Safari Industries (India) Upgraded to 'Hold' by MarketsMOJO: Positive Outlook for Midcap Plastic Company

Safari Industries (India) is a midcap company in the plastic products industry. Recently, MarketsMOJO has upgraded its stock call to 'Hold' on November 14, 2024. This upgrade is based on several factors that indicate a positive outlook for the company.
One of the key reasons for the upgrade is the high management efficiency of Safari Industries, with a ROCE (Return on Capital Employed) of 15.09%. This shows that the company is utilizing its capital effectively and generating good returns for its shareholders.

Another positive aspect is the company's ability to service its debt, with a low Debt to EBITDA ratio of 0.46 times. This indicates that the company has a strong financial position and is not heavily burdened by debt.

Safari Industries also has a healthy long-term growth potential, with its operating profit growing at an annual rate of 49.43%. This is a positive sign for investors looking for sustainable growth in the company.

From a technical standpoint, the stock is currently in a mildly bullish range and has shown a 1.26% return since November 11, 2024. The Bollinger Band, a key technical indicator, has also been bullish since the same date.

Institutional investors hold a significant stake of 35.14% in Safari Industries, indicating their confidence in the company's fundamentals. Their stake has also increased by 0.63% in the previous quarter, further strengthening the company's position.

However, the company's financial results for September 2024 were flat, with a decrease in PAT (Profit After Tax) by -30.3% and the lowest PBDIT (Profit Before Depreciation, Interest, and Taxes) at Rs 47.89 crore. The operating profit to net sales ratio was also at its lowest at 10.46%. Additionally, with a ROE (Return on Equity) of 18, the stock is currently trading at a very expensive valuation with a price to book value of 12.8.

Despite these challenges, the stock is currently trading at a fair value compared to its average historical valuations. However, in the past year, while the stock has generated a return of 10.45%, its profits have fallen by -1.3%. This indicates that the company has underperformed the market (BSE 500) returns of 26.29% in the last year.

In conclusion, while Safari Industries (India) has shown positive signs of growth and efficiency, it also faces some challenges in terms of its financial performance. Investors should carefully consider these factors before making any investment decisions.