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Prabhudas Lilladher Report
In an inflationary environment, Safari Industries India Ltd. reported a decent performance with gross margin of 38.7% (our estimate of 36.9%) buoyed by price hike taken towards end of Q3 FY22 and favorable product/channel mix.
Though top-line declined 5.4% QoQ due to Omicron impact in January/February, overall demand environment remains strong given easing travel restrictions.
While we cut our FY23E earnings per share estimates of Safari Industries by 7% as we trim our gross margin assumption by 100 bps amid persistent raw material cost inflation, our FY24E estimates are broadly intact.
We expect sales/profit after tax compound annual growth rate of 27%/98% over FY22-FY24E as benefits of distribution network expansion and stock keeping units extension is yet to play out since sales volumes were impacted by Covid in last two years.
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