Buy Supreme Petrochemicals; target of Rs 1021: KR Choksey

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KR Choksey's research report on Supreme Petrochemicals

Supreme Petrochem’s (SPL) revenues saw robust growth of 41.8% YoY to INR 14,854 mn. Though on QoQ basis revenue was mostly flat, declining by 0.8%. The strong growth in revenue was on account of healthy demand and improved realisations. EBITDA witnessed a healthy growth of 27.5% YoY to INR 2,517 mn, though sequentially EBITDA declined by 18.2% QoQ. EBITDA margin contracted by 190 bps YoY/361 bps QoQ to 16.9%. PAT for the quarter stood at INR 1,891 mn, witnessing a strong growth of 29.3% YoY. Though on QoQ basis, PAT was down by 16.1%. PAT margin contracted by 123 bps YoY/232 bps QoQ to 12.7%.

Outlook

We continue to remain positive on the growth prospects of SPL. The stock is currently trading at a P/E multiple of 9.9x/8.6x on its FY23E/24E EPS of INR 88.7/102.1 respectively. We value the stock at 10x on its FY24E EPS of INR 102.1/share, which yields a target price of INR 1,021/share, an upside of 16.1% over the CMP. Accordingly, we recommend a “BUY” rating on the shares of Supreme Petrochem Ltd.

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Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Supreme Petrochemicals - 270722 - kr