Safari Industries Falls 16.82%: 6 Key Factors Driving the Sharp Decline

Feb 9: Death Cross Formation Signals Bearish Momentum

Safari Industries began the week with a notable technical development as it formed a Death Cross, where the 50-day moving average crossed below the 200-day moving average. This event is widely regarded as a bearish indicator, signalling a potential shift to a prolonged downtrend. The stock closed at Rs.2,167.75, up 2.05% on the day, outperforming the Sensex’s 1.04% gain. Despite this initial strength, the Death Cross foreshadowed the weakening momentum that unfolded over the week.

Feb 10: Quarterly Results Disappoint, Stock Retreats

On 10 February, Safari Industries reported its Q3 FY26 results which revealed margin pressures overshadowing revenue growth. Profit Before Tax declined by 25.4% to Rs.35.64 crores, while Net Profit After Tax fell 20.8% to Rs.32.89 crores compared to the average of previous quarters. The stock reacted negatively, closing at Rs.2,146.25, down 0.99%, despite the Sensex gaining 0.25%. Technical indicators also shifted further bearish, with the Moving Average Convergence Divergence (MACD) remaining negative and the stock trading below key moving averages.

Feb 11: Intraday Low Amid Intensifying Price Pressure

The stock’s decline accelerated on 11 February, hitting an intraday low of Rs.1,995.75, a 7.01% drop from the previous close. The day ended with a 7.04% loss, closing at Rs.1,977.00, significantly underperforming the Sensex which gained 0.13%. This sharp fall extended a two-day losing streak and reflected heightened selling pressure. Safari Industries traded below all major moving averages, reinforcing the bearish technical outlook. The stock’s Mojo Score remained at 37.0 with a Sell rating, reflecting deteriorating investor sentiment.

Feb 12: Continued Downtrend with Sharp Intraday Low

On 12 February, the downward momentum persisted as Safari Industries hit an intraday low of Rs.1,830, closing down 7.73% at the same level. This marked the third consecutive session of steep declines, with a cumulative loss exceeding 15%. The stock underperformed both its sector peers and the Sensex, which declined only 0.56%. Trading below all key moving averages, the stock showed no signs of recovery. The company’s recent downgrade to a Sell rating and the low Mojo Score underscored the bearish outlook.

Feb 13: Stock Hits 52-Week Low Amid Sustained Weakness

The week concluded with Safari Industries falling to a fresh 52-week low of Rs.1,771.15 on 13 February, closing at Rs.1,766.85, down 4.09% on the day. This marked a cumulative four-day decline of 17.89%. The stock remained below all major moving averages, signalling persistent bearish momentum. Despite the broader market’s modest decline of 1.40%, Safari Industries’ underperformance was stark. The company’s valuation metrics remain elevated, with a Price to Book Value ratio of 8.6 and a PEG ratio of 4.2, indicating that price growth has outpaced earnings. Operationally, the company shows strengths such as a Return on Equity of 15.9% and robust debt servicing, but these have not translated into positive price action.

Key Takeaways

Bearish Technical Signals: The formation of the Death Cross early in the week and consistent trading below all major moving averages signalled a clear bearish trend. The MACD and Know Sure Thing indicators confirmed weakening momentum across daily, weekly, and monthly timeframes.

Disappointing Quarterly Results: Margin pressures and declines in both PBT and PAT weighed heavily on sentiment, triggering sharp price declines despite revenue growth.

Significant Price Declines: The stock lost nearly 17% over the week, markedly underperforming the Sensex’s modest 0.54% decline, reflecting company-specific challenges rather than broad market weakness.

Proximity to 52-Week Low: The stock closed near its 52-week low, raising concerns about further downside risk and investor caution.

Valuation and Operational Metrics: Despite elevated valuation ratios and a high PEG, the company maintains solid operational fundamentals such as a strong ROE and manageable debt levels, highlighting a disconnect between fundamentals and market pricing.

Mojo Score and Rating Downgrade: The downgrade to a Sell rating with a Mojo Score of 37.0 reflects the deteriorating outlook and technical weakness.

Conclusion

Safari Industries (India) Ltd’s week was dominated by a sharp reversal in price momentum, driven by bearish technical signals and disappointing quarterly earnings. The stock’s 16.82% weekly decline and fall to a 52-week low underscore the challenges it currently faces amid a broader market that remained relatively stable. While the company’s operational metrics and long-term growth remain commendable, the prevailing technical weakness and valuation concerns have led to a cautious market stance. Investors should closely monitor the stock’s price action and technical indicators for signs of stabilisation or further deterioration in the near term.

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