This Ashish Kacholia owned travel stock has zoomed over 100% since April

Safari Industries hit a new high at Rs 4,373 and has rallied 25% in past 11 trading sessions.

Shares of Safari Industries hit a new high at Rs 4,373, up 4 per cent on the BSE in Thursday’s intra-day trade on expectations of strong earnings. In past 11 trading days, the stock has rallied 25 per cent.

A sharp rally in stock price of the company has seen the market capitalisation (market cap) of Safari Industries cross Rs 10,000 crore mark. At 10:35 AM; Safari Industries market cap stood at Rs 10,196 crore, the BSE data shows. While, its peers VIP Industries market cap stood at Rs 9,368 crore, data shows.

Since April, the stock the company engaged in the manufacturing and marketing of luggage and luggage accessories, has more than doubled or zoomed 114 per cent. In comparison, the S&P BSE Sensex was up 11 per cent during the same period. The market price of Safari Industries skyrocketed by 1,380 per cent from March 2020 low of Rs 295.45.

Investor Ashish Kacholia held 543,000 equity shares or 2.29 per cent stake in Safari Industries at the end of June 2023 quarter, the shareholding pattern data shows.

On August 1, 2023, Safari commenced operations of additional 125,000 units at its factory situated at Halol, Gujarat. Consequently, the production capacity of Safari Manufacturing Limited, a wholly owned subsidiary, has increased from 225,000 units per month to 350,000 units per month.

In past two months, the stock has soared 51 per cent after Safari reported yet another quarter of stupendous performance with Gross/EBITDA margin of 45.1 per cent/18.5 per cent respectively in June quarter (Q1FY24) given rising benefits of indigenous manufacturing and stable raw material prices.

Additional capacity of 125,000 units per month has come on stream from August 1, 2023 which is likely to further cushion gross margin as it would reduce reliance on outsourcing, analysts at Prabhudas Lilladher said in Q1FY24 result update.

The brokerage firm maintains its positive stance on Safari as consistent gain in market share and rising share of indigenous manufacturing is likely to result in sales/PAT CAGR of 24 per cent/31 per cent over FY23-FY25E.  The stock however, was trading above its target price of Rs 3,728 per share.

Meanwhile, the overall long-term outlook for the organised sector remains very robust with a strong growth in travel, increasing preference for branded luggage, growth in school and office going population, and sustained marriage demand.

Safari in its FY23 annual report said, the company has continued to grow ahead of the market and will continue to build on this momentum. It has a focused strategy on identified channels, categories and consumer segments that are expected to drive market growth.

The company has also made significant investments in modernising and improving its warehousing capability. The company has invested in upgrading its SAP system which has a positive impact on operations and value chain. These improvements will help the company in reducing costs and making its supply chain leaner and more responsive to the changing market.

While the pressure on raw material and sourcing costs has eased out in the second half of the year, the company intends to keep improving price realisation through product mix improvement.

While there continue to be some uncertainties, the overall growth drivers are well in place for the company to continue on a high growth trajectory with improving profitability, Safari said.