KR Choksey's research report on Supreme Petrochem
Supreme Petrochem met our estimates on revenue, EBITDA, and PAT for Q4FY24. Revenue beat was due to strong volume growth, EBITDA beat was due to lower-than-expected other expenses and net profit beat was due to better-than-expected operational performance and lower-than-expected tax expenses. The Board has proposed a final dividend of INR 7 per equity share for FY24. The stock is trading at PE multiples of 29.0x/20.7x based on FY25E/FY26E EPS estimates, respectively. We increase the target price to INR 766/share and upgrade the rating on the stock from HOLD to ACCUMULATE. The Company focuses on the domestic market as half of the demand for ABS is met by imports. We believe once the upcoming projects are operational the Company can meet the domestic demand and increase the sales volume.
Outlook
Currently, the stock is trading at PE multiples of 29.0x/20.7x based on FY25E/FY26E EPS estimates, respectively. We expect the revenue to grow at 22.8% CAGR over FY24-FY26E, and PAT to grow at 34.5% CAGR over FY24-FY26E. We increase the target price to INR 766/share (Previously – INR 592) and upgrade the rating on the stock from HOLD to ACCUMULATE implying an FY26E P/E multiple of 23.0x.
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