Safari Industries Ltd (Safari ) is the third largest branded player in the Indian luggage industry. Post the management change in 2012, it has witnessed complete restructuring in business and product portfolio. This restructuring has helped it in posting a CAGR of 42% in revenue and 46% in PAT over 2012-17. It has also now captured ~14% market share in a ~`2600 cr branded luggage market.

Outlook and Valuation: We expect its revenue to grow by 23% CAGR over FY2017-20E on the back of growth in its recently introduced new products. We expect its earnings to grow by ~59% CAGR, owing to stable operating margins and its asset light model. Safari currently trades at a P/E of 40x FY2019E and 30x its FY2020E EPS which looks attractive looking at its strong brand play story emerging in the luggage industry. We initiate coverage on the stock with a Buy recommendation and Target Price of `650 (36x FY2020E EPS), indicating an upside of 18%.

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