Prabhudas Lilladher's research report on Safari Industries (India)
We retain our FY24/FY25E EPS estimates and upgrade FY26E estimates by 7% as full fledge benefits of upcoming capacity expansion will be evident in next 12-15 months. Safari has outlined a capex plan of Rs2.15bn which will double its HL capacity from ~6.5lac pieces per month to ~13lac pieces per month. The company reported decent performance in a seasonally weak quarter with Gross margin/EBITDA margin of 45.5%/17.2% respectively.
Outlook
We maintain our positive stance, as consistent gain in market share and rising share of indigenous manufacturing is likely to result in Sales/PAT CAGR of 24%/31% over FY23-FY26E. Maintain ‘BUY’ with a TP of Rs4,752 (earlier Rs4,559) valuing the stock at 45x Sep-25E EPS (no change in target multiple).
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