Buy Safari Industries (India); target of Rs 2225: Prabhudas Lilladher

About this update from Safari Industries (india) Limited

Prabhudas Lilladher's research report on Safari Industries (India)Safari’s top-line was lower than our expectation as pricing aggression on ecom channel was measured. On the other hand, GM improved to 50.6% (PLe 47.9%) due to improvement in HL:SL mix. The expansion plan at Jaipur is on track and production is expected to begin from 3QFY25E. Timely operationalization of the new plant will bring in cost competitiveness and enable Safari to compete better at lower end of the mass market. In addition, launch of backpacks & duffle bags under brand “Urban Jungle” is likely to give push to its premiumization journey. Given near term growth challenges amid lower number of auspicious wedding days in 1QFY25 and rising competitive intensity we have lowered our EPS estimates by 4%/2% in FY25E/FY26E respectively.OutlookWe maintain our positive stance on Safari and expect sales/PAT CAGR of 21%/24% over FY24-FY26E. Maintain ‘BUY’ with a TP of Rs2,225 valuing the stock at 40x FY26E EPS (no change in target multiple).For all recommendations report, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Safari Industries (India) - 15052024 - prabhu

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