Buy Safari Industries India; target of Rs 2437: Prabhudas Lilladher

Prabhudas Lilladher's research report on Safari Industries India

We cut our EPS estimates by 6%/5% for FY26E/FY27E as we fine tune our topline growth assumptions amid persistent pricing pressure (volume growth of 22% has resulted in value growth of 15%). Safari reported better-thanexpected performance with EBITDA margin of 14.5% (PLe 12.8%) led by improvement in GM amid 1) reduction in RM prices, 2) better product & channel mix, and 3) lower discounts on e-com channel. Progress at the new site in Jaipur is satisfactory and capacity utilization stood at 20% in 4QFY25. As capacity utilization at the new plant improves further; Safari will become increasingly cost competitive and will be in a better position to fend the ongoing price war. Backed by the expansion, we expect sales/PAT CAGR of 19%/36% over FY25- FY27E.

Outlook

Maintain ‘BUY’ with a TP of Rs 2437 (45x FY27E EPS; no change in target multiple). Excessive pricing pressure is a key risk to our call.

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