Accumulate Supreme Industries; target of Rs 3803: Prabhudas Lilladher

Prabhudas Lilladher's research report on Supreme Industries

Supreme Industries’ (SI) Q4FY25 volume growth was 2.3% below with our estimates, due to lower volume in the plastic pipe segment (up 2.2% YoY against our est. of 5%) because of low demand in plumbing and infra segments, delay in ADD on PVC resin resulted de-stocking in the channels. EBITDA margin contracted by 260bps YoY with decrease in EBIT/kg to Rs 13.3 (down 27.8% YoY)in pipe segment mainly due to inventory losses in pipe segment. SI expects topline to reach Rs 12bn by FY26 driven by volume growth of 10-12% in pipe segment with overall EBITDA margin of 14.5-15.5%, also plastic pipe segment capacity to reach 1mn MT by FY26.

Outlook

We estimate FY25-27E revenue/EBITDA/PAT CAGR of 14.3%/17.7%/19.8%, with volume CAGR of 12.4% and EBITDA margin expansion of ~80bps. We have up revised our earnings estimates for FY26/FY27E by 3.8%/3.1% and revised TP to Rs3,803 (Rs3,689 earlier), based on 35x FY27E earnings. Maintain ‘Accumulate’.