Hold Supreme Industries: target of Rs 4204: ICICI Securities

ICICI Securities's research report on Supreme Industries

Supreme Industries (SI) reported Q4FY24 blended plastics volume growth of 32.5% YoY (3-year CAGR of 20.7%), driven by 41.4% YoY volume growth in the pipes segment (+30.2% QoQ; 3-year CAGR of 27.8%). Blended EBIT/kg increased 10.2% QoQ to INR 21.5 (-23.1% YoY) with pipes EBIT/kg increasing 5.6% QoQ to INR 18.4 (-37.1% YoY), but was lowerthan- expected due to adverse product mix (despite operating leverage). Management stated that demand remains healthy across segments and has guided for blended volume growth of 20% YoY with pipes volume growth of 25% YoY (earlier 12%–15%) for FY25E.

Outlook

We tweak our EBIDTA estimates by ~4%/3% for FY25E/26E. Maintain HOLD with a revised SoTP-based FY25E TP of INR 4,204 (earlier INR 3,936) set at an unchanged core business target P/E of 35x.