Campus Activewear Ltd
NSE:CAMPUS
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
214.5
367.15
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Campus Activewear Limited Q2 and H1 FY '25 Earnings Conference Call. [Operator Instructions]. Before we proceed on this call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It may be viewed in conjunction with our business that can cause future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements.
The Campus Activewear's management team is represented by Mr. Nikhil Aggarwal, Whole-Time Director and CEO; and Mr. Sanjay Chhabra, CFO.
I now hand the conference over to Mr. Nikhil Aggarwal, Whole-Time Director and CEO, for his opening remarks. Thank you, and over to you, sir.
Thank you. Good evening, everyone. We appreciate your presence at our quarter 2 and H1 FY '25 earnings call today.
Campus Activewear continues to display exceptional adaptability and notable agility with a 36% volume growth navigating challenging macro environment and subdued demand across geographies. Our revenue surged by 28.8% Y-o-Y during quarter 2 FY '24, led by strategic distribution initiatives, including the highest number of annual retailers meet, more than 120, which have been conducted across regions.
We had a successful new product statement drive with our top articles being placed in over 80% of our distribution network. We introduced 87 new styles, including our strong sneaker offerings across channels, further strengthening our product portfolio.
During the quarter, we expanded our large format stores presence. We have introduced our products in lifestyle stores and scaled up our presence in Reliance footprint. During the quarter, we have onboarded Vicky Kaushal and Vikrant Massey, renowned Bollywood actors as our new brand ambassadors. We plan to leverage this association for further building our brand through various media channels. Additionally, our recent Move Your Way campaign launched across various platforms is designed to resonate with the youth, encouraging them to celebrate their uniqueness.
Our gross margin for the quarter stands at 52.8%, marginally lower versus quarter 1 FY '25 that is 53.3%, driven by planned higher promotions and retailers need to showcase new products and drive placements ahead of season in distribution channel.
Our EBITDA margins were lower at 12.3% versus 15.8% during quarter 1, driven by lower gross margin, higher investments in advertisement and sales promotion and higher commission on online business. We believe a part of this dilution has a phasing element as the timing of Big Billion Day offers was more towards week 4 of September. We continue to invest judiciously in media spend, including TV campaigns, outdoor coverage and social media engagements for strengthening our brand and widening our consumer engagement. Our new TV ad with Vicky Kaushal is live on air as we speak.
During the quarter, we have added 9 new stores across India taking a total EBO count to 288. We would further like to update you that our Board has approved a capacity expansion plan at Ganaur and Haridwar with an investment of approximately INR 35 crores. These investments shall help us to cater to the growth in upcoming years.
Here at Campus, our steadfastness and perseverance are anchored by 5 essential pillars, namely product innovation, design philosophy, omnichannel presence and innovative marketing capabilities and our vertically integrated manufacturing system with the digital transformation that strengthens our core and drive the momentum. These critical elements empower us to navigate challenges, amplify our business expansion and enforces us to stay ahead of the curve, thereby creating long-term value for our esteemed stakeholders.
Thank you. And now I hand over the call to our CFO, Mr. Sanjay Chhabra, to take you through more details on the quarter 2 and H1 performance. Over to you, Sanjay.
Thank you, Nikhil. Good evening, everyone, and thank you for joining us in our Q2 and H1 FY '25 earnings call for Campus Activewear. Our operational revenue grew by 28.8% year-on-year to INR 333 crores in Q2 FY '25, largely benefited by higher distribution, which has shown around 30% growth and online channel, around 36% growth. The company sold approximately 5.4 million pairs during this quarter, up 36.2% year-on-year.
The average selling price stood at INR 622 in quarter 2 versus INR 585 during quarter 1, which is largely an open footwear season and INR 658 in quarter 2 last year. The dilution in ASP was largely driven by higher schemes and promotions and distribution channels towards the retailers meet and also a part was attributable to non-BIS inventory liquidation in line with our inventory optimization strategy.
We have been able to reduce our non-BIS inventory by 25% during the quarter. Our overall inventory days have reduced from 126 days in Q2 FY '24 to around 110 days at the end of quarter in FY '25. Our gross margins were at 52.8% during quarter 2 versus 53.3% in quarter 1, marginally lower, driven by higher retailer meet led trade spends.
Our EBITDA for quarter 2 FY '25 was at INR 41.6 crores. The EBITDA margin stood at 12.3% during quarter 2, owing to higher advertisement and promotion costs incurred for performance marketing and marginally higher online commission. PAT stood at INR 14.3 crores in quarter 2 FY '25 and PAT margin was at 4.2%. Our balance sheet continues to demonstrate strength and robust return ratios, such as return on capital employed and return on equity of 18.4% and 15.1%, respectively as of 30th of September '24.
With this summary, I will now conclude my remarks and open the floor to the moderator for the Q&A. Thank you.
[Operator Instructions] The first question is from the line of Priyank Chheda from Vallum Capital.
Yes, I see a great performance. Of course, this has come on a lower base plus it has come at the cost of margin. So my first question is, if there are some one-offs with respect to retailer meet or higher commissions given to them or higher online sales in the Big Billion days, if you can quantify to get us a sense of what could be a normalized margins if there is a one-off cost involved, what was the quantum of that cost?
This is Sanjay. If you look at our gross margin, the dilution in gross margin is only 50 bps. So that's a reflection to this extent, we had higher trade promotions and schemes for retailers meet. Of course, on the ASP dilution front, apart from the trade spends, the liquidation of non-BIS has also contributed. But as far as gross margin, 50 bps dilution, that's the quantification.
And secondly, on the A&P part, yes, we did spend around 1% higher in terms of advertisement and promotion. And that's largely, I would say, phasing we need to look at it from a full year or a longer or 6 months perspective because there was -- there is a bit of seasonality element. We did invest in September and ahead of the season, and we would be getting a return on that during October and November during the Diwali and festival season.
Got it. Wonderful and clear. So there were 2 particular guidances that we were guided. One on the EBITDA margins for the full year to be 17% to 19% range as well as strategically with whatever actions on the growth side we are taking, we will maintain the ASP. So anything that we would -- that you would like to help us think about how FY '25 should be on these 2 guidances that were given?
Yes, Priyank. So see, we said last time that our endeavor definitely is to deliver in those number ranges in terms of EBITDA margins. But of course, at the same time, strategically, we have also taken an initiative to basically liquidate all of our non-BIS inventory within this fiscal year. We don't want to carry any such inventory over to next year. Therefore, keep -- and we do not anticipate honestly a large or any kind of material dilution effect, but there could be some, I mean, because it is slightly older stock.
So to that extent, we would be looking at slightly lower margins given versus the guidance that we've given, slightly lower on that side. But we do expect now that with the balance 2 quarters, obviously, the base is larger in terms of revenue. So there should be higher operating leverage and margin inflow from the balance 2 quarters.
Okay. Got it. Yes. On the traditional channel, sir, we were targeting somewhere around 25,000 touch points by the year-end. Where are we right now? And we also were targeting to increase the billing from that each counter, which we were at around INR 3.5 lakhs per shelf by FY '24, where are we right now on that? And as well as traditionally, we were weak in South and West, you did highlight in the last quarter that there were a few product gaps that you plan to bridge. How has been the progress on these 3 aspects? One is on the touch points, the increase in the share of the each counter on the billing side and the South and West.
So on the touch points, we have grown our total number of touch points from about 22,000 let's say, or 22,200 at the end of last quarter to about 23,000 at the end of this quarter. So about 800-odd touch points have been increased. At the same time, we have grown our share. There has been a product mix. So with the right product mix in place, we have been able to grow our volume significantly over this entire channel at about approximately 36% -- sorry, 44% is the volume growth in the GTM channel, which has led to about a 36% value growth.
So there has been definitely an increase in per counter share which has led to this kind of growth. So our main objective for this quarter has been about placement where we have a certain number of focused articles that we call them at -- which are priority articles or hero articles. And those are -- the endeavor was to maximize the placement of those focused articles across this entire channel.
And that has been a very successful drive, which has led to a lot of this volume growth, right, for the channel. In terms of geographical split, we are very similar to last quarter. We have been able to grow our West share from about -- actually about 20.8% last quarter to about 24.4% this quarter for the West. Central is at 10% each in both the quarters. South has slightly degrown in this quarter from 5.1% last quarter, 3.3%. That is primarily due to a bit of a seasonal effect because of the open category being phased out in quarter 2. Open category sells the most during quarter 1 as a seasonal product. So that is the only thing. Otherwise, everything else remains the same in terms of the mix, and this is geographical split.
Amazing. Just a last question on the key few other strategic areas that we were focusing with respect to sneakers, women's portfolio. How has been the growth in that, if you can highlight? As well as I do see that our NPDs and the number of launches has have seen a step up growth. So what has been the contribution from such NPDs? How do you define the NPDs when you track such a large number of new additions, new articles getting added. So how do you track the NPDs for the full year and their contribution in the revenue?
So NPDs, let me take your second question first. NPDs are tracked basis the placement, right? So of course, there is a certain number, which strategically I will not be able to talk about on this call, as that's the strategy for the company. But there is a certain contribution that we target from NPDs every quarter. And even this quarter, like we've launched about 87 new styles. Those have really, really done well, and we have had a very, very good response. So that has, again, also added to this volume growth. While coming back to sneakers, right, sneakers amongst those 87 styles, a lot of them, I would say, at least 30% are about sneakers, the new sneaker range that has been launched, and it's also received an overwhelming response. Even in terms of the new expansion plans, that we just mentioned in terms of Haridwar and our Ganaur plant.
The expansion is mainly to do with the sneaker range, right? So that will help us expand the capacity to produce even more volume of higher-quality sneakers in the coming quarters. So that's where we are in terms of the initiatives. Again, another initiative that focus area is about the demographics in terms of men, women. So very happy to say that we've grown our share of women by another percent. So right now, the split is about 78% and 22%, approximately 78 men, about 14% women and balance from kids. So the overall share has gone up from, let's say, 21% to 22% for women and kids put together.
Okay. Sorry, if I can just squeeze in one more question. So Chinese imports...
Sorry to interrupt sir. Priyank sir, can you please fall back in the question queue? The next question is from the line of Umang Mehta from Kotak Securities.
My question was more on primary and secondary sales. So last year, we had seen that in third quarter, we have seen some restocking in some states where you have taken channel inventory correction. And given that there is an early festival this year and you spoke about the retail, do you see any kind of headwind for primary sales in the December quarter, particularly in the NPL channel?
Not at all. In fact, see quarter 2 was a lot about primary statement as we did see consumer sentiment being subdued at the tertiary level, but it's given for quarter 3, it's like -- it's back on track and the markets have opened up. So we don't see any tertiary issues at the moment. And a lot of the placement that was done during the end of quarter 2 has basically materialized, and we are now basically looking at the management of those orders and repeating the orders for those statements. No issues in terms of primary as well.
Understood. That's very encouraging. Second thing was on A&P. Given that you have in these 2 ambassadors and you spoke about the TV campaign, on an annual basis, would it be able -- would you be able to share any percentage which you are looking at? You spend around INR 108 crores last year on A&P. How much growth can we expect from these initiatives?
No, we cannot quantify this. These are actually building blocks for the brand, right? These are -- in terms of spend, it will be pretty much the same as last year in terms of the overall A&P spend. But in terms of quantification of the growth in business from these initiatives, that would be, I would say, it's a longer-term initiative. It takes time to constantly build the brand and grow it over time. So this would not be ideal to quantify at this stage.
Understood. And this is my last question on performance marketing, given that you called out that it was higher this quarter. Now again, if I go back to the base quarter in 3Q earlier, you need to recoup the sales loss and deeply in the performance marketing spend, which had weighed on your EBITDA margin in 3Q last year. Given the tailwind of big demand as this year, that shouldn't recur, right? This year, we should see margins normalize in 3Q in that sense. Is that correct?
That's a right interpretation. I mean because of the big billion day falling in week 4 of September, so we couldn't get the fullest ROI. I mean, most of the improvement in top line would get reflected in the next quarter. However, we had to do the investment upfront.
[Operator Instructions] The next question is from the line of Gaurav Jogani from JM Financial.
Congratulations on the strong revenue growth number. Sir, my first question is with regards to the spends that you mentioned on the trader meet, et cetera. So one would be giving them discounts on the product price. But would it be the trader meet expense would be accounted in the other expenses rather than the gross margins? Please correct me, I'm not interpreting the right sir.
A typical accounting question. I mean if I do a spend, it gets accounted in other expense or in sales promotion. But if I -- if I support my distributor through a credit note, then it's a reduction to the sales and hence lower ASP and lower gross margin.
Okay. Okay, sir. Got it. Got it. Related to this, given that there is a focus of clearing the BIS inventory the non-BIS inventory this quarter -- sorry, this year rather FY '25, would it be prudent to estimate some contraction in the gross margin at least for this year? And maybe once things normalize and restore, the gross margins could restore in the end, and then hence, we can restore the guidance also of the 17%, 19% that we have given?
Yes. It's -- I mean, it's 9 months down the line, so we are not left with too much of non-BIS inventory. However, in a phased manner, we are trying to sort of liquidate the entire inventory by FY '25. So which means we are targeting that as of March '25, we should not be sitting on anything which is produced prior to December '23.
Sure. And sir, the last question is if you can highlight some of the initiatives that you have taken over the last 1.5 years to drive the growth across the various panels and what you have done in terms of the slowing growth? And additionally, if you can also help us to quantify what not quantify rather help us out how BIS once the non-BS inventory is out, how this measure can help the company as a whole. That would be...
So no, it's -- this growth is definitely not a one quarter phenomena. It has come on the back of several initiatives we've taken over the last few quarters. So I'm very proud of the new team that has been put in place now after a lot of restructuring that have happened over the last few quarters. So one is on the back of that. Second is a lot of these initiatives in terms of strategies across the distribution channel, more placement, more focused articles with higher volume throughput for each article, very focused.
This is -- basically, we are going for very high efficiency execution across GTM across all the channels rather and then new channels have also been incubated right, in terms of more stores in terms of LFF like Lifestyle, Reliance Trends. We're also focusing on starting of exports, for example, so -- or incubating that it's right in the process.
And so there have been several initiatives which have been taken both at the product level and at the geographical, channel level demographics, we basically cater to all the pillars that would lead to sustainable growth going forward. And in terms of BIS, we have been very, very positive and very happy with the way the Chinese imports have basically largely been dried up.
We also get to know from our channel deck that there have been absolutely no Chinese finished goods import over the last 9 to 10 months in the country today. largely due to the non-DIS regulation. So we do anticipate that over the next maybe 1 or 2 quarters, this entire non-BI inventory would sort of dry up and that's when the domestic brands across the country would benefit from this.
[Operator Instructions] The next question is from the line of Videesha Sheth from Ambit Capital.
My first question was on the ASP. While for FY '25, it would be impacted as we trying to liquidate the noncompliant inventory. But from a long-term basis, how are you looking at the trajectory to shape up?
So we may end up -- I mean, this year would not be a year wherein we will see a step-up growth in ASP. But from a longer-term perspective, we would continue to go with the trend of perhaps sneakerization or will add the NPDs, which are more trendy and likewise, we can command the premium and the ASP eventually would go up. I mean it would be a part of strategy that there will be certain core items in the distribution channel to drive volume.
At the same time, we will be displaying a wider range of our articles in the other channels, which include the large pharma stores, the online and our brand.com and our exclusive outlets. So these channels would continue to help us drive the premiumization and hence, a realization of higher ASP. Having said that, I mean, it would start from the product strategy per se, wherein certain percentage of our products would be developed in the premium range to help us continue with the strategy.
Yes. Just to add to that, Videesha, like we do see an opportunity gap in the market in terms of the premium price points, which is 1,500 plus to about, let's say, up to 2,500, 3,000 plus. And there is a significant gap there in terms of availability of high-quality issues at these price points. And we are completely committed to delivering a stunning premium range as well like -- and it would be a combination of sneakers, for those, all kinds of categories. There is no category in terms of closed shoes apart from obviously levers. We don't do leather, but every other category would be touched in this -- even in the price points.
Got it. And second, on the capacity expansion by when do you expect it to get commercialized?
I think, conservatively by end of quarter 4.
The next question is from the line of Giriraj Daga from Visaria Family Trust.
Yes. So my first question is related to non-DIS command. So if I was to say like-to-like realization, what should be the call out for let's like how much a decline on growth or what we witness the realization for quarter 2.
Okay. If you -- it is your question that to what extent the ASP dilution is that equation. So that would be in the range of INR 8 to INR 10 per pair.
Okay. Okay. So we had about -- like 5.4% was a decline, roughly 5.5%. So roughly about 1.5% came from the non-BIS mark?
Yes.
And rest because of the mix -- channel mix?
Rest because of the higher schemes in the distribution channel is to drive the retailers meet and also remaining portion would be because of the mix.
Okay. My second question will be on your channel expansion. You mentioned about 23,000 touch points. If I look at for a 2-, 3-year perspective, like what is the total time you are addressing here? Can this 22,000 go to 40,000, 50,000. Now what is the outlook there for the 2-year perspective?
So we do -- we have a universe of -- and I'm talking about close to because the overall universe is close to 60,000, 70,000 retailers in the country, but that also includes very low-value clippers, which is a starting point. If we talk about close, there is a universe of about 40,000 to 45,000 outlets, of which the top 23,000 are the ones that we're catering to at the moment. But over time, like over the years, we will continue to add on at least 5% to 10% new outlets every year as we also have a big opportunity to continue to gain market share in each and every outlet. So it's both the initiatives that we'll run in and demand.
The next question is from the line of Prerna Jhunjhunwala from Elara Capital.
My first question is on how do you see the demand now in the second half, given that the festive demand is robust in the other categories. So how do you see the demand going forward?
Demand has definitely opened up compared to a as the festive seasonand this was expected as well. So at the moment, I would say that we are happy with and satisfied with the way the demand has shaped up in quarter 3.
How has been the festive sales for you.
Encouraging, it was good.
Okay. And given that there is a mix valuation in Q2, how do we see the mix improvement coming? Do we see this mix improvement coming in the second half? Or it should be a more longer-term thing that will happen?
We see some bit of improvement coming in through, I would say that the retailers meet over the event, which was specific to would not be at good scale in Q3. So to that extent, our ASPs and margins would improve. Likewise, non-gas liquidation. Of course, that's an event that may not to the extent of INR 10 crore, INR 12 in Q3 and Q4, difficult to quantify. But yes, retailers meet is an event which from a controllable factor, yes. And otherwise, organically from a business perspective, when we move to Q3, it is more of closed footwear, higher sale of shoes and has the ASPs improve by virtue of seasonality.
So may it be possible to quantify the non-BIS inventory quantum with you for us to just have an understanding on how much can be the second how long?
A bit difficult to quantify at this point in time. However, it's not a sizable chunk. I mean we have moved past 9 months since the BIS implementation at our factory line or, I would say, rather 10 months because first of December or mid of December, we implemented BIS. And so difficult to give you exact numbers, but we are left to the very small portion.
Okay. And what has been a revenue growth and margin guidance for a FY '25 and beyond?
Sorry, no, I would not think of giving any guidance. We have shared quite candidly in terms of the bidding blocks, for the rest of the year and what we expect in terms of non-PI as well. So we do expect -- I can just tell you that we certainly expect much superior margins to last year overall at the end of the year.
The next question is from the line of Ankit Kedia from PhillipCapital.
So government is talking about Indian footwear sizing. Do you think that's going to have a positive impact given that volume of manufacturing is happening in-house for you now?
Absolutely. It is something that can have a materially positive impact, but it would take time. We believe that it's a company like this does not happen overnight in terms of a transition and the effect of it. But yes, overall, on a long-term basis, it should have a positive impact. As the consumers, there would be one size and the consumers would have more, let's say, visibility and more comfort in terms of the sizing when they're selecting any product.
And do you think unorganized market that time, given that government has been a leeway to a lot of unorganized players in terms of revenue threshold? And that's where some of the brand players like yourself can really disrupt the market at a lower price point at the premium level?
Well, we don't necessarily compete with the unorganized segment because there's -- their product offerings and the quality and the strategies are largely different from organized players like ourselves. So we would like to just continue to focus on the initiatives that have been working well for the brand. And just keep building on that. That is the long-term objective. So I don't see any -- honestly, any kind of threats or issues from any unorganized players in the market.
And sir, my last question is on the EBO channel. If I look at B2C offline, the growth has tapered a bit in the last couple of quarters. Is it because the number of EBO growth is moderate? Or is it to do with the general demand environment being slow?
Yes, it is largely due to the substitute demand in the market. We have tapered growth and the opening of new stores accordingly. As we believe that the demand is picking up, we will certainly expand the store opening more -- accelerate the store opening from now on.
And sir, what is the target EBO we are targeting for FY '25?
It would be difficult to comment at this point is largely dependent on the availability of the right location. It's very important to not go just after a certain number when you're opening ever, but you need to be in the right place. And the right TT, the right geographical set. So that is more important at this point. And -- but we do endeavor to open about 70 to 80 stores every year.
The next question is from the line of Devanshu Bansal from Emkay Global.
Congratulations on a good pick up in Q2. Sir, sorry for persisting on this, but this non-DIS inventory must have been declared by you to the government, right? So any specific reason for not calling this out because this must be ready with you, right?
Yes. Any specific reason, meaning we would have these inventories both some at a warehouses and some at the distribution channels. So it depends, like to what extent we need to -- first is, we need to push it out from our warehouses and then if at all required, we see that in the distributors place such inventory got stuck up and they are not sitting on inventory days beyond certain defined norms, which we monitor through the DIS.
Okay. But out of this INR 45-odd crores of inventory that is on your books, can you sort of call out as in how much is the left over non-BI inventory?
We can call out our inventory, but we cannot quantify what is sitting in our distributors, network or distributor channels, which are non-DIS partners, right? So at an overall level, I mean, it becomes difficult to give a number. However, since -- I mean, as we are with every passing month, such inventory is getting reduced. And as I said that the ASP dilution was to the extent of INR 10 to INR 12, which is just 2%. So it's not a very big number to concern us. Yes, it is a bit dilutive on ASP, and it will be there for, let's say, 2 more quarters max.
The next question is from the line of Varun Gajaria from Omkara Capital.
So just wanted to understand what is the commission component in our other expenses? I'm sorry if I missed that earlier.
Yes. Sorry, can you please come again?
What is the commission component in our -- the other expenses go ahead? And how does it stack up Y-o-Y?
Okay. Online commission is ranging between 6% to 10% depending on the portal. And again, it becomes very difficult to put a specific number if you are looking at it is 6% to 10% of our online sales, online marketplace sales.
Okay. So what has largely within the other expenses? It seems they're up 1% Y-o-Y.
Okay. In other expenses, we have the freight and warehousing piece, the online commission piece and all other SG&A admin expenses, which includes rather than travel CSR and provisions for receivables, inventories and all that stuff. If you referring to, of course, this quarter. This quarter, we have shown a 9% growth in marketplace. So correspondingly, online commission will also grow because of the volume impact. And there is an element wherein the mix will play in which total we are selling higher. So versus last quarter, the online commission is higher by around INR 2 crores, INR 2.5 crores.
Got it. Okay. And sir, how is the demand now looking?
We already answered that question as demand has opened up compared to quarter 2.
[Operator Instructions] Next question is a follow-up question. It's from the line of Priyank Chheda from Vallum Capital.
Sir, December quarter seems to be contributing almost 1/3 of our total sales for the annual revenue that we target. And in the past, 2 years ago, we did touch upon 7 million pairs in the quarter of December '22. How do you see this panning out as far as December '24 goes, what is -- what are the internal targets that you're thinking of to beat the previous peak?
Yes, Priyank that will go into the guidance. So I would refrain from giving any guidance for the quarter. But like I've mentioned a couple of times on this call that we have certainly seen demand opening up at the tertiary level and given the initiatives and that we started early in terms of the retailers meet and the placement drive, we certainly see a good, let's say, replenishment and repeat orders coming from those initiatives. So we don't see any issues in terms of both primary and tertiary sales for quarter 3 going forward. That should contribute to a decent quarter 3, as I said.
Perfect. Sir, on B2C online has been the growth for marketplace as well as for O2O and as far as O2O goes, which is into a D2C online O2O, there was a destocking, which we called out, which has bottomed out in Q1. So have we started seeing sales picking up? Now have you reached to aroud INR 30 crores, INR 35 crores of sales per quarter in that channel also?
Yes. I mean, overall, we have seen the sales, both value and volume to grow in 2 of our biggest channels, online and distribution. So online also, in the earlier call, I mentioned that our Q1 was the last quarter wherein we had the impact of higher base and that stand corrected. So now from this quarter onwards, we are showing a growth in B2B and O2O. O2O, by and large, I would say that now is sort of nonexistent, very small portion. It is largely B2B wherein we do outright sales to some of the portals. And versus last year, we have shown growth in that as well. So we have grown in marketplace by around 9%. But in the outright, we have grown at a much higher rate.
Okay. So when we say about phasing of performance marketing spend, what we really mean in that way?
It's a strike in marketplace, I do invest for a particular month. But whatever things happens in the last few days of the month, there is an element of GIT and that does not get recognized as a sales, whereas I have done the marketing spend, right? So it's a normal course, but then those last 4, 5 days is a big building day period, then a big number goes and sits as a GIT, right? From an accounting perspective, I tend to recognize that sales in the subsequent month and in this case, subsequent quarter.
Got it. Got it, clear. And just last question on your non-PI inventory. It can be the case for the industry as well where the inventory would be higher. And at least MCA data suggests that Chinese imports are on the rise, at least in September quarter, they have risen in terms of absolute -- in terms of total imports that we do, which is before the deadline was ended and then the non-BS inventory deadline was also extended until June '26.
So if it's the case for industry, would it also impact the non-BIS inventory ASP for you for still the time industry also liquidated the non-BS inventory.
So just a small correction there. The MCA has given time for the non-DIS liquidation until July 2026 to the entire industry, but the imports were banned from China for finished goods, starting November, I believe, November or October last year. So since then, no finished goods has been imported in the country, only SFG, to some extent, like upper or sold or some raw materials is basically being imported from China.
Having said that, we do not anticipate like the ASP dilution, like what Sanjay just mentioned in terms of 1% to 1.5% or let's say, maximum 2% ASP dilution on account of non-BIS goods. We don't anticipate any dilution further than that on account of that.
The next question is from the line of Aliasgar Shakir from Motilal Oswal.
Congratulations on a pretty decent set of revenue growth. Nikhil, my question is on the margin. So if I understand correctly, you mentioned that FY '25 margin should be higher in FY '24 margin. Now 1H, I observed that we had about 140 bps down. So that imply you should probably then in that case, do nearly about the high teens margin in the H2, which obviously also gives you operating leverage because of the higher revenue base.
That's right. Without commenting on specific margin percentage, your interpretation is correct. The second half definitely contributes to much higher margins than first half.
Got it. And a quick clarification on the revenue side. Now I know you don't want to leave guidance. But this quarter, we did excellent, thanks to also a low base of last year. So in that context, now, I mean, please why the base will be obviously good given that it's seasonally strong quarter. But should we expect kind of similar trends to continue or probably this quarter was benefiting because of the lower base and therefore, we should not extrapolate that.
Yes. Certainly, I mean, this quarter 2 had a benefit of lower base, which got corrected. And of course, the was element of strong execution as far as distribution is concerned, to both having organizing retailers meet and driving product placement. So to that extent, I would say that we have, by and large, tried to cover the gaps in our execution and got our fair share in the market. And going forward, we would continue to sort of build on this, whatever good work we have done on the ground. However, I would just like to say that 30% growth is a number which would -- I mean, you can't have that quarter-on-quarter, right?
Yes, that's true. But in the past, we've been talking about double-digit growth. So in this particular quarter, in double-digit growth after probably 7 quarters. So that kind of double-digit growth now trajectory that we have seen in Q2 that at least should continue.
It's the guidance again, but see, all the building blocks will certainly help us a lot. So the endeavor is that only. I would just want to give you some comfort that is the endeavor. The rest, we, of course, need the market to support, which certainly, the macros have improved in the country in quarter 3.
The next question is from the line of Rajiv Bharati from Nuvama.
There has been correction issues from the trade side in the business. We don't see that in your numbers. But are you hearing something of similar order in the competition, sir?
Can you elaborate the correction in what sense?
Collection. Collections in the sense. Collections...
Our collections, in fact, our DSO days have come down from, I believe, 35 to 30 days in quarter 2 end. Sanjay, do you want to elaborate?
I just put that we do have a strong system in place to monitor our receivables, our receivables and I mean to restrict our exposure. The later part of your question that are you hearing this from competition, you would retent comment on that. But as far as we are concerned, we do have systems in place how to deal with the customers with overdue outstanding. I mean, we don't overexpose unduly just to comp in the inventory.
Yes. So just to add to Sanjay's point, like the sales has not come on the back of pump and dump. We can just say that.
And on the online , what is the credit to extent because you said the growth is higher there?
Online marketplace, they pay immediately after the replacement or no question ask return period is over, so which is largely -- I mean, the agreed trade day is 21 days, and we do collect within 30 days.
The next question is from the low of Prerna Jhunjhunwala from Elara Capital.
Just wanted some details on the CapEx that you mentioned in the beginning of the commentary that you were undergoing a INR 35 crores. Could you please highlight what will be the capacity expansion or backward integration initiatives that you're taking away?
This would be a combination. I would say that the capacity expansion would be to the extent of INR 10 to INR 12 as far as our backward integration is concerned.
So it will be net capacity addition or it will be just backward integration? I'm just trying...
It will be backward integration, it's more the component capacity addition.
Okay. And for the capacity 35 million continues to remain there.
That continues to remain there. And in the event of season, we can look at a small investment to debottleneck, wherever -- whichever, I mean, village, Dehradun and Baddi, wherever we need to unlock some of the capacity. To that extent, we have the flexibility.
Okay. And this INR 10 to INR 12 capacity similar for upper and sole both or is it different?
Yes. It's at the moment. So there are both the projects in the pipeline for both upper and sold. There would be capacity expansion in both these areas. On the upper side, specifically more for sneakers to make high-quality sneakers. And sole is a regular expansion of the entire sole project, the sole plant that we have in addition of even...
The next participant is from the line of Umang Mehta from Kotak Securities.
Nikhil, I heard that marketplace grew by 9%, which means that B2B outright more than doubled Y-o-Y basis. Our understanding was that over reprioritizing the B2B panned or greater core on pricing. I just wanted to understand what has changed.
So nothing much has changed except for the big billion day as explained earlier. So the lower growth in marketplace is only a reflection of timing of big building day had it been during September, mid of September, we would have been able to recognize the entire sales. But as I said that it was in the last week of September, so large -- or large part of the Big Billion Day sales was sitting in GIT in our books.
The entire Big Billion Day is on outright basis, is it.
Sorry?
The Big Billion Day model is on an outright basis for you completely.
Yes.
No, no, no. Big Billion days both.
Umang, I'm just helping you understand that it's not that outright has grown and marketplace has shown a slower growth. Marketplace would have shown a growth a decent growth had the Big Billion Day timing would have been different.
Understood. Sure. And just one thing if you can hedge the this quarter as several one-offs and different as kind of impacting margins, would you be able to share any clean EBITDA margin print and it just so that we anchor ourselves to a cleaner number?
Again, I already explained that the one-off was the retailers need. And if you see the gross margin dilution, that is only to the extent of 0.5% INR 33 crores is roughly INR 1.5 crores to INR 2 crores. So to that extent, and -- to the extent of non-BS liquidation, it would be, again, in the similar range, I would say, around INR 80 lakhs to INR 1 crores. So to that extent, it's one-offs. So 1% is to the one-off risk whatever you see in the EBITDA margin, a lower EBITDA margin is driven by phasing of A&P spend, phasing of CSR and all. So all these things, I mean, on a quarter-on-quarter basis, these are moving pieces. I would suggest that a full year view would be a more relevant year.
The next question is from the line of Ankit Kedia from PhillipCapital.
Sir, just one question on -- for BIS compliant inventory, we are doing a type 1 inventory in the market. Is the retailer educated enough to train the consumer that our product is more superior versus unorganized or versus competition? How are we educating that or charging a premium to a consumer for type 1 inventory?
So it's about the brand and the legacy of the brand. It's not -- Campus has been there in the market for the last almost 25 years now. So it's about the comfort and the trust and experience of the distributors and retailer partners. They trust the brand, they know us very well, the quality, the designs of the shoes. They know that Campus stands for excellence in quality along with the latest in design quality material trends across the -- bringing them first to the country across -- from across the world in very reasonable price points. So it's nothing that is out of books for them. And it's very easy for them to sell this to the end consumer.
And do you think you can manufacture time to inventory also at a lower price point to compete with the unorganized market and lower volumes?
Come again, sorry, your volume is buffering.
I said that do you think you want to manufacture inventory at the lower price point to compete with unorganized market to gain market share and volumes?
We can, but it would just dilute the ASP, and we do have the starting price points of 899. That's where we start selling the shoes from. I'm talking about men closed shoes, shoes. And going any way less than that would further unnecessarily dilute the ASP. So we take a very calculated call in terms of the number of pairs that we need to sell for each and every price point. So the overall ASP can be maintained. We don't want to also further dilute the brand because any -- going everything goes in that also unnecessarily dilute the brand.
Ladies and gentlemen, that was the last question for today's conference call. On behalf of Campus Activewear Limited, that concludes this conference. Thank you for joining us. And in case of any further queries, please reach out to Campus Activewear's Investor Relations team at ird@campusshoes.com. You may now disconnect your lines. Thank you.