Supreme Industries Q1 Results Review — PL Capital Maintains Both Rating, Target Price Post Soft Earnings

Supreme Industries is targeting a volume growth of 15-17% in the pipes segment and 14.5-15.5% from overall segments with Ebitda margins of 14.5–15%. The company is aiming to scale its pipe segment capacity to 1 mmt by FY26 with a utilization of 65-70%. The recently acquired Wavin is expected to contribute 30k mt to volumes in FY26.

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

PL Capital Report

Supreme Industries Ltd.’s Q1 FY26 volume growth was 5.7% below our estimates, due to lower volume in the plastic pipe segment (up 6.1% YoY against our estimate of 7.3%) due to early monsoon, leading to lower demand in the agriculture piping segments, delay in anti-dumping duty on PVC resin resulted de-stocking in the channels.

Ebitda margin contracted by 250 bps YoY with decrease in Ebit/kg to Rs 10.6 (down 35.9% YoY) in pipe segment mainly due to inventory loss of Rs 500 million. Adjusting for the inventory loss PAT was in line with our estimates in Q1 FY26. The management has revised its FY26 guidance, raising P&F volume growth from 10–12% to 15–17% and overall volume growth to 14–15%, while maintaining its Ebitda margin guidance at 14.5–15.5%.

Also maintained its plastic pipe segment capacity to reach 1 million metric by FY26. Considering the current PVC resin price scenario, moderate demand environment, and slowmoving channel inventory, we have decided to maintain our FY26/FY27 estimates, with P&F volume growth of 12.4%/15.0% and Ebitda margins of 14.2%/14.5%, respectively.

We estimate FY25-27E revenue/Ebitda/PAT CAGR of 14.3%/17.7%/19.8%, with overall volume CAGR of 12.4% and Ebitda margin expansion of ~80bps. We maintained our target price of Rs 4,346 based on 40x FY27E earnings. Maintain ‘Hold’.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.