Buy Supreme Petrochem; target of Rs 467: KR Choksey

KR Choksey's research report on Supreme Petrochem

Supreme Petrochem Ltd. has reported a revenue of INR 13,869 Mn in Q4FY23 against INR 11,804 Mn in Q3FY23, a growth of 17.5% on a QoQ basis and INR 14,977 Mn in Q4FY22, a dip of approximately 7.4% on a YoY basis. On operational front EBITDA in Q4FY23 stood at INR 2,089 Mn (-32.1% YoY / 75.7% QoQ), EBITDA Margin contracted by 549 bps YoY and 499 bps QoQ to 15.1% in Q4FY23 due to volume growth and better spread. Net Profit in Q4FY23 stood at INR 1,589 Mn (-30.1 YoY /78.4% QoQ) , with NPM at 11.5%. EPS during the quarter came at 17 against 24 in the same quarter last year and 9.5 in Q3FY23.

Outlook

At CMP of INR 383, the stock is currently trading at a P/E multiple of 11.8x/9.8x on its FY24E/25E revised EPS of INR 32.4/38.9 respectively. We value the stock at 12x on its FY25E EPS of INR 38.9, which yields a target price of INR 467/share, an upside of 21.9% over the CMP. Accordingly, we maintain our “BUY” rating on the shares of Supreme Petrochem Ltd.