Campus’ stock price has been correcting further from the last few days. Till mid July, it was consolidating in a range of 310-330 and not it seems to have shifted around the 300 mark.
While these short term stock price gyrations should not hinder our conviction on a business, what are the possible reasons it has been absolutely lackluster over the past few months? The ones I can think of are the following:
- The rural economy recovery has been slow and the Tier II/ III towns are facing the brunt of inflation. These 2 should form a major chunk of Campus’ revenue
- RM as % of revenue has kept higher, hence compressing EPS and making the PE look optically higher
- The Company maybe facing competition from the unorganised sector as they appear to emerge on the scene post the covid-19 turmoil, especially in the sub 800 range
- People moving towards premium brands and hence the Tier I/ II towns not contributing as much (IMHO).
What really like to know the views of experienced and keen trackers of stock market, especially with respect to if this story is still intact or was it just bull run wave.
Thank you,
A.
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