This smallcap luggage maker to issue bonus shares, dividend: Check details

Safari Industries in its board meeting held on Wednesday (November 1) announced bonus share issue together with the dividend payout.

On the sidelines of the September quarter results announcement, the luggage-maker’s board has proposed to issue bonus shares in the ratio of 1:1 i.e. each of the company’s shareholders will be entitled to receive 1 share for free for every 1 share held by them as on the record date.

The proposed bonus shares will be issued out of the securities premium account of the company available based on Audited Financial Statements as at 31 st March 2023.

As part of the bonus share issue, the company will be issuing a total 2,37,83,607 equity shares having face value of Rs. 2/- each.

The company will credit such bonus shares to the eligible shareholders on or before December 31, 2023. However, record date is to be fixed by the company's board in this regard.

Furthermore, the company has also declared and approved an interim dividend of Rs 2.5 per share for the fiscal year 2023-24. This dividend shall be paid on or before November 30, 2023.

For the purpose of determining shareholders' eligibility for the aforesaid dividend, the company has fixed November 10 as the record date. 

In the financial year ending March 2023, the company declared an equity dividend of 175 per cent amounting to Rs 3.5 per share.

As per the Trendlyne data, the company since 2002 has declared 13 dividends.

Safari Industries Q2FY24 earnings

The company’s top-line increased 18 per cent year-on-year (YoY) to Rs 370 crore led by strong growth across channels. Net profit increased 53.2 per cent YoY to Rs 39.8 crore with a margin of 10.7% as compared to a margin of 8.3%/11.7% in 2QFY23/1QFY24.

Safari has outlined a capex plan of Rs 215 crore that would entail doubling its hard luggage (HL) capacity from ~6.5lac pieces per month to ~13lac pieces per month. The new plant is expected to come up in North India and expansion is expected to complete in the next 12-15 months.

Brokerage view

The company reported decent performance in a seasonally weak quarter with Gross margin/EBITDA margin of 45.5%/17.2% respectively. Brokerage firm Prabhudas Lilladher has maintained its buy rating on the stock with a target price of Rs 4752 valuing the stock at 45x Sep-25E EPS. The brokerage is bullish on the counter given the company’s consistent gain in market share and rising share of indigenous manufacturing that is likely to result in a Sales/PAT CAGR of 24%/31% over FY23-FY26E. 

Shares of the company last traded at a price of Rs 4096.1, down over 3 per cent over the previous day’s close.