Safari Industries Upgraded to 'Hold' by MarketsMOJO, Positive Outlook for Midcap Plastic Company

Safari Industries (India), a midcap company in the plastic products industry, has recently been upgraded to a 'Hold' by MarketsMOJO. 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 indicates that the company is utilizing its capital effectively and generating good returns for its shareholders.

In addition, Safari Industries has a low Debt to EBITDA ratio of 0.46 times, which shows its strong ability to service its debt. This is a positive sign for investors as it reduces the risk of default.

The company also has a healthy long-term growth potential, with its operating profit growing at an annual rate of 120.37%. This indicates that the company is performing well and has the potential for future growth.

From a technical standpoint, the stock is currently in a mildly bullish range and has shown improvement since 01-Nov-24. The Bollinger Band, a key technical factor, has been bullish since then, further supporting the positive trend.

Another positive aspect of Safari Industries is its high institutional holdings at 35.14%. This indicates that these investors, who have better resources and capabilities to analyze companies, have increased their stake in the company by 0.63% over the previous quarter.

However, the company's results for Jun 24 were flat, with the lowest operating profit to net sales ratio at 14.64%. The PBT (Profit Before Tax) less OI (Other Income) also fell by -8.8% to Rs 49.29 crore. Additionally, with a ROE (Return on Equity) of 21.3, the company has a very expensive valuation with a price to book value of 13.3. This may be a concern for some investors.

Despite these factors, the stock is currently trading at a discount compared to its average historical valuations. Over the past year, while the stock has generated a return of 3.51%, its profits have risen by 14.7%. The PEG (Price/Earnings to Growth) ratio of the company is 5.7, indicating that the stock may be undervalued.

In the last 1 year, Safari Industries has underperformed the market, generating a return of 3.51% compared to the market (BSE 500) returns of 31.79%. However, with the recent upgrade to 'Hold' and positive indicators for the company's future growth, it may be worth considering for investors looking for a long-term investment in the plastic products industry.