Moneycontrol PRO

Buy Safari Industries (India); target of Rs 1288: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Safari Industries (India) has recommended buy rating on the stock with a target price of Rs 1288 in its research report dated May 14, 2022.

May 16, 2022 / 06:27 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Prabhudas Lilladher's research report on Safari Industries (India)


In an inflationary environment, Safari reported a decent performance with GM of 38.7% (PLe of 36.9%) buoyed by price hike taken towards end of 3QFY22 and favorable product/channel mix. Though top-line declined 5.4% QoQ due to Omicron impact in Jan/Feb, overall demand environment remains strong given easing travel restrictions. While we cut our FY23E EPS estimates by 7% as we trim our GM assumption by 100bps amid persistent RM cost inflation, our FY24E estimates are broadly intact. We expect sales/PAT CAGR of 27%/98% over FY22-FY24E as benefits of distribution network expansion (up from 5,950 in July-18 to >9,300 in Aug21) and SKU extension (up from 100+ in July-18 to 800+ in Aug-21) is yet to play out since sales volumes were impacted by COVID in last 2 years.


Outlook


Retain BUY with a TP of Rs1,288 (35x FY24E EPS) given 1) leadership position in mass market which is witnessing higher growth than premium/economy segments and 2) better valuation comfort vis-à-vis market leader VIP. Safari trades at 5%/27% discount to VIP on our projected FY23E/FY24E EPS despite having superior sales/PAT CAGR over FY22-24E.


For all recommendations report, click here

Close

Disclaimer: 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.

Broker Research
first published: May 16, 2022 06:27 pm
Sections
ISO 27001 - BSI Assurance Mark