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Why Safari is a good long-term candidate in your portfolio

Given the strong industry dynamics and Safari’s vantage positioning, the in-coming weak phase could be an opportunity to accumulate the stock for the long term

February 11, 2020 / 02:35 PM IST

Highlights
- Steady Q3 from Safari – Modest top line, strong margin
Shift from unorganised to organised in value category, post GST
Multi-product multi-channel model paying off
- Creating successful brands
- Focusing on high growth categories and channelsDe-risking business by diversifying sourcing
Long-term macro drivers in place
Accumulate for the long term

Luggage manufacturer Safari Industries (CMP: Rs 671, Market Cap: Rs 1487 crore) offers a rare blend of growth and quality that is hard to ignore in the current environment. The overall weak consumer sentiment has impacted consumer discretionary companies, and Safari Industries is no exception. Still, it has fared better and so far succeeded in keeping its head above water.

While the stock made a decent run in the past couple of months, it remains an underperformer from a 1-year perspective. Its prima facie expensive valuation should not dissuade long-term investors from buying it as the moats of the business are difficult to give a miss. The novel Coronavirus-led supply disruption from China could result in a couple of soft quarters, which could provide an excellent accumulation opportunity.

A stable quarter