Buy Safari Industries; target of Rs 2700: Motilal Oswal

Motilal Oswal's research report on Safari Industries

Safari Industries (Safari)’s 2QFY26 print came in above our estimate; revenue grew 16.5% to INR5.3b, supported by ~16% YoY volume growth. Its EBITDA/PAT grew 54.6%/ 58.0% YoY. Though sales in Jul and Aug’25 were lower, Sep’25 sales topped on account of Big Billion Day (BBD) sales, while sales were comparatively down. Higher growth was attributed to 1) ~10-12% growth in the e-com channel despite the high base, and 2) a pickup in the MT channel. Management expects a healthy uptick in 2HFY25 due to the strong wedding/festive season. We note Safari’s revenue momentum to continue ahead of the industry, led by 1) full utilization of the Jaipur plant (currently ~70%), 2) EBO expansion of 4-5 stores every month, and 3) DD growth in MT/E-com ~65% sales, followed by the GT channel showing a demand uptick in T2/T3 towns.

Outlook

We expect rising competitive intensity from VIP and Samsonite, as well as from local players in the soft luggage market, may dent Safari’s growth rates. However, led by its strong operating performance in 2QFY26, we reiterate our BUY rating with a DCF-based TP of INR2,700 (based on an implied P/E of 50x on Sep’27).