ICICI Securities is bullish on Supreme Industries recommended buy rating on the stock with a target price of Rs 1640 in its research report dated September 23, 2020.
ICICI Securities research report on Supreme Industries
We upgrade Supreme Industries (SIL) to BUY driven by a) faster-than-expected recovery post Covid-19 led lockdown - mere 3.4%/3.7% volume/value decline in Jul and Aug’20 (Source: Chairman’s speech at its recently concluded AGM); b) higher (double-digit) growth expectations post FY21 in its core segments – plastic piping and SILAPULIN; c) likely improvement in asset turns over the next 2-3 years with huge capex over FY20-FY21 going into the production next year; d) reducing dependence on commodity-led industrial and consumer product segments; d) higher EBITDA margin trajectory driven by increasing share of VAP revenues, further decentralisation of plants, superior product mix and operating leverage; and f) fast improving RoCEs led by strong traction in profitability and higher fixed asset turns.
We upgrade SI to BUY with a target price of Rs1,640 (Rs1,135 earlier) valuing it at 35x FY22E core earnings.
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