Robust Q4FY2018 results- For Q4FY2018, Safari Industries (Safari ) posted a growth of 26%/150% yoy growth in revenue/ PAT amid ~543 bps yoy expansion in operating margin expansion. The company is gaining market share especially from the unorganized players and seeing good demand in its backpacks and new categories which is driving such strong growth in its financials.
Outlook and Valuation: We came convinced about its long term growth story as the company is in a sweet spot in the fast growing luggage industry. We are expecting a CAGR of ~25%/40% in revenue/ earnings over FY18-20E. The stock has given 15% return since our initiation in April. It is currently trading at 33x FY2020 earnings which still looks attractive in view of its strong growth trajectory. Hence, we recommend BUY with a target price of `720 (38x FY2020E EPS).
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