive production costs. This holistic approach, combining product innovation, strategic expansion, and operational efficiency, positions Campus Activewear for continued leadership in the evolving Indian footwear market.