In a highly volatile and unpredictable equity market, delivering consistent returns to shareholders over an extended period is no small feat. However, there are a handful of stocks that have shown remarkable resilience and stability, navigating through market uncertainties, economic downturns, and industry disruptions with ease.
Safari Industries (India), a leading manufacturer of luggage and travel gear in India, is one such stock that has managed to maintain a consistent upward trajectory over the last three years, delivering steady returns to its investors.
Over the past two years, the shares of the company have experienced a remarkable surge, soaring from ₹618.60 apiece to the current market price of ₹2,505. This impressive growth has resulted in a significant wealth multiplication for the company's shareholders, with their investments witnessing a remarkable gain of 305%.
Even more impressively, the stock has gained a substantial 645% over the span of the last three years. On May 15, the stock jumped nearly 8% to mark a new life-time high of ₹2,660.
The three-year beta value of Safari Industries stands at 0.63, indicating its lower volatility compared to the overall market. A beta value of less than 1 suggests that the stock tends to move less significantly than the broader market.
During the quarter ending in March 2023, the company showcased significant improvement in its performance. Revenues experienced a notable YoY growth of 57%, reaching ₹303 crore compared to ₹193 crore in Q4FY22.
The gross margin also witnessed a YoY increase of 447 basis points and a QoQ increase of 144 basis points, reaching 43.1%. Furthermore, the EBITDA surged by 241% YoY, to ₹58 crore, while an EBITDA margin expanded 1000 basis points (bps) YoY of 19%.
Overall, the company's net profit surged to ₹38 crore in Q4 FY23 as compared to ₹2 crore in Q4 FY22, ending FY23 with a total consolidated net profit of ₹125 crore, up 468% over FY22 net profit of ₹22 crore.
The revenue from operations expanded by 71.67% to ₹1,212 crore in FY23 from ₹706 crore in FY22.
In FY23, margins have improved remarkably, led by price hikes, strong growth in tourism, and lower discounts. Also, the company’s product mix has improved, and its constant efforts to improve its channel mix are beginning to yield incremental margin improvement, said the brokerage firm IDBI Capital.
Safari has ventured into the premium range under the brand name Urban Jungle. This is comparable to the premium luggage categories of VIP Industries and Samsonite.
Safari has ambitious plans to grow its premium segments. This could provide an additional boost to its margins over the coming 2–3 years, the brokerage stated.
IDBI Capital continued with its 'buy' rating on the stock and raised its target price to ₹3,223 apiece from ₹2,499 earlier. This revised new target price indicates a 28.66% upside for the stock.
The brokerage said it continues to applaud management’s ability to outperform industry sales growth and also expand operating margins to higher levels.
Earlier in April, Monarch Networth Capital also initiated a 'buy' call on Safari Industries with a target price of ₹2,620 apiece. The brokerage said that the company, over the last few years, has reduced its dependency on outsourced manufacturers and set up its own manufacturing facility, which has aided in revenue growth and margin expansion.
Over the last ten years, Safari has increased its market share from 4% in FY12 to 23% in FY22. Today, Safari is the single largest brand in India, it added.
06 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.