Buy Supreme Industries; target of Rs 4850: Motilal Oswal

Motilal Oswal's research report on Supreme Industries

Supreme Industries (SI) reported muted operating performance (EBITDA down 7% YoY), led by volatile PVC prices, a lower VAP mix, and weak demand (due to extended monsoon). Despite this, pipes volume grew ~17% YoY in 2Q, with piping volume growth guidance maintained at ~15 17% for FY26. Management has also maintained its overall volume growth for FY26 at 12-14% YoY, driven by a positive demand outlook from the housing/plumbing and agriculture segments, expected stabilization of prices (with the implementation of ADD), and the addition of Wavin capacity (~71,000MTPA).

Outlook

We largely maintain our FY26/FY27/FY28 earnings estimate and reiterate BUY, valuing the stock at 45x FY27E EPS to arrive at our TP of INR4,850.