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Prabhudas Lilladher Report
We tweak our FY24/FY25 earnings estimate by -1.1%/+2.2% to factor in-
higher volume growth guidance of 15% and
reduction in Ebitda margin guidance from ~15% to 13.5%-14%.
Supreme Industries Ltd. delivered healthy performance with volume growth ahead of expectations, mainly led by plastic pipe segment (up 16.4% YoY on higher base) and improvement in Ebitda/kg at ~Rs 33/kg (versus Rs 22 QoQ and Rs 30 YoY).
We believe Supreme Industries is structurally placed to capture plastic processing industry demands given-
healthy capacity expansion in different geographies,
benefit of local manufacturing (~3.5% logistic cost saving) to be passed-on to channel for driving volume growth,
wide pan India distributors n/w of 4500 channel partners, with 1443 distributors for pipe business; additional 100 in FY24, and
cash surplus of Rs 7.4 billion for funding expansion plans.
We estimate FY23-25E sales/Ebitda/profit after tax compound annual growth rate of 12.5%/19.2%/18.0%, with volume CAGR of 13.1% and Ebitda margin improvement of 160 bps.
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