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Last Updated : May 09, 2019 03:54 PM IST | Source: Moneycontrol.com

Buy Supreme Industries; target of Rs 1165: ICICI Direct

ICICI Direct is bullish on Supreme Industries has recommended buy rating on the stock with a target price of Rs 1165 in its research report dated May 08, 2019.

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ICICI Direct's research report on Supreme Industries


Supremes’ performance was hit by significant inventory losses during Q4FY19 owing to sharp decline in polymer prices, resulting a sharp contraction in EBITDA margin by ~630 bps YoY to ~13% (I-direct: 16.6%). As a result, net profit declined by ~30% YoY. On the positive front, volume growth at ~10% YoY (I-direct: ~13%) was led by ~15% and ~14% YoY growth in core business i.e. piping and packaging segments respectively. However, volume growth in the industrial and consumer segment was tad below the expectation at -13% and 3% YoY respectively. According to management, downside pricing pressure has been bottom-out and company is likely to maintain EBITDA margin in the range of ~14% -15%.


Outlook


However, strong balance sheet with debt/equity 0.08x and higher return ratios RoE, RoCE at 22%, 28% reduce the short-term concern in the industrial segments. We maintain our stance on the stock as Buy with revised target price of Rs 1165/share.


For all recommendations report, click here


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First Published on May 9, 2019 03:54 pm
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