Campus Activewear Ltd (NSE:CAMPUS) Q2 FY23 Earnings Concall dated Aug. 16, 2022
Corporate Participants:
Nikhil Agarwal — Whole Time Director
Piyush Singh — Chief Strategy Officer
Raman Chawla — Chief Financial Officer
Analysts:
Vicky Punjabi — UTI Mutual Fund — Analyst
Jignesh Kamani — GMO — Analyst
Ankit Kedia — PhillipCapital — Analyst
Manish Poddar — Motilal Oswal Asset Management — Analyst
Akshay Kothari — Envision Capital — Analyst
Aliasgar Shakir — Motilal Oswal — Analyst
Jay Kumar Doshi — Kotak — Analyst
Unidentified Speaker —
Ashwin Agarwal — Akash Ganga Investments — Analyst
Nitin Gupta — CLSA — Analyst
Harsh Yogesh Shah — Incred — Analyst
Gaurav Jogani — Axis Capital — Analyst
Tejash Shah — Spark Capital — Analyst
Presentation:
Operator
Good day, ladies and gentlemen, and a very warm welcome to the Campus Activewear Limited’s Q1 FY23 Earnings Conference Call. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Before we proceed on this call, let me remind you that the discussion may contain certain forward-looking statements that may involve known and unknown risks, uncertainties and other factors. It may be viewed in conjunction with our businesses that could cause results, performance or achievement 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 Agarwal, whole time Director and CEO, Mr. Raman Chawla CFO, and Mr. Piyush Singh, Chief Strategy Officer. I’m now glad to hand the conference over to Mr. Nikhil Agarwal, Whole Time Director and CEO for his opening remarks. Thank you, and over to you, sir.
Nikhil Agarwal — Whole Time Director
Thank you and welcome everyone for joining our quarter one FY’23 earnings call today. I believe, everyone is staying safe. We appreciate and deeply knowledge your trust in our vision to create India’s leading sports and athleisure footwear brand. I am delighted to share that our quarterly performance has been in line with our expectations, despite an uncertain and inflationary macro environment. There has been a sustained improvement in Y-o-Y quarterly financials, exhibiting marked improvement in both top line and bottom line numbers, compared to quarter one FY ’22 which was largely impacted by the second wave of COVID-19 last year. Because of seasonality seen across product mix consumption, quarter one empirically has been contributing 18% to 20% of our annual net revenue. During quarter one FY’23, we sold more than 5.5 million shares at an aggregate level, thereby clocking net income of INR338 crores and a Y-o-Y growth of about 150% versus quarter one FY’22 which was at about INR135 crores. Both trade distribution and D2C channels have delivered a holistic growth of more than 150% of fees on a worldwide basis versus quarter one FY’22.
Just to highlight, we sold the highest ever first quarter volume in the history of Campus at 5.6 million sales, registering a Y-o-Y volumetric growth of about 141% in comparison to quarter one FY’22. Along with volume, our quarterly ASP has also grown by about 3% from INR580 in quarter one FY ’22 to INR597 in quarter one FY’23, despite a challenging inflationary environment. Campus Activewear’s balance sheet continues to demonstrate [Technical Issues] with robust return ratios such as ROCE and ROE of 37.4% and 38.2% respectively as of 30th June 2022. We are sincerely thankful to our end consumers, our channel partners and our passionate team, which has helped us in delivering this performance, which earmark the underlying strength and resilience of the brand. As always, we thank you for your invaluable support and investments.
I will now hand over to our Chief Strategy Officer, Mr. Piyush Singh for his remarks. Thank you.
Piyush Singh — Chief Strategy Officer
Thank you, Nikhil, and greetings to everyone. Adding onto what Nikhil just said, while FY’22 was an exciting year for all our stakeholders, we have started FY’23 on a strong note from both an operational and a financial performance standpoint. All our distribution channels, category cohorts and price segments have demonstrated robust growth both in terms of volume and value amidst the challenging operating environment impacted by supply chain disruptions and inflationary trends. Basis price segments, our sales rate in quarter one FY’23 has exhibited sustained premiumization vis-a-vis FY’22 to full year, wherein sales quarter from semi premium and premium categories have increased from 64% in FY’22 full year to 68% in quarter one FY’23. Similarly on a category basis, the revenue mix across men and women and kids have improved from 84/16 in the favor of men in FY’22 full-year basis to 81/19 in quarter one FY’23 for men and women and kids respectively. On a trailing 12-month basis, revenue from operations increased by almost 17% on a year-on-year basis to INR1397 crores in TTM Q1 FY’23 as compared to FY’22 full year revenue at INR1194 crores. Similarly TTM quarter one FY’23 EBITDA stood at INR290 crores as compared to FY’22 full-year EBITDA at INR244 crores, demonstrating almost a 19% year-on-year growth. TTM quarter one FY’23 EBITDA margin also improved at 20.8% versus 20.4% for FY’22 full year.
Net profit during the trailing 12 months of quarter one FY’23 stood at INR151 crores with a PAT margin of 10.8% as against a full year FY’22 PAT of INR124 crores at a margin of 10.4%.
On the supply chain front, we continue to stay cautious of the challenging inflationary environment in the near-medium term, ensuring that RM and semi-finished goods availability above everything else to maximize sales potential in the coming quarters.
We continue to maintain a close watch on our input costs as well. As an outcome, while our material margin has improved from 48.4% in quarter four of FY ’22 to 49.6% in quarter one of FY’23. Our gross margins have stayed intact at 36% across both the quarters. We are confident of maintaining that trend line growth trajectory and margin profile in the near to medium term.
I will now hand over to our CFO, Mr. Raman Chawla to take you through more details on the quarter one FY’23 performance. Over to you, Raman.
Raman Chawla — Chief Financial Officer
Thanks, Piyush. Thank you so much, good afternoon everyone and welcome to quarter one FY’23 earnings call of Campus Activewear Limited. During the quarter under review, Campus as a brand demonstrated a lot of resilience. Campus delivered its best first quarter, both in terms of top line and the bottom line growth. Revenue from operations increased by 149.6% year-on-year to INR338 crores during the quarter with both channels, visible [Phonetic] trade distribution and D2C, exhibited similar Y-o-Y growth profile in this quarter at about 150% year-on-year growth.
Our quarter one FY’23 sales volume registered at 5.6 million pairs as against 2.3 million pairs in quarter one FY ’22, thereby generating a 141% year-over-year volume growth, while quarter one FY ’23 aggregate ASP stood at 597 versus 580 in quarter one FY ’22, thereby resulting about 3% year-on-year ASP growth.
In terms of profitability, EBITDA was at INR62.3 crores in quarter one FY ’23 as compared to INR16.1 crore in quarter one FY’22. EBITDA margin stood at 18.4 in quarter one FY ’23 versus 11.9% in quarter one FY ’22.
In terms of our net profit during the quarter, it stood at INR28.7 crores as compared to INR2 crores in quarter one FY 2’2 and our profit margins back margin stood at 8.5% in this quarter versus 1.5% in quarter one FY ’22.
Moving onto the balance sheet, our net debt has reduced from INR174 crore in FY’22 end to INR124 crores as of 30th June. Net debt to EBITDA ratio has improved from 0.7X in FY ’22 to 0.4X in TTM quarter FY’23. Similarly, our return on capital employed has also gone up from 29.7% in FY’22 to 37.4% in TTM quarter one FY ’23, and our return on equity has also gone up from 32.9% in FY ’22 to 38.2% in TTM quarter one FY’23.
With this, I conclude and hand over to the operator for question and answer. Thank you.
Questions and Answers:
Operator
Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Vicky Punjabi from UTI Mutual Fund. Please go ahead.
Vicky Punjabi — UTI Mutual Fund — Analyst
Hi sir, thanks taking my question. So just the first thing actually I wanted to understand the reasons for this seasonality in the business because, I mean my thinking was that and given 4Q had that Omicron impact and 1Q volumes could have been a little better than what we saw in the 4Q, but the volume is pretty similar. Can you help me understand what is leading to this seasonality?
Nikhil Agarwal — Whole Time Director
Hi Vicky, Nikhil here. Surely, so and a great question, Vicki. We basically don’t look at seasonality only on the basis of COVID. While COVID certainly is in the past now, more or less, seasonality for us is also due to the winter season where the festivities and when the purchase power of the consumer goes up against the other seasons in other quarters, and also because we primarily dominate in closed footwear category, and our portfolio for open footwear category is very limited. So, because of that also, quarter three and quarter four are basically the highest-grossing quarters for us as a company, and quarter one and quarter two are lower than the other two quarters. So, there is a fair bit of seasonality, while we have done a lot in the last few years to bring this parity down. I hope that answers your question.
Vicky Punjabi — UTI Mutual Fund — Analyst
Sure. And just one more thing, I mean if I see the realizations for this quarter versus see the realizations for the annual FY’22, it seems to be a bit lower than what it was in FY’22 and the average realization was not [Indecipherable]. I think in the comments I heard that that we’ve seen a better premiumization in this quarter versus what we saw in FY ’22, any reasons for that?
Piyush Singh — Chief Strategy Officer
Yeah, hi Vicky, Piyush this side. So just adding on to what Nikhil just mentioned, there is a fair bit of seasonality in our first half of the financial year, because during this time during the summer months, we sell a larger proportion of open footwear which are lower ASP products. Now there has been a premiumization with comparison to ASP of quarter one of FY ’23 versus quarter one of FY’22. So, on a year-on-year basis, there is a 3% premiumization. But that said, our FY’22 overall numbers in terms of ASP would be a tad higher, because second half of the year is not only contributing to roughly 60% of our top line, but it also is a higher ASP generating second half, and hence full year blended number is a tad higher, which was at 616 for last year, FY ’22 full year.
Vicky Punjabi — UTI Mutual Fund — Analyst
Okay. Sure. Thanks for that, that’s it from my side. Thank you.
Piyush Singh — Chief Strategy Officer
Thank you.
Operator
Thank you. The next question is from the line of Jignesh Kamani from GMO. Please go ahead.
Jignesh Kamani — GMO — Analyst
Hi. Just wondering about if you take about the 1Q last year was because of the COVID. Just, if you want to compare with normally say 1Q FY ’23 CAGR, how is the revenue volume and the ASP CAGR compared to 1Q FY ’20?
Piyush Singh — Chief Strategy Officer
So, hi Jignesh, Piyush this side. First quarter FY’20 revenue was almost equivalent to our first quarter FY’22 revenue at INR135 crores. So, from that perspective, it’s a 150% growth. Similarly, our ASPs for this quarter are way better as compared to our first quarter of FY’20 ASP, wherein the ASP of first quarter was closer to 570, this time it is 590. So, volume in first quarter FY ’20 we did 3 million pairs wherein in first quarter FY ’23 we did 5.6 million pairs.
Jignesh Kamani — GMO — Analyst
Sure. Second question is, if you take for last one year, how is the cost increase for you? You mentioned that a 3% increase in the ASP roughly, so it is commensurate to all the cost increase or how is the scenario right now?
Nikhil Agarwal — Whole Time Director
Right now so I’ll take that. Hi, Jignesh. Yes, we have taken quite a bit of cost increase already factored into the ASP increase. While there has been certain inflation in the polymers and some raw material and compounds. So far we have incorporated most of the inflationary pricing increase, so given the trend now that we are seeing in the markets, we are hoping and we are already seeing the trend to be sort of improving in terms of inflationary increases on the side of raw materials.
Piyush Singh — Chief Strategy Officer
And so, just to add to it, Jignesh, if you look at our quarter-on-quarter trend, while in quarter four FY ’22, our material margin was 48.5%, it has gone up to 49.5% just shy of 50% in quarter one FY ’23. And despite the inflationary environment in freight logistics and some increase in contract workers wages, we were able to maintain our gross margin levels at 36% in both the quarters. So far we have maintained our control over the raw material inflationary prices, while also increasing our ASP because of the product mix.
Jignesh Kamani — GMO — Analyst
And another area of snicker, I think since last one one and half year we aggressively invested in the sneaker SKU portfolio everything, how is the current performance of the sneaker and the market feedback, any idea how is the contribution of sneaker as a category for us right now?
Piyush Singh — Chief Strategy Officer
Sure, Jignesh. The contribution right now, I would say, is not very significant because we have just launched the sneaker range very recently. So if you visit any of our showrooms EBOs that we have across the country, about 140 of them, the sneaker range is present in our EBOs now. While we are also in the process launching a very good sneaker range in the other channels, in the e-commerce and NBO distribution, so the contribution I would say is still at a nascent stage, but the response is very, very encouraging.
Jignesh Kamani — GMO — Analyst
And right now our portfolio would be similar in sneaker in terms of SKU basis or other competitor, or still, we need to improve on the SKU and the portfolio size.
Piyush Singh — Chief Strategy Officer
It’s a work in progress, I would say. So it’s not like that we don’t follow a system where we just launched one range and then we are done for the year. So, it’s a continuous process for us. And like I told you, it’s already a good range that has been launched in a review channels, and very soon you will see a different kind of range for the other two channels as well.
Jignesh Kamani — GMO — Analyst
My last question on the seasonality, you mentioned that 1Q is around 18% to 20% of the full-year revenue. Is the seasonality there in the margin also across the various quarters?
Nikhil Agarwal — Whole Time Director
So yes Jignesh, so in the initial quarters, there is a fair bit of fixed cost absorption that happens. As we progress down the financial year, our operating leverage keeps on improving from hereon. So we see two levels of improvement, one at the material margin and gross margin level, because of the enhanced product mix and a high ASP and our relatively high share of high ASP product being sold. And the second is on account of operating leverage, with a better absorption of fixed costs in quarter three and quarter four.
Jignesh Kamani — GMO — Analyst
Sure, sure. Thanks a lot and all the best.
Nikhil Agarwal — Whole Time Director
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Ankit Kedia from PhillipCapital. Please go ahead.
Ankit Kedia — PhillipCapital — Analyst
Couple of questions from my side. While you have shared the growth across the channels, could we get the revenue split across the channels?
Piyush Singh — Chief Strategy Officer
Yes, sure, Ankit. So our trade distribution channel out of INR338 crores have done almost close to INR200 crores, INR199 crores to be precise. And the remaining comes from our D2C channels, which is the balance. It’s 113 crores from e-commerce and another INR21 crores from EBO plus key account.
Ankit Kedia — PhillipCapital — Analyst
So on seasonality perspective, do you see seasonality across channels or a particular channel like the trade channel has more seasonality while online should not be so seasonal in nature, given that customers would tend to buy throughout the year on online channel.
Piyush Singh — Chief Strategy Officer
So it’s not about customer buying across all the channels, it’s about what kind of product are the customers buying. So, seasonality is holistic across all the channels. So, for example, we see lower ASPs across all the channels, relatively slightly lower ASPs, because if the aggregate is INR597 crores vis-a-vis INR616 crores for full year FY ’22, we see a slight drop of, you can say 2% to 3% in terms of ASP across state distribution e-commerce because irrespective of the customer journey, the customer ends up buying relatively higher share of the slip on, slider and sandals in the first quarter and the second quarter, when in the the entire North East and Western India belt, there is a high degree of summer season and high temperature ranges. As winter months comes in with festivities and more marriages and colder season coming, people tend to switch to closed footwear, which has a higher ASP. So seasonality is holistic across all channels, just to answer your question.
Nikhil Agarwal — Whole Time Director
Also, just to add, Ankit, there is also an element of school shoes, which are also lower in ASP compared to regular footwear. So that’s also mostly sold during quarter one during this time, which also brings on the ASP prices.
Ankit Kedia — PhillipCapital — Analyst
So, how big would be a school portfolio now?
Piyush Singh — Chief Strategy Officer
It’s catching up after 2.5 years. Earlier, it used to be roughly 8% to 10% of our portfolio, now is again catching up and very soon will be in the same trend line.
Ankit Kedia — PhillipCapital — Analyst
So the kids portfolio is broadly school shoes portfolio? Should we understand that way?
Piyush Singh — Chief Strategy Officer
The kids portfolio for us so far over the last two years was ex-school shoes, and it’s roughly 10% as of now.
Ankit Kedia — PhillipCapital — Analyst
Sure. My second question is regarding your working capital. From FY ’22 to Q1, we are seeing a significant decline. Can you just throw some light on the inventory and receivable days?
Piyush Singh — Chief Strategy Officer
Yeah, sure Ankit. So, while our receivable days, you will be happy to know that our receivable days have improved from 40 days of sales outstanding to 35 days of sales outstanding. We are still maintaining the same level of inventory cover at almost 108 days outstanding for that reason. End of quarter one is just the precursor of the beginning of our festive season, because as you enter into July and August and September, a lot of offtake starts across online and our trade distribution channel. So at this point in time, we tend to maintain the highest level of inventory cover just in order. Just [Indecipherable] preparedness perspective. Despite that, our inventory cover in terms of base sale outstanding stays the same, while we have managed to work on our payable days and stretch it to a certain extent, and hence you see a significant improvement in our net working capital.
Ankit Kedia — PhillipCapital — Analyst
That’s helpful. Thank you so much. And all the best for the upcoming quarters.
Piyush Singh — Chief Strategy Officer
Thank you.
Operator
Thank you. The next question is from the line of Manish Poddar from Motilal Oswal Asset Management. Please go ahead.
Manish Poddar — Motilal Oswal Asset Management — Analyst
Yeah, hi, thanks [Indecipherable] three questions. First is, [Technical Issues] men, women and kids?
Piyush Singh — Chief Strategy Officer
Sorry, Manish, your voice is a little garbled. Can you please repeat your question?
Manish Poddar — Motilal Oswal Asset Management — Analyst
I’m just trying to understand, three year volume CAGR for men, women and kids for this quarter. What would that number be?
Piyush Singh — Chief Strategy Officer
So while we can take that question offline, but I can give you a breakup. So last year for full year FY’22, our distribution between men and women and kids portfolio was 54% towards men and 16% towards women and kids, wherein, it was equally spread between 8% a piece across women and kids. It has improved to almost 80/20 now, whereas 80% is towards men and 10% as far as women and remaining 10% is for kids and child. And the year before that, FY ’21, if you want to look at, the ratio was again very close to it, it was almost 88/12, wherein 88% was men and remaining 6% piece was child and women.
Manish Poddar — Motilal Oswal Asset Management — Analyst
Okay. Okay. Would you be able to help me with how much was the ad spend during this quarter and the last quarter, Q4 FY ’22 absolute amount?
Nikhil Agarwal — Whole Time Director
This quarter, we spent about INR17 odd crores in marketing which is roughly 5.2%, and last quarter we did almost INR9 crores. So for us, ad spends on a trend line basis are expected to stay between 6% to 6.5% of our topline, but there is some bit of lumpiness depending on what kind of product portfolio are you marketing and what kind of regions are you targeting and the channels you’re targeting. So quarter one for us typically contributes 5% to 5.5% of our ad spend. Quarter two and quarter three tends to be heavy, because they are the start of the season and the middle of the season, and quarter four is typically the lowest quarter in terms of ad spend for us. And for quarter four FY ’22, this was 2.5%, quarter one FY ’23 is 5%.
Manish Poddar — Motilal Oswal Asset Management — Analyst
Effectively, the delta change and other expenses are largely because the ad spend?
Nikhil Agarwal — Whole Time Director
Yes, because of the ad spend and some bit of employee appraisal that changes from quarter four FY ’22 to quarter one FY ’23, and the annualization because it is spread over the full year now.
Manish Poddar — Motilal Oswal Asset Management — Analyst
Yeah, just one last one, just one last one if I can.
Operator
Manish. I’m sorry to interrupt, may request you to come back in queue for follow-up questions. [Operator Instructions] The next question is from the line of Akshay Kothari from Envision Capital. Please go ahead.
Akshay Kothari — Envision Capital — Analyst
Thanks for the opportunity. Sir, in the last call you mentioned that we were focusing on trifecta of aspiration, accessibility and affordability. I had a question regarding aspiration. So my question is specific, like which are the major leagues are we looking to sponsor? For example, IPL, Pro Kabaddi or commonwealth? And who would be our brand ambassador? Do we have any brand ambassador? and in terms of adjacencies, are we planning to go into the sport specific like football studs, cricket spikes or badminton shoes, any of those? Yeah. That’s my question.
Nikhil Agarwal — Whole Time Director
Hi, Akshay, Nikhil here. So let me answer your second question first. We are not looking at any performance shoes category right now, like cricket or badminton and all, because it’s a fairly very niche market in India, very, very concentrated. So we do more of everyday wear shoes which our audience, our consumers can wear throughout the day for all purposes whatsoever the need. And with regards to any of the aspiration components that you spoke about, we basically, we follow very stringently an ROI based marketing model. So we absolutely make sure that wherever we do spend in the marketing, there has to be significant ROI generated from that, and given the kind of the relatability that these platforms have today, it’s not exactly very ROI generating for us. The marketing in these, let me say, the IPL [Speech Overlap], yeah. So that is one of the main reasons why we shy away a little bit from marketing over there. But given, we are not totally closed off to it. So, if the right opportunity presents at the right time, we could be open to looking at that as well in the future.
Piyush Singh — Chief Strategy Officer
Let’s say we are a fashion forward organization and the kind of portfolio that we offer is bringing you the latest fashion trends globally for the first time in India at the fastest time possible. From that spend point, we have pivoted marketing spend more towards digital influencer led community and ad community and all, where the relatability quotient is relatively higher. We are always on the lookout for the right kind of celebrity endorsement, be it sports league that you talked about, be it kind of impact properties across OTT and TV channels or be it any celebrity. But it has to — as Nikhil rightly mentioned, it has to justify the bottom line and the ROI that we’re expecting out of it, and hence, all the decisions are driven by the profitability metrics.
Akshay Kothari — Envision Capital — Analyst
Okay. Yeah. Thanks a lot and all the best.
Piyush Singh — Chief Strategy Officer
Thank you.
Operator
Thank you. The next question is from the line of Aliasgar Shakir from Motilal Oswal. Please go ahead.
Aliasgar Shakir — Motilal Oswal — Analyst
Yeah, thanks for the opportunity. Couple of questions. First is on the margin profile, you did indicate that as the quarter goes by, you have heavy quarters Q3, Q2, which are higher in operating leverage and higher margin accretive quarters. Just if you could also help us understand from a two year point of view, the kind of growth, what we are seeing, and second is the kind of ASP mix improvement we are seeing. What is the kind of margin improvement one should think of, how we should think of the margin improvement?
Nikhil Agarwal — Whole Time Director
Hi, Ali. So, Ali, unfortunately, we cannot give you any forward-looking statements. But what we can tell you is that historically we have performed at a good 8% to 9% of ASP growth minimum, and about, I would say 22% to 23% volume growth for the last 10 years, almost eight to 10 years, and there is no reason we should be looking at performing lesser than that. So that’s been the historical trend for the Company. Even in terms of margins, we are seeing a good 1% to 1.5% growth in both the gross margins and flowing down to the EBITDA and PAT margins for the last at least three years right? So there has been significant margin improvement, and we are working on many, many initiatives right now, very fruitful initiatives, which should lead to higher gross margins as well.
Aliasgar Shakir — Motilal Oswal — Analyst
Got it. This is very helpful. I mean I was coming more from the point of view that if I see last three to four years, EBITDA margin is in fact and of course even gross margin has gone up by nearly 400 bps to 500 bps. So I mean, you still see room for improvement even from this level with the kind of revenue growth that you indicated.
Piyush Singh — Chief Strategy Officer
[Speech Overlap] operating leverage would keep on kicking in with the enhanced base. Even if we maintain the same revenue growth trajectory, that is bound to show its impact on the operating leverage side.
Aliasgar Shakir — Motilal Oswal — Analyst
Got it. This is very helpful. And second quick question is on the economics of the business in online versus offline. So is online equally margin accretive, if you could just explain the margin profile between both on gross and EBIT.
Piyush Singh — Chief Strategy Officer
Sure, Ali. I mean, while we have explained this historically on an FY ’22 full-year basis, I won’t comment this on a quarter-on-quarter basis, but from a full-year trend line perspective, our B2C online channel has contributed at a higher EBITDA margin levels compared to our trade distribution level. So there is a delta of 300 bps to 400 bps in terms of margin vis-a-vis trade distribution versus our D2C online platforms, with D2C online contributing a higher margin. So that is the reason historically for shift in our margin profile is largely because our D2C online business has grown to almost 35% revenue contribution.
Aliasgar Shakir — Motilal Oswal — Analyst
That’s good at gross and EBITDA level.
Piyush Singh — Chief Strategy Officer
Yes, absolutely.
Aliasgar Shakir — Motilal Oswal — Analyst
Got it. This is really helpful. Thank you
Operator
Thank you. The next question is from the line of JayKumar Doshi from Kotak. Please go ahead.
Jay Kumar Doshi — Kotak — Analyst
Afternoon, everyone. Thanks for the opportunity. I’ve got three questions, the first one is, can you talk a little bit about the growth trends that you’re seeing on e-commerce platforms, and this is marketplaces, not the B2B distributors, it’s a purely on the likes of Amazon and Myntra, and are you still seeing month-on-month growth even after opening up, month-on-month volume growth from those platforms? And how has your market share trended in the recent past on e-commerce platforms as well as overall wherever you are able to track? So that’s question number one.
Piyush Singh — Chief Strategy Officer
Shall I take this one by one. So, Hi jay, Piyush here. So from a D2C online perspective, yes, we are still witnessing decent month-on-month growth on the marketplace side. Anyway the B2B business is very small, it’s only 10% of our overall D2C online portfolio. So for example, compared to quarter one FY’22, our online business in quarter one FY ’23 has grown by 130% again with significant improvement over quarter four FY ’22 as well. So just to answer your question, yes, we are seeing fair bit of both volume and value growth across these marketplace businesses. Yes, I mean we can go on to your question. And in fact, our commission level, Just to add to it, our commission levels on an aggregate basis for FY’22 has reduced by 1 percentage point in quarter one FY ’23. So, it has also led to some bit of margin improvement as well in this quarter.
Jay Kumar Doshi — Kotak — Analyst
And market shares on these platforms, do you get some industry growth, and are you able to compute your market share early on?
Piyush Singh — Chief Strategy Officer
I mean, very, very difficult to comment on that. While, I mean, you’ll be a better judge of what the market is growing at the number that we see and triangulate from the market. The channel is growing at anywhere between 25% to 30% on a year-on-year basis. If we take that number as a baseline, our performance so far has been better as compared to the market. So, I mean on a derived basis, yes, we tend to gain market share on these platforms, but very, very difficult to triangulate.
Jay Kumar Doshi — Kotak — Analyst
Sure. My second question is South and West market is growing faster for you. Can you give some color in terms of how growth is trending South and West versus maybe North?
Nikhil Agarwal — Whole Time Director
Yeah, Jay, hi. So, South and West have particularly done quite well even for quarter one, where about 19% of the sale of the overall MP distribution sale I’m talking about, has come in from West and about 6% is coming from South. So there has been an emphasis and a very clear focus on growing these, specific these two markets. So we are very happy to tell you that both of the markets have done remarkably well for this quarter.
Piyush Singh — Chief Strategy Officer
I mean for FY ’22 full year, South and West put together were contributing close to 21% – 22%, which has now improved to 26%
Jay Kumar Doshi — Kotak — Analyst
That’s helpful. Thank you. And the final question is on your thoughts or your views on Relaxo doubling down [Indecipherable] Sparks, so competitive intensity in.
Nikhil Agarwal — Whole Time Director
Jay, we don’t comment on any of our competitor policies. I’m sure everybody has a strategy that they follow.
Jay Kumar Doshi — Kotak — Analyst
Sure. And final bookkeeping that has come from somebody else, can you call out the operating cash flow for the quarter?
Unidentified Speaker —
Yes, our OCF for the quarter is at about INR83 crores…
Piyush Singh — Chief Strategy Officer
Our operating cash flow is about INR83 crores of generation that we have done this quarter compared to EBIDTA number of about INR62 crores.
Jay Kumar Doshi — Kotak — Analyst
Perfect, thank you so much and good luck for rest of the year.
Piyush Singh — Chief Strategy Officer
Yeah. Thank you, Jay.
Operator
[Operator Instructions]. The next question is from the line of Ashwin Agarwal from Akash Ganga Investments. Please go ahead.
Ashwin Agarwal — Akash Ganga Investments — Analyst
Thank you for the opportunity. I just had one question. Like, could you give me a split like the revenue split between the Tier 1 cities and Tier 2 cities, like NCR region you’re dominating there, and Mumbai, Bangalore another Tier 2 cities like, could you — do we have a split over there?
Piyush Singh — Chief Strategy Officer
Yes. Hi Ashwin, we do have a split here. On an aggregate basis, 70% of our revenue comes in from Tier 2, Tier 3 cities and 30% of our revenue comes in from Tier 1 and metros. While on a channel basis, trade distribution mimics the same mix, but our B2C online business has a roughly 45-55 kind of a mix in the favor of Tier 2, Tier 3 cities.
Ashwin Agarwal — Akash Ganga Investments — Analyst
Okay. So, do we have any like major strategies to penetrate into the Tier 1 because we can have a good market share over there as well, looking at the opportunities like big cities like Mumbai, Bangalore and Kolkata.
Nikhil Agarwal — Whole Time Director
Certainly, the way we are looking at premiumizing our portfolio, and we have significantly premiumized over the last three years. This is one of the major reasons we’ve been able to garner extra market share in the metros and Tier 1s. Also, we have had a specific emphasis on opening our EBOs in these cities, which has led to a very high aspirational quotient and a premiumization as well in these cities. So, given both the factors, we’ve been able to gain disproportionate, I would say, market share in these metros and Tier 1s.
Ashwin Agarwal — Akash Ganga Investments — Analyst
Okay. Okay, thank you. Thanks.
Operator
[Operator Instructions] The next question is from the line of Sahil from IBT. Please go ahead. Sahil, your line is unmuted, please go ahead with your questions.
As there is no response. [Operator Instructions] Next question is from the line of Nitin from CLSA. Please go ahead.
Nitin Gupta — CLSA — Analyst
Hello. Thanks a lot for giving the opportunity. My question is with respect to gross margin contraction of 570 bps. So would you be able to help me separate in terms of the quantum of gross margin impact, I guess like GST rate changes led to 100 bps impact. How much was the impact due to the product mix like in terms of what is the share of open footwear and how it expanded Y-o-Y, if you can throw some light on that?
Piyush Singh — Chief Strategy Officer
Hi Nitin, Piyush this side. Not sure why are we saying that there is a gross margin compression because compared to quarter four FY ’22, our gross margin have stayed impacted 36% in quarter one FY ’23. Even from a full year FY ’22 perspective, our gross margin in FY ’22 year-end for a full year basis was 37.5% vis-a-vis 36% in quarter one, while our major quarters are yet to come in. So, if you could [Speech Overlap] understand the 570 bps…
Nitin Gupta — CLSA — Analyst
Just comparing quarter on quarter, like a Y-o-Y from Q1 to Q1.
Piyush Singh — Chief Strategy Officer
Okay. So, Nitin, that would be an unfair comparison, because last year for quarter one, the majority of the revenue came in from our D2C online channel, which by nature itself is high margin generating channel, because last year before all the three months of first quarter, distribution got impacted severely by the second wave of COVID-19.
Nitin Gupta — CLSA — Analyst
Okay. Okay, got it. And in terms of like the raw material situation currently, like what is the inventory position we have built up, and how we are confident about the maintaining margin from the inflationary pressure. If you can quantify on the quantum of inflation we have seen in this quarter?
Piyush Singh — Chief Strategy Officer
I mean, while it will be difficult to quantify the quantum of inflation that we have seen, all we can say is, despite all the inflationary pressure, we have managed to improve our Y-o-Y ASP by 3%, and even on an aggregate level, while we closed FY’22 had an ASP of 616, we have managed to achieve an ASP of 597 in the first quarter itself. Now in order to talk about our preparedness, we have taken certain — as we had mentioned in our last quarter call itself, we have taken some proactive steps in terms of building up essential raw material supplies like forward purchase of EVA raw materials, that has really paid off from an availability perspective, and hence we were able to place the product at a faster pace in the market. So, from a GTM perspective of first to market and fastest market has really helped us in gaining some bit of revenue growth in the first quarter itself, and from a preparedness perspective, all I can say here is that we have the requisite inventory levels to take care of our festive season in the coming quarters.
Nitin Gupta — CLSA — Analyst
Okay. And lastly, like in terms of the difficulty in sourcing EVA, so how exactly we have entered into contract? I’m just thinking from that perspective. The competition is unable to source this raw material. Will it be an opportunity for us to gain share?
Piyush Singh — Chief Strategy Officer
Surely. So, EVA is just one of the components amongst the many raw materials that we purchase. While EVA is certainly extremely important, because I mean you cannot make a sole without it. So in our case, we have booked EVA for the next six months for this quarter. We obviously pay only as it arrives. So it’s not a payment impact on the outflow — cash outflow, but it’s more of securing the supplies at a specific price. So there is no volatility in terms of price and supply, which has really, really helped us in terms of optimizing our supply chain and making sure that we are the fastest to the market.
Amongst other raw material as well, we are trying to follow a similar approach. We are not forward booking, but as we are one of the largest consumers in our footwear segment for most of these raw materials, we have a very strong negotiating power with the vendors, and that’s how we sort of go about purchasing them.
Nitin Gupta — CLSA — Analyst
Okay, thanks a lot, and all the very best.
Piyush Singh — Chief Strategy Officer
Thank you.
Operator
[Operator Instructions] Next question is from the line of Harsh Yogesh Shah from Incred. Please go ahead.
Harsh Yogesh Shah — Incred — Analyst
Yeah, hi, thanks for taking my question. Sir, the channel mix has evolved considerably over the past four to five years, we need to see now it’s 35% of our overall sales. So how do you see the channel mix evolve going ahead, let’s say, four, five years from now?
Nikhil Agarwal — Whole Time Director
Hi. So, certainly it’s done very well for us as a brand, as a company, the D2C channel has grown significantly. So, today the mix is about 60-40, and going forward in a stable state situation, we see it stabilizing at somewhere around 50-50 over the next couple of years. So that’s, yeah, that’s how we are planning the two channels.
Harsh Yogesh Shah — Incred — Analyst
Okay. And sir, within that, if we look at trade distribution as you just mentioned that close to 80% of our sales comes from our core markets of North and East. So, how do we look at growth there, because I mean, the kind of penetration and the market share would be high in those markets, right? So how do we look at growth in those core market in trade distribution?
Nikhil Agarwal — Whole Time Director
So interesting question. There is still, and we debate this a lot internally as well. There is a lot of potential still in our core markets left. It’s not like we have saturated the markets in any way, or there are still so many areas which are sort of untapped, which have untapped potential, and we are always on the lookout to creating and growing a distribution channel with the wider reach, with more number of distributors and retailers on hand. So there’s a lot of potential still left, and we are nowhere even close to saturating in these core markets.
Harsh Yogesh Shah — Incred — Analyst
So, basically you are saying that there is still an opportunity for higher penetration, as well as improving the throughput from a particular outlet in those core markets, if i word it correctly.
Nikhil Agarwal — Whole Time Director
Absolutely, absolutely. There is a lot of potential in increasing the market share, and the, let’s say, the wallet share in each of these outlets that we have in the MBOs as well.
Harsh Yogesh Shah — Incred — Analyst
Okay. But, sir, when we think of wallet share, I mean in the MBOs in the core markets, I mean marginally increasing it from the current level [Technical Issues] competing with the other categories as well in which we are not spread in, like let’s say men formal wear or I mean ladies casual wear.
Nikhil Agarwal — Whole Time Director
Yeah. So there are two things happening there. One is that we are gaining market share on account of other sports shoe brands, where the consumer is preferring Campus over other brands. And the second is [Technical Issues]. Sorry, there is some disturbance. Yeah. So the second factor that’s contributing is on account of the consumer preference shift towards casual and sport shoes. So there is a significant shift that has happened in the last couple of years, and it’s progressively happening more and more after COVID happened. So like leather industry, for example, is on a downward trend right now, it’s not growing at all. It’s actually on a de-growth path. So, all of that market share is sort of converting to casual and sport segment.
Harsh Yogesh Shah — Incred — Analyst
Okay. So basically the product mix at an MBO level itself is changing, which is benefiting us, right?
Nikhil Agarwal — Whole Time Director
Yes, one of the factors that’s contributing to our growth.
Harsh Yogesh Shah — Incred — Analyst
Yes. Okay, thank you so much. And all the very best sir.
Nikhil Agarwal — Whole Time Director
Thank you.
Piyush Singh — Chief Strategy Officer
Yeah, hi, operator. Just for everyone’s clarification, I would like to highlight a statement here, maybe because of the statement that we have published in the newspapers, people are looking at gross margin for the quarter as INR338 crores minus INR170 crores, equaling to INR168 crores. In our parlance, we mentioned this as material margin. So material margin for this quarter of first quarter of FY ’23 is 49.6%, which last year same quarter was 55.3% because of the disproportionately high revenue contribution coming in from e-commerce channel, and trade distribution for us was literally shut during the first three months because of the second wave of COVID-19. While, if we look at the full year FY ’22 audited numbers, this material margin was close to 50%, so both on a full-year basis as well as quarter four FY ’22 basis, we have kind of maintained our material margin. While we have a better view of our direct expenses, and hence our gross margin for both these quarters — quarter four FY ’22 and quarter one FY ’23 have stayed intact at 36%. So I wanted to clarify this for everyone’s benefit, because the breakup is not given in our published financials.
Operator
Thank you. The next question is from the line of Gaurav Jogani from Axis Capital. Please go ahead.
Gaurav Jogani — Axis Capital — Analyst
Thank you for the opportunity sir. One observation across the footwear industry is that while the value segment has continued to struggle, at least the premium and the mid-premium continues to do well. So, just wanted to move your thoughts on this, and how are you seeing this trend to continue or maybe change going there?
Nikhil Agarwal — Whole Time Director
Sure, Gaurav. So, see the value segment which is basically up to 999 MRP is extremely saturated as the market. If you notice that most of the private labels that there must be like hundreds of them in India, they’re all manufacturing and selling shoes between this price point from INR500 to INR2999, and that’s where the saturation sort of creeps in. And it’s extremely competitive at that space also, which leads to very low margins for everybody operating in that value segment. So that’s where we as a brand differentiate ourselves by because of the brand aspiration we’ve created over the last several years, we dominate and do really well in this semi-premium to premium segment, which is INR1,000 to INR3,000, and specifically INR1000 to INR2000 is our core, where there is absolutely no competition that way, and which leads to higher ASP and higher realizations also in the gross margins.
Piyush Singh — Chief Strategy Officer
Yeah. so Gaurav, Just to add to it, as revenue contribution from semi-premium, premium category has significantly gone up on a year-on-year basis, last year same quarter we saw anything above INR1,000 MRP contributed only 53% of our revenue, which in this quarter of FY’23 has gone up to 65%. Even for the other 68%, even for full year FY ’22, the contribution from semi premium, premium products were 64%. So with enhanced marketing, focus targeting and imagery building and premiumization of portfolio, we have been able to significantly increase our ASPs and contribution from the premium and semi-premium categories.
Gaurav Jogani — Axis Capital — Analyst
Sure sir. Got it. And sir, my other question of the other clarification is, when you say your ASP is 600 odd rupees, so that would be the net that you realize, right? It’s nothing to do with the selling price I mean.
Piyush Singh — Chief Strategy Officer
That is the x factor realization in our books. That is the [Indecipherable] realization for us.
Gaurav Jogani — Axis Capital — Analyst
Okay, got it. Thanks for that.
Operator
Thank you. The next question is from Tejas Shah from Spark Capital. Please go ahead.
Tejash Shah — Spark Capital — Analyst
Hi all, thanks for the opportunity. Just couple of questions from my side. The first question pertains to that in other retailers, we have seen this seasonality in margins is also emanates on the fact that they have a very wide variation of end-of-season sale and food pricing in the charts that is stretched over different quarters. So just wanted to understand how it plays out in our portfolio especially in 1Q.
Piyush Singh — Chief Strategy Officer
Hi Tejas, Piyush this side. I mean, the way our business is constructed is very different compared to a pure play retailer. See, 60% of sales happen through sale distribution network, where the level of discounting is sub 2% for us. It’s almost a full price sales for us, and hence our ASPs are lower as compared to a couple of retailers that are listed in the space. Similarly, in our e-commerce portfolio which is 35% of our topline at discount percentage so far has stayed sub 20% despite it being touted as a discount channel, and lastly for our [Indecipherable] channel, our aggregate discounts have stayed below 6% for the channel so far in the first quarter. So that takes impact of everything including EOSS and any discounted sales happening at the store, but this part of the portfolio is only 5% of our top line. Just to give you some more color on the channel perspective, trade distribution, which is 60%, the average discounting that we typically see at a multi-brand outlet for our brand is anywhere between 15% to 20%. So for a large part of portfolio, which is roughly 95% of the portfolio, our aggregate discounting are somewhere between 15%% to 20% on an annual basis.
Tejash Shah — Spark Capital — Analyst
Okay. And then there is no seasonality there, which would have impacted us especially [Phonetic] this quarter.
Piyush Singh — Chief Strategy Officer
The seasonality is there in terms of the product profile that we end up selling, like in the first two quarters, there is a fair bit of open footwear, which is as high as 25%. But in the second half of the year, this percentage goes down to almost 10%, and remaining 90% is closed footwear, which is the higher ASP product for us.
Tejash Shah — Spark Capital — Analyst
Sure, that you mentioned before. Second question is on the kind of expansion that you have done, both geographic product portfolio and then even channel mix change. Just wanted to understand in the last two years, in the pre-COVID same quarter, what was the number of SKUs we are catering with, and what will be the number of SKUs that we are catering today with?
Piyush Singh — Chief Strategy Officer
I mean, the number of SKUs remain more or less the same, it’s largely the channel mix that has changed. So there must be like very, very small variation in that, because in the last four, five years, we’ve been having a very good assortment of SKUs, so it’s not exactly a function of how many designs, its more about what’s the volume per design that we can sell, and that’s why the throughput has really kicked in for us over the last couple of years.
Tejash Shah — Spark Capital — Analyst
Sure. So the consumer’s taste for our brand across channels, across geography, does not change much, so the SKU pressure does not increase with more market or more geographies to cover.
Piyush Singh — Chief Strategy Officer
Sorry, come again.
Tejash Shah — Spark Capital — Analyst
Yeah, sorry. So, usually we have seen when we enter a new market, there is a difference of fashion sense that we have to cater to usually, and then that initially it actually builds some SKU pressure, we are, what I understood from your statement, you are saying that in our category, perhaps in our brand that pressure is not that high.
Piyush Singh — Chief Strategy Officer
Yeah, yes, it is not that high, because you’re right in that sense, because as we entered into frontier markets like South India markets, we had to beef up our open footwear an slip-on and slider portfolio. Similarly, when we entered West, we had to add significant bit of sandals as a portfolio, but if you look at the overall picture, that incremental addition is not even 10% of our overall portfolio. Given the strength of our R&D department, we have one of the largest R&D teams, development teams in India in this category. So even creating products from that perspective is not exactly any bit of a challenge. It’s more about creating the right product for the right market where we really expediting.
Tejash Shah — Spark Capital — Analyst
Sure, sure. Understood. Thanks, and all the best.
Operator
Thank you very much. That was the last question for today’s Q1 FY’23 con 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 irt@campusshoes.com. [Operator Closing Remarks]