Research Reports

Safari Industries Share Price Target Q4FY24 Results: Buy, Sell or Hold?- IDBI Capital

IDBI Capital

16 May 2024

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IDBI Capital Brokerage recently released stock research reports on Safari Industries, focusing on share price targets, along with Result Update Q4FY24, featuring buy, hold, and sell recommendations and potential upside. Let’s delve deeper into their recommendations for Safari Industries Share Price Target.

Safari Industries Share Price

In the fourth quarter of the financial year 2024 (Q4FY24), Safari Industries saw a significant increase in their sales. The company’s revenue jumped by 21% compared to the same period last year, reaching Rs 3,651 million. This growth was mainly due to the improvement in tourism activities. When more people travel, they buy more luggage, which helped Safari’s sales go up.

Gross Margin and EBITDA

Gross margin is the difference between sales and the cost of goods sold. Safari’s gross margin expanded by 45 basis points (bps) year over year (YoY) to 43.6%. This means that for every 100 rupees of sales, they made Rs 43.6 in profit before deducting other expenses. This improvement was due to lower input costs (the cost of raw materials) and a better product mix (selling more high-margin products).

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 10% YoY to Rs 569 million. However, the EBITDA margin (EBITDA as a percentage of sales) decreased by 151 bps to 15.6%. This means that while the company made more money overall, their profit margin decreased slightly due to higher overhead costs (expenses like rent, utilities, and salaries).

Net Profit

Net profit is the amount of money left after all expenses have been deducted from total revenue. Safari’s net profit increased by 11% YoY to Rs 389 million. This increase was driven by higher depreciation expenses but was offset by increased other income.

Future Share Price Target

Experts have revised their earnings per share (EPS) forecast for Safari Industries. EPS is a measure of a company’s profitability. They have lowered their forecast for the next two financial years (FY25 and FY26) by 15% and 13%, respectively.

Despite this, they still have a positive outlook on the company’s future. They now value Safari Industries at a Price-to-Earnings Ratio (PER) of 50 times the expected EPS for FY26. This gives a new target price of Rs 2,535 per share, down from the previous target of Rs 2,607.

Key Highlights and Investment Rationale

Outpacing Competitors: Over the past two years, Safari Industries has gained market share from its peers. In Q4FY24, their sales grew by 21% YoY, while VIP Industries, the largest luggage player in India, reported only a 15% YoY sales growth. This shows that Safari is doing better than its competitors.

Capex Update: Safari Industries is investing in expanding their manufacturing capacity. They announced setting up a new manufacturing unit in Jaipur, Rajasthan. They have also invested Rs 750 million in Safari Manufacturing, their 100% subsidiary, to fund this expansion. In Q2FY24, they invested Rs 650 million. This expansion will help them produce more premium products, which are expected to drive future growth.

Safari Industries has shown strong performance in Q4FY24 with significant sales growth and an increase in net profit. While their profit margins have slightly decreased due to higher overhead costs, their investment in expanding manufacturing capacity and focus on premium products are positive signs for future growth.

Safari Industries Share Price Target

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