Ashish Kacholia’s favourite stock is up 100% in FY23. Can shares of this smallcap firm rally further?

By admin On Mar 23, 2023

Chasing the portfolio of well-known individual investors on Dalal Street can sometimes help you to identify a stock which may deliver you solid returns even in a tough time. One such stock is Safari Industries which has rallied 106 per cent in the ongoing financial year to date. Shares of the company have advanced to Rs 1,999.45 on March 22, 2023 from Rs 968.50 on March 31, 2022. On the other hand, the benchmark BSE Sensex inched lower by 0.60 per cent during the same period.

Ace investor Ashish Kacholia held a 2.59 per cent stake in the company as of December 31, 2022, against 2.74 per cent on December 31, 2021.

The luggage manufacturer continued to deliver robust quarterly numbers, with the December quarter being the most profitable ever. The consolidated net profit of Safari Industries (India) zoomed to Rs 34.47 crore in Q3FY23 against Rs 6.90 crore in December 2021 and Rs 1.19 crore in December 2020. On the other hand, gross sales of the company climbed 48.56 per cent YoY to Rs 303.07 crore for the quarter ended December 2022.

On the back of favourable raw material prices coupled with increased capacity utilisation and reduction in ocean freight (back to pre-covid levels), gross margins came in at 45.1 per cent with the highest-ever operating profit margin of 18.1 per cent.

Brokerage Monarch Networth Capital last month gave a ‘Buy’ rating on Safari Industries with a target price of Rs 2,620, indicating an upside of 31 per cent against the current market price.

“We continue to witness a robust uptick in hard luggage where Safari is the biggest beneficiary. Hence, we raise our earnings estimates (around 18 per cent FY24-FY25) and continue to prefer Safari over VIP, given the current demand trend, a better gross margin to EBITDA transition and a focused approach,” the brokerage said.

Jinesh Joshi, Research Analyst, Prabhudas Lilladher also retained a ‘Buy’ call on Safari Industries last month with a target price of Rs 2,476.

Foreign portfolio investors held 15.53 per cent stake in the company as of December 2022, while mutual funds had 6.70 per cent stake.

Data available with Trendlyne showed that Ashish Kacholia holds shares worth around Rs 1,700 crore in his portfolio at present. Shares of Likhitha Infrastructure, Raghav Productivity Enhancers, D-Link (India), Megastar Foods and Gravita India also rallied somewhere between 50 per cent and 60 per cent in FY23 till March 22. Kacholia held over a 1 per cent stake in these firms as of December 31, 2022.

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