On Tuesday, Campus Activewear Ltd (CAMPUS:IN) shares saw a Kotak analyst increase its price target to INR300.00, up from INR285.00, while the 'Add' rating was sustained. The adjustment reflects anticipation of the company's performance improvement starting in the second quarter.
The analyst cited a recent decline in Campus Activewear's revenue and EBITDA by 4.1% and 21.8% year-over-year in the first quarter, attributing the downturn to a combination of external and internal factors, including fewer weddings and lower foot traffic, as well as a dip in e-B2B business.
Despite the first-quarter setbacks, there are signs of a turnaround for Campus Activewear. The analyst noted that July has shown some recovery, channel inventory levels have returned to normal, and the e-B2B business decline is expected to stabilize. These factors contribute to a more optimistic outlook for the upcoming quarters.
The analyst also pointed out that Campus Activewear could greatly benefit from the Bureau of Indian Standards (BIS) regulations, which may lead to a decrease in low-cost imports and potentially narrow the cost gap with unorganized market players due to higher compliance costs. This could position Campus as a key player in the market.
In light of these observations, the analyst has revised the fair value (FV) for Campus Activewear to INR300 from INR285, while also adjusting the company's estimates. The 'Add' rating has been maintained, indicating that the analyst believes the stock has the potential to perform well in the market going forward.
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