Accumulate Supreme Industries; target of Rs 4895: Geojit Financial Services

Geojit Financial Services recommended accumulate rating on Supreme Industries with a target price of Rs 4895 in its research report dated October 30, 2024.

October 31, 2024 / 12:07 IST

accumulate

26 Aug, 2025 12:21

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Geojit Financial Services research report on Supreme Industries

Supreme Industries Ltd. (SIL) is India’s leading player in plastic products; the company’s wide range of offerings include plastic piping systems, packaging, industrial and consumer products. Revenue decreased by 2% YoY, primarily due to flat volumes in the piping segment and overall weak volumes across other segments. Additionally, there was a significant 5% YoY decline in realization within the pipe business. Volatility in input prices, destocking over the last four months (June to September), and reduced government spending adversely affected volumes. Gross margins improved by 100bps YoY to 34.5%, driven by lower PVC prices. EBITDA margins declined of 140bps YoY to 14.0%, attributed to higher employee costs and other expenses. Consequently, Net profit fell by 15% YoY. With the normalization of input prices and lower inventory levels in the channel, restocking is expected to drive volume growth from hereon. Further, anticipated increase in government spending in H2FY25, along with healthy demand from the real estate and construction sectors, is expected to boost pipe volumes. We anticipate a 13.3% CAGR in volume and a 13.6% CAGR in revenue from FY24– 27E, while profitability is expected to grow by 16% CAGR.

Outlook

We value SIL at a P/E of 36x as we roll forward to FY27E EPS and upgrade to Accumulate from Sell rating with a target price of Rs. 4,895.

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