Smallcap stock to buy now for an upside of 44%; Recommended by Motilal Oswal

Synopsis: MOSL sees up to 44% upside in this luggage stock, supported by strong volume growth, premium brand expansion, improving capacity utilization, and steady industry demand despite near-term margin pressures.

This article will outline the rationale behind upside given by MOSL for the company, which manufactures and markets hard luggage, soft luggage, backpacks, school bags, and travel accessories with brands like Safari, Genius, Genie, and Magnum.

With the market capitalization of Rs 8,887 crore, Safari Industries (India) Ltd’s shares were trading at Rs. 1813 per share, down by 2 percent from its previous day’s close price. It has delivered a negative return of 18 percent over the year.

Industry Overview

MOSL notes that discounting in the luggage industry has moderately increased, which could support demand in 1HFY27. The sector recorded high single-digit growth in the past quarter, reflecting steady travel demand despite competitive intensity and a softer pricing environment.

However, average selling prices continue to trend lower amid elevated promotional activity. MOSL expects 4Q growth to remain broadly stable on a QoQ basis, with volumes likely driving performance while pricing remains under pressure across key channels.

Brokerage’s View

MOSL remains bullish on Safari, citing strong structural growth drivers that could support further stock upside. Backed by premium brand expansion, improved capacity utilization at Jaipur, and steady store additions, the brokerage sees sustained momentum. It maintains a BUY rating with a Rs 2,600 target, implying nearly 44 percent upside despite trimmed earnings estimates.

Safari Industries reported 15.7 percent YoY revenue growth to Rs 5.1 billion in Q3 FY26, supported by strong 20 percent volume expansion. Offline sales rose 22 percent, while e-commerce grew 12–15 percent. Industry growth remained steady at around 16 percent in early Q4, indicating sustained demand momentum.

The company is expected to outpace industry growth, driven by hard luggage dominance, new product traction, and scaling at its Jaipur plant operating above 75 percent utilization. Premium brands and in-house accessory manufacturing should further support volumes, with management guiding 15–16 percent growth over the next 3–5 years.

Higher discounting and elevated raw material costs weighed on margins in Q3, with gross margin at 46.5 percent and EBITDA margin at 10.9 percent. While EBITDA rose 10.5 percent to Rs 55.7 crore, PAT grew 5.6 percent amid lower other income and higher interest costs. Management expects margins to recover to 13.5 to 14.5 percent over two years.

About the Company

Safari Industries is in the business of manufacturing and trading of luggage and luggage accessories. There are two broad categories of luggage i.e hard luggage and soft luggage. Hard luggages are mainly made of PolyPropylene (PP) and Polycarbonate (PC) and manufactured in-house by Safari at its Plant located at Halol, Gujarat. Soft luggages are made of fabrics of various kinds and are mainly imported.

Financial highlight: The revenue from operations grew by 16 percent to Rs 512 crore in Q3 FY26, corresponding to the same quarter in the last financial year. Accompanied by a net profit growth of 6 percent to Rs 32.9 crore in Q3 FY26 from Rs 31.1 crore in Q3 FY25, resulting in an EPS growth of 5 percent to Rs 6.71 per share in Q3 FY26.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Smallcap stock to buy now for an upside of 44%; Recommended by Motilal Oswal appeared first on Trade Brains.