Accumulate Supreme Petrochem; target of Rs 877: KR Choksey

KR Choksey's research report on Supreme Petrochem

Supreme Petrochem reported better-than-expected top-line growth compared to our estimates due to an increase in price realization. However, profitability was in-line with our estimate with stable pricing in key raw material Styrene Monomer. We believe continued robust domestic demand, especially in the OEM (Original Equipment Manufacturer) sector, and EPS (Expandable polystyrene) capacity expansion and a new Mass ABS (Acrylonitrile butadiene styrene) project will drive future growth. We lower our FY25E/FY26E estimates by 2.1% and 0.9%, respectively due to reduction in volume guidance.

Outlook

We assign a P/E multiple of 27.0x (previously: 27.5x) on FY26E EPS of INR 32.5 to arrive at a target price of INR 877/share (previously: INR 903/share) as exports are under pressure with geopolitical uncertainty.

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