Prabhudas Lilladher's research report on Safari Industries India
SII IN reported better than expected performance with revenue/EBITDA beat of 4%/16% respectively. GM expanded 130bps on sequential basis to 47.1% led by benign RM prices and rising backward integration benefit arising from expansion at Jaipur. Further, since the last 2 quarters, volume growth is at par with value growth indicating pricing environment has now stabilized. Despite a strong performance, we broadly retain our estimates as we are factoring 2HFY26E ask of Rs10bn in revenue and 46.6%/15.0% in GM/EBITDA margin respectively.
Outlook
We expect sales CAGR of 17% over the next 3 years with an EBITDA margin of 14.7%/15.6%/16.3% in FY26E/FY27E/FY28E. Retain BUY on the stock with a TP of Rs2,570 (45x Sep-27E EPS; no change in target multiple).
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