Accumulate Supreme Petrochem; target of Rs 683: KR Choksey

KR Choksey's research report on Supreme Petrochem

Supreme Petrochem’s revenue beat our estimates (+4.8%) due to a strong volume growth. However, profitability missed our estimates significantly due to higher-than-expected cost of goods sold and higher-than-expected other expenses. We expect the revenue to grow at 21.5% CAGR and Adj. PAT to grow at 27.2% CAGR over FY24-FY27E as we anticipate continued strong domestic demand, incremental revenue from upcoming mass ABS product, and improved profitability with favourable product mix. We reduce our FY26E/FY27E EPS estimates by 8.4% and 8.9% to INR 29.7/ INR 38.0, due to persistent export challenges, volatility in the raw material price and uncertain global situation.

Outlook

We roll over our valuation multiple to FY27E and assign a P/E multiple of 18.0x to arrive at a target price of INR 683 (previously: INR 877) and maintain “ACCUMULATE” rating.

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