Supreme Industries Ltd. share price target

Asian Paints is a market leader in the decorative paint segment having ~2.3x more dealers (~70,000) than the No.2 player. There are structural long term demand drivers of decorative paint such as reduced repainting cycle and Housing for all, that makes it a long term growth story...

SI's Q1 volumes slipped 22% YoY as agri pipe demand slowed, but pass-along of higher RM prices aided consolidated revenue growth of 27% YoY

Much of the growth in revenues (45.7%) in Q4 bear little resemblance to underlying growth for Supreme's plastics goods volumes grew by a measly 7.8% with dispatches of the flagship plastics piping products business declining by 1.7% (its revenues grew by some 44%) as the company amassed market share from unorganized players. Revenues of...

Background: Supreme Industries (SI) is a plastic product manufacturer and the largest plastic processor in India, processing over 0.37mn MT annually. Company has four business verticals i.e. Plastic Piping (55%), Packaging Products (21%), Industrial Products (16%) and Consumer Products (7%). SI has 22 manufacturing plants situated across India. Company enjoys a significant market share across its business verticals; Plastic Piping (9.48%), Industrial Products (15%) and...

Supreme Industries Ltd.'s (SIL) Q4FY21 result was a beat to our as well as consensus estimates on all parameters. The company reported net sales of Rs20.8bn, increased by 45.7% YoY, while EBITDA came in at Rs5.1bn, a robust growth of 86.4% over Q4FY20. It reported net profit of Rs4.5bn, higher by 284% YoY. SIL reported inventory gain of Rs2,000mn in current quarter, which resulted in superlative performance of the company. The management remains committed to new products launches and capacity expansion to strengthen further market share in the domestic market as well as increase export sales in future. We have revised our net sales/PAT estimates by...

EBITDA margin at 24.5% during Q4 is one of the highest in the history of Supreme backed by inventory gains amid rise in PVC prices. We believe the inventory gains are limited till FY21 and EBITDA margin will peak out from its high with ease in PVC prices, going forward. The management has guided for EBITDA margin of ~17% (~200 bps higher than its last five years average) backed by an improved product mix. Valued added product...

Q4FY21 Revenue & PAT grew by 46% & 284% YoY respectively, led by higher operating profit and share of profit from associate. EBITDA margin improved by 530bps YoY to 24.5% led by better product mix and inventory gains (Rs.80-100cr) . With revival in construction activities and pick-up in consumption spending, overall demand scenario is expected to be strong. Investment in new capacities, focus on new products, expansion of...

Supreme Industries' (SI) Q4FY21 revenue grew 46% YoY, aided by an 8% rise in volumes off a tepid base.

Q3FY21 Revenue & PAT grew by 34% & 153% YoY respectively, led stable volume & higher operating profit. EBITDA margin improved by 570bps YoY to 21.8% led by inventory gains (Rs.80cr) and better product mix. With ease in restrictions, green shoots of revival in construction activities, stable agri demand and improvement in consumption are tail winds driving earnings revival for the company....

Supreme Industries Ltd.'s (SIL) Q3FY21 result was ahead of our and consensus estimates on all parameters. Strong demand traction in agri segment led to healthy volume growth, while lower raw material cost aided operating margin improvement. The company reported net sales of Rs18.4bn, increased by 34.3% YoY, while EBITDA came in at Rs4bn, a robust growth of 81.7% over Q3FY20. It reported net profit of Rs3.1bn, higher by 153% YoY. Our interaction with the management suggest that SIL will remain focused on capacity addition, new products launches and increasing share of value added products to strengthen future earnings growth. To factor in margins beat and...

Capex of | 400 crore to increase geographical reach The company has total 25 manufacturing units across 12 states in India. Supreme is planning a capex of ~| 400 crore (including maintenance capex) to increase its total manufacturing capacity by 10% to ~7,00,000 metric tonnes by 2022. The company is debt free and has cash balance of | 432 crore by the end of December 2020. We believe the surplus cash would be...

Supreme Industries' (SI) Q3FY21 revenue grew 34% YoY, aided by a 10% rise in volumes.

Results above estimates on revenue front as there was an overall revival seen in volumes across segments. Gross margins expanded by 425 bps YoY driven by higher realizations, better product mix and...

Background: Supreme Industries (SI) is a plastic product manufacturer and the largest plastic processor in India, processing over 0.37mn MT annually. Company has four business verticals i.e. Plastic Piping (55%), Packaging Products (21%), Industrial Products (16%) and Consumer Products (7%). SI has 22 manufacturing plants situated across India. Company enjoys a significant market share across its business verticals; Plastic Piping (9.48%), Industrial Products (15%) and...

Better product mix and good demand drives topline Q2FY21 topline growth at 8% YoY at ~| 1375 crore was largely in line with our estimates. The plastic piping, packaging, industrial product categories revenue increased ~4%, ~11%, ~8% YoY to | 847 crore, | 220 crore, | 182 crore, respectively. The valued product category revenue growth was at 9% YoY to | 533 crore indicating good demand of premium product categories as well. The improved product mix led to a sharp rise in realisation by ~7% YoY in Q2FY21 while packaging & industrial products volume grew ~11% &...

Supreme Industries Ltd.'s (SIL) Q2FY21 result was a beat to our as well as consensus estimates on all parameters. The company reported net sales of Rs13.7bn, increased by 8.2% YoY, while EBITDA came in at Rs2.5bn, a robust growth of 48.1% over Q2FY20. It reported net profit of Rs1.4bn, higher by 15.4% YoY. The management guided that SIL would remain focused on new products launches and capacity expansion to accelerate further the growth momentum in all products segments. We have revised our net sales/PAT estimates by 18%/28% and 11%/6% respectively over FY21E/FY22E and introduce FY23E financials. The stock had a sharp run up recently which caps its upside from current level....

We upgrade SIL to Hold from Sell as we upgrade our earnings estimates given significant turnaround in earnings post Covid-19. Q2FY21 Revenue & PAT grew by 8% & 25% YoY respectively, led by recovery in demand and higher operating profit....

The company reported strong outperformance in revenues, OPM and net profitability in Q2FY2021. Cash surplus further improves. October till date continued to see y-o-y growth across all business verticals. The company remains optimistic on rural, tier III, tier IV economies along with demand generation from the affordable housing segment. SIL is one of the fastest to recover in post lock-down era in the building material space....