Safari Industries India: Target Price Set at Rs 1953 by Prabhudas Lilladher

Safari Industries India Sees Upgrade to Buy Amid Margin Revival

Prabhudas Lilladher's latest research report has upgraded Safari Industries India (SII IN) to a BUY recommendation, reversing the previous HOLD status. This upgrade comes on the back of the company's impressive performance scorecard for the fourth quarter of fiscal year 2026, which indicates a potential revival in margins.

According to the report, SII IN reported better-than-expected results, with a gross margin (GM) of 49.3%, surpassing the previous estimate of 45.8%. This improvement was primarily driven by the benefits of backward integration, resulting from the company's captive manufacturing of wheels and trolleys at Jaipur, and the rationalization of schemes and discounts to channel partners.

While the report acknowledges that near-term margin headwinds may arise due to inflation in raw material (RM) prices, it believes that this issue is transitory in nature. Once input costs stabilize, the benefits of the price hike (approximately 4-6% taken in May 2026) and captive manufacturing will become visible.

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Earnings and Sales Projections

Looking ahead, Prabhudas Lilladher expects SII IN to achieve a sales compound annual growth rate (CAGR) of 14% over the next two years, with gross margins expected to be 46.2% and 46.8% in fiscal years 2027 and 2028, respectively. The estimated earnings before interest, taxes, depreciation, and amortization (EBITDA) margin is expected to be 12.5% and 13.7% in fiscal years 2027 and 2028, respectively.

Valuation

SII IN trades at 38x and 29x the estimated earnings per share (EPS) for fiscal years 2027 and 2028, respectively. Considering the company's expected growth prospects and margin revival, the upgrade to a BUY recommendation seems justified.

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Comparison of Valuation Multiples