Supreme Industries Q3 Results Review — IDBI Capital Upgrades The Stock To 'Buy', Sees 20% Upside; Here's Why

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IDBI Capital Report

Supreme Industries Ltd.’s Q3 FY25 result was in-line with our estimate on net sales front, while margins disappointed. During the quarter the Plastic Pipe Systems business growth was adversely affected due to unfavorable PVC resin prices scenario and subdued demand from infrastructure.

Also demand dynamics from agriculture and housing sector was muted, denting overall sales off-take. However, the company expects Q4 FY25 demand to be higher led by increased spending on infrastructure by the government.

Also the company expects the overall margins to be in between 13-14% for FY25. Supreme Industries reported net sales of Rs 25 billion, marginally up by 2.5% YoY, while Ebitda came in at Rs 3.1 billion, declined by 18.5% over Q3 FY24.

It reported net profit of Rs1.8bn, lower by 27% YoY. We roll over to FY27E earnings. Post recent stock price correction, potential upside from current level is meaningful. We upgrade the stock to Buy with a revised target price of Rs 4,820, assigning 40 times PER on FY27E.

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