Supreme Industries Q3 Results Review - Decline In ASP Dents Performance, Maintain 'Reduce': Yes Securities

Yes Securities Report

Supreme Industries Ltd. delivered robust volume growth of 14% YoY and 15% QoQ, wherein pipes volumes (77% of total volumes) increased by 17% YoY and 19% QoQ (largely in-line with our estimate) backed by healthy demand across plumbing and infra segment. However, correction in PVC resin prices during the quarter lead to contraction in average selling price from Rs 166 in Q2 FY24 to Rs 155 in Q3 FY24 wherein pipes ASP stood at Rs 135/kilograms as compared to Rs 147 in previous quarter.

Therefore, overall revenue increased by 6% YoY and QoQ and pipes revenue (67% of total) grew by 9% YoY and QoQ. Volume growth of other segments improved marginally by 5% YoY and 3% QoQ.

Owing to contraction in ASP, the Ebit/Kg of pipes declined sequentially from Rs 19.5/kg to Rs 17.4/kg. Overall Ebitda margins were stable on QoQ basis at 15.5% and absolute Ebitda grew by 6% over similar period.

We remain positive on Supreme Industries’ growth over FY23-FY26E owing to sturdy demand from real-estate and infra segment and with expected pick-up in rural segment.

Hence, we expect revenue/Ebitda/ profit after tax growth of 12%/18%/21% over FY23-FY26E.

We continue to value the stock at price/earnings (times) of 35 times on FY26E earning per share (stand) and maintain our 'Reduce' rating on the stock with a target price of Rs 3,709.

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