Supreme Industries Ltd. share price target

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...

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...

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...