with market valuation of 28,417.18 crore, Supreme Industries Limited (SIL). is a large-cap industrial firm. With seven business divisions, Supreme Industries Limited is the leading plastic processing company in India. The company has ventured into a variety of plastic processing technologies including Extrusion, Rotational Molding (ROTO), Compression Molding, Blow Molding and Injection Molding. In India’s plastics sector, Supreme is widely recognized as a pioneer. The largest plastics processors in the country efficiently handle volumes of polymers in excess of 350,000 tonnes annually. According to data from Value Research, Supreme Industries is a debt-free firm, but the cherry on top is that it will soon pay a 300% dividend.
“We would like to inform you that the Board of Directors of the Company in its meeting held on Monday, 31st October, 2022 has, inter alia, approved the payment of Interim Dividend @ 300%. 6/- per share on the number of equity shares of Rs.12,70,26,870. 2/- each (face value),” the company said in the stock exchange filing.
“We must state that the Company has fixed Wednesday, November 9, 2022, as the “record date” to ascertain the eligibility of shareholders for payment of interim dividend, if and to the extent declared By the Board of Directors in its meeting to be held on Monday, October 31, 2022, the Board of Directors of the Company informed the Stock Exchanges.
Research analysts at broking company ICICI Direct Research have said in a note that “SIL’s share price has given 88 per cent returns in the last five years”. We maintain our BUY rating on the stock. We value the stock at 32x P/E FY24E EPS and revise our target price 2600.”
Government’s flagship ‘Nal Se Jal’ scheme (with an outlay of ~.) Maintaining EBITDA is a big booster for domestic plastic piping industry in the long term, increasing contribution of value-added product to overall topline (from 35% in FY18 to ~38%) Margins up, company plans capex She is making According to analysts, a model revenue CAGR of 12% led by the manufacturing facility to grow by 11% YoY to ~8 lakh tonnes in FY23E and 17% volume CAGR in FY22-24E, the key triggers for the stock’s future price performance. Huh.
“Supreme Industries’ Q2FY23 performance was weak on the EBITDA margin front. Inventory losses have pulled down consolidated EBITDA margin to 7.1% (vs ~15% pre-Covid margin) amid sharp decline in PVC prices (40% drop since April 2022). We also reduced our FY23 EBITDA margin estimate by 180 bps YoY to 12.8% (taking into account the sharp decline in Q2FY23 EBITDA margin). We believe EBITDA margins to come down in FY23 and return to their pre-Covid levels by FY24, supported by stable PVC prices, new product launches in the value-added product segment and improved operating leverage. On the revenue front, Q2FY23 Piping segment volume growth of 9% was well ahead of our estimate of ~2% decline. Management expects strong demand for piping products from the second half of FY23 on the back of improving rural demand. We believe that the piping segment of SIL will report a CAGR of 19% in FY22-24E, supported by a revival in pipe demand from agriculture, housing and infrastructure. We believe that Government sponsored schemes like Nal Se Jal Mission, Swachh Bharat Abhiyan, Sanitation, Affordable Housing can be the major catalysts for the volume growth of SIL. We make up for FY 2012-24E over revenue, earnings 12%, CAGR of 3%, led by Piping Segment revenue CAGR of 12%. We maintain our BUY rating on the stock given the strong growth outlook and strong balance sheet position in the Company’s core business. We value the stock at 32x PE of FY24E EPS and revise our target price 2600/share,” said research analysts at broking firm ICICI Direct Research.
Research analysts at broking firm Anand Rathi said in a note that “Driven by volume growth, Supreme’s second quarter revenue grew 8.2% y/y to 21bn (in line with ARE), even as mixed receivables remained soft. Raw Materials Inventory losses curbed profitability due to sharp fall in prices. Gross, EBITDA and PAT margins shrank by 830bps, 906bps and 793bps y/y to 23.2%, 7.1% and 3.9%, respectively.
He further added that “encouraging demand outlook and margin tailwinds will boost the performance of the second half of FY13. Management expects revenue of Rs 90 billion and EBITDA margin of 12-12.5% for FY13. We present FY25 earnings and expect revenue and earnings CAGR of 12% and 9% respectively in FY22-25. We retain our buy rating, and increase our target price to Rs 2,730 (from Rs 2,467) based on FY15 earnings 27.5x (unchanged).
“We have revised our FY23 and FY24 figures downwards to reflect healthy volume growth and continued margin pressure (from inventory losses) in plastic piping in H1 FY23. We also present FY25 earnings and expect revenue and earnings CAGRs of 12% and 9% respectively in FY22- 25. We maintain a Buy rating, and increase our target price to Rs 2,730 (from Rs 2,467) on a 27.5x (unchanged) basis. FY24e earnings,” said research analysts at broking firm Anand Rathi.
Supreme Industries shares closed today 2,240.00 each, up 1.78% from previous close 2,200.75. On NSE, the stock had touched a 52-week high 52-week low of 2,492.55 on (10-Nov-2021) and on 1,666.25 (23-June-2022). However, if the stock reaches the target price set by the above brokerage companies, it will set a new record high.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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