India Ratings Affirms Campus Activewear's LT rating

Campus Activewear said that India Ratings and Research has affirmed the company's long-term issuer rating at 'IND A+' and the outlook on the same is 'positive'.

India Ratings said that the 'positive' outlook reflects a sustained premiumisation of the portfolio and strong volume growth in H1 FY23, resulting in a substantial increase in the revenue, and the likelihood of continued growth over the second half of the year while maintaining a strong credit profile.

Moreover, after the initial public offering and listing in May 2022, the company's corporate governance and financial disclosures have improved.

The rating agency further stated that a significant improvement in revenue along with profitability by way of increasing the share of premium products, while maintaining the credit metrics, will be positive for the ratings.

However, lower-than-expected revenue diversification and/or a deterioration in the EBITDA margins, higher working capital requirements, or a large debt-funded capex, leading to the net leverage (net debt/ EBITDA) exceeding 1.5x, on a sustained basis, could result in the outlook being revised to 'stable'.

Campus Activewear commenced the commercial operations as Ankit International in August 2015. The company is a part of the Hari Krishan Agarwal group of companies within the larger Action Group, which has been in the footwear business for over three decades.

The company reported 48.51% drop in net profit to Rs 14.54 crore on a 22.04% rise in sales to Rs 333.17 crore in Q2 FY23 over Q2 FY22.

The scrip tumbled 4% to end at Rs 426.50 on the BSE yesterday.

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