18 Nov , 2021 By : Kanchan Joshi
Safari Industries is in the business of manufacturing and trading of luggage and luggage accessories. The brokerage and research firm Axis Securities has recommended Buy rating on the stock as part of its top pick for the week with target price of Rs1,036 per share.
While the second wave of Covid had an adverse impact on H1FY22, a robust demand recovery is expected in H2FY22 on account of rising leisure trips, festive season, workation, and opening up economies increasing international travel as well as the pent up demand due to postponement of marriage season, as per the brokerage.
Though the ideal investment horizon for such ideas remain 6-9 months, Axis Securities said its stock picks may provide some profit-making opportunities even to short-term investors.
"Safari Industries is expected to focus in preseriving its current market share and expand it further while growing its EBITDA margins. It aims to meet these twin objectives by increasing usage of polypropylene resulting in higher margin, reducing china sourcing, adding more value added product to the current product basket, and taking price hikes to pass on the high RM cost," the note stated.
The management indicated to register growth higher than pre-Covid levels in the H2FY22 on account of an increase in domestic leisure travel, marriage season, corporate gifting, and gradual re-opening of schools and colleges. Business-related travel has also started picking up slowly and it would gradually revive from FY23 onwards as the pace of vaccination increases across the globe.
Increasing leisure travel, marriage season, resumption in international travel with the economic reopening, and expected reopening of schools and colleges, are supporting high demand for the company’s products. The company has plans of doubling its production capacity every 2 years, Axis added.
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