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Axis Securities Report
Safari Industries India Ltd. Q1 FY21 result was an all round miss versus our estimates. Q1 which is typically a peak season for the company was adversely hit by the pandemic leading to a revenue decline of 90% YoY tp Rs 20 crore (Rs 50 crore our estimate).
Benign raw material prices and better product mix led to gross marign expansion of 440 basis points YoY to 44.2% (43.5% our estimate).
Desptie healthy gross margin performance, the company reported loss at the operating level. Ebitda Loss was Rs 19 crore owing to higher fixed costs on account of a lower topline.
As a result, the reported net loss stood at Rs 19 crore versus a net profit in Q1 FY20.
While, management indicated a month on month improvement in demand, uncertainty on growth continues given the fluid situation regarding Covid-19 and its containment.
To factor in near term pressure on demand we revise FY22 revenue/profit after tax estimates downwards by 4%/12%.
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