Buy Supreme Industries; target of Rs 4200: Motilal Oswal

Buy

Motilal Oswal's research report on Supreme Industries

Despite lower-than-expected performance, Supreme Industries (SI) saw an improvement in its quarterly result, with an EBITDA growth of ~7% in 3QFY26 (vs. a dip in the last five quarters). The improvement was mainly driven by high overall volume growth of 13% YoY. Margins were flat YoY due to volatile PVC pricing in 3Q, offset by a better product mix. Plastic pipe volume rose ~16% YoY, with volume growth guidance maintained at ~15-17% for FY26. This implies a 20-24% YoY volume growth in 4Q.

Outlook

We expect SI to clock 12%/18%/18% CAGR in revenue/EBITDA/PAT over FY25 28. We value the stock at 34x FY28 EPS to arrive at a TP of INR4,200 (on par with its last 10-year average P/E valuation). Reiterate BUY.

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