Safari Industries (India) Ltd


#85

Safari Industries and VIP Industries coming out of ASM from tomorrow (30th Oct, 2018).

Source: https://www.bseindia.com/markets/MarketInfo/DispNoticesNCirculars.aspx?Noticeid={0667A738-FF47-4EAB-AB15-01D2048E225B}&noticeno=20181027-2&dt=10/27/2018&icount=2&totcount=2&flag=0

Annexure.xls (57.5 KB)
Refer Annexure III in the above file.


(Bheeshma Sanghani, PhD) #86

Good Operating performance continues from Safari. Half Yearly Gross Margins maintained ~44%. Nice improvement in Half Yearly operating margins and PAT margins.Good topline growth as well.

Quarterly margins have decreased sequentially and yoy as well indicating many things. Unlike VIP which follows the average cost method, Safari follows the FIFO method, so lower cost inventory gets expensed first and higher cost later ( assuming an inflationary environment ), causing fluctuations in gross margins quarter on quarter.

Lastly, it looks likely that safari could close fy19 with an EPs of 15. This coupled with a further drop in share price will bring multiples closer to rational levels forming a good strong base hopefully. Once there is some base formation the intent is to summon up the courage to add.

Best
Bheeshma
Disc - invested


(Himadri Roy) #87

Why there is a difference in Debtors figure as per AR 2018 and Q2 FY19, any idea

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(Nikhil Moryani) #88

Hi Bheeshma,

The total operating expenses have been more or less the same on qoq basis. The only reason operating margins were higher in Q1 fy19 was because of a very high sales no. on an absolute basis, ~150cr.

It was also good to note that receivables have come in control keeping in mind a very strong sales growth witnessed in the quarter.

It’s good to see a 120 cr sales mark in an ersthwile okayish quarter, talks of the tailwind or the tipping point this industry has hit. I’m excited to see what they post next quarter owing to the festive season and multiple online melas. The change in inventory no. could be one clue but let’s not read much into it.

Cheers.

Disc. - Invested


(Bheeshma Sanghani, PhD) #89

Hi @nikhilmoryani

Yes, on the balance sheet front - there are signs that tied up operating cash has been released. Inventories + receivables ( the two main operating assets) as a group are up by 13% while payables are up by 59% viz a viz Sales growth which is 40-45%. Receivables is up by only 3% indicating good collections.

Short term borrowings as a result of this cash flow are also down by 25% , but compensating for that are the higher interest rates leading to a slight increase in finance costs.

Improvement in balance sheet is a good sign.


(bimalb) #90

Disc - Invested