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

Prabhudas Lilladher is bullish on Safari Industries (India) has recommended buy rating on the stock with a target price of Rs 2476 in its research report dated August 07, 2024.

Broker Research

August 08, 2024 / 14:57 IST

Buy

26 Aug, 2025 12:21

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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.

Outlook

We 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.

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