Buy Safari Industries (India); target of Rs 2476: Prabhudas Lilladher

About this update from Safari Industries (india) Limited

Prabhudas Lilladher's research report on Safari Industries (India)We cut our EPS estimates by 6%/1% for FY25E/FY26E as we fine tune our GM assumptions in light of rising competitive intensity. Safari reported a subdued performance with GM of 44.5% (PLe 47.0%) as pricing strategy had to be re-aligned to protect market share in a weak demand environment that witnessed aggressive discounting by a leading player. While pricing pressure might prevail in near term we believe Safari will be in a better position to counter this challenge once greenfield plant at Jaipur begins operations in 3QFY25E. Progress at the site is satisfactory and capex of ~Rs300-350mn has already been incurred in 1QFY25. Operationalization of new plant will bring in cost competitiveness by optimizing freight & power cost enabling Safari to compete better at mass end of the curve that is most price sensitive.OutlookWe maintain our positive stance on the stock and expect sales/PAT CAGR of 21%/24% over FY24-FY26E. Maintain ‘BUY’ with a TP of Rs2,476 as we increase our target multiple to 45x (earlier 43x) to account for growth & earnings optionality arising from new plant in Jaipur.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) - 080824 - prabhu

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