Shares of Safari Industries (India) Ltd. were trading nearly 4% lower on Tuesday, August 4, following the luggage maker's mixed quarterly results for Q1FY27. According to reports from CNBC TV18, the market reaction reflected investor concerns over the company's profitability despite revenue growth during the quarter. Recent brokerage reports indicate the stock has faced significant pressure, with analysts maintaining cautious outlooks amid margin concerns.
For the quarter, Safari Industries reported a 5.43% year-on-year decline in consolidated net profit to ₹47.75 crore from ₹50.49 crore in the corresponding quarter last year. As reported by Business Standard, revenue from operations showed stronger performance with a 11.51% increase to ₹588.58 crore from ₹527.83 crore in the same period last year. The mixed results highlighted the company's ability to grow revenue while facing profitability challenges, with recent analyst estimates showing revenue growth of 12.4% year-on-year to approximately ₹4.7 billion in Q4FY26.
The company's profitability metrics showed significant deterioration during the quarter. According to Business Standard, EBITDA declined 4.9% year-on-year to ₹80.09 crore from ₹82.88 crore in the corresponding quarter last year. More concerning was the EBITDA margin contraction to 12.8% from 15.02% a year earlier, indicating reduced operational efficiency despite revenue growth. Recent analyst reports suggest that EBITDA margin contracted by 52bps YoY to 10.9% in Q3FY26, owing to increased employee costs, price discounts and higher marketing spends. The operating profit margin (OPM) also compressed to 12.8% from the previous year's level.
Despite the recent challenges, analysts maintain cautious optimism about Safari Industries' recovery prospects. Recent brokerage reports indicate that while the company faces near-term margin headwinds from raw material price inflation, these issues are expected to be transitory. The company's volume growth of 19% in FY26 and 15.5% revenue growth demonstrate strong operational fundamentals. Analysts expect the benefits of price hikes taken in May-26 and the company's captive manufacturing capabilities at the Jaipur facility to drive margin expansion once input costs stabilize. However, recent stock performance shows significant correction with the stock trading at ₹1,512.90 compared to previous levels, reflecting investor concerns about the margin recovery timeline.
