Ashish Kacholia portfolio: This stock has zoomed 75% in three months
Shares of Safari Industries moved higher by 9 per cent to its record high level of Rs 1,545.55 on the BSE in Wednesday’s intra-day trade. The stock of the luggage company surpassed its previous high of Rs 1,498.95, hit on August 16, 2022.
In the past three months, the market price of Safari Industries has appreciated 75 per cent on healthy earnings and strong outlook. In comparison, the S&P BSE Sensex gained 9 per cent. The stock has more-than-doubled from its 52-week low level of Rs 750 on August 24, 2021.
Ace investor Ashish Kacholia owned 614,228 equity shares or 2.74 per cent stake in Safari Industries at the end of the June quarter of fiscal 2022-23 (Q1FY23), as per shareholding pattern available on the stock exchanges.
For the said quarter, Safari Industries reported an over 10-fold jump in its standalone net profit at Rs 27.44 crore, as against Rs 2.54 crore in the year-ago quarter and Rs 2.57 crore in the preceding quarter (Q4FY22). Revenue from operations grew 144 per cent year on year and 53 per cent sequentially at Rs 293 crore during the quarter.
Safari Industries is engaged in the manufacturing and marketing of luggage and luggage accessories. The travel sector has seen a resurgence on the back of demand revival and increase in consumers’ confidence. That apart, the demand for backpacks, ladies’ handbags, and school bags is also expected to rebound strongly as normalcy resumes.
The medium and long-term growth drivers, also, remain intact, analysts said. The luggage industry has witnessed a shift towards branded goods with rising income and rapid urbanisation. The change in behavioural patterns of consumers also augurs well for the industry, they added.
“The overall long-term outlook for the sector remains very robust with a travel coming back in a big way, opening of schools and offices, and marriage demand seeing a strong upswing. Other structural factors driving industry growth continue to be in place such as accelerated shift in consumer preference away from unorganised labels to brands, increase in ownership of multiple bags and shortening replacement cycles,” Safari Industries said in its FY22 annual report.
In order to meet the rising demand for hard luggage, the Company is setting up a new manufacturing plant through its wholly owned subsidiary in Halol, Gujarat for additional capacity for polypropylene zippered hard luggage.
The company has significantly enhanced its sourcing from manufacturing bases in India and Bangladesh reducing its dependence on Chinese imports. This shift has helped improve supply security as well as relative cost savings given the continued global supply chain disruptions.
“The company also started a new International Business division focussed on export of luggage and backpacks. In the initial phase, the focus of this division will be to expand business in geographies with large Indian diaspora taking advantage of the latent equity of the ‘Safari’ brand in this segment,” Safari Industries said.