Hold Supreme Industries; target of Rs 3441: ICICI Securities

ICICI Securities research report on Supreme Industries

Supreme Industries (SI) reported Q4FY25 blended plastics volume growth of 2.3% YoY (6-year CAGR of 9.8%) with pipes segment reporting modest 2.2% YoY volume growth (6-year CAGR of 11.7%) on a high base YoY. Blended EBIT/kg contracted 23.1% YoY to INR16.5 (+19.2% QoQ) as pipes EBIT/kg fell 27.8% YoY to INR 13.3 (+22.3% QoQ), partly due to inventory losses. Management guides for pipes volume growth of 3–4%, better than industry’s growth (~6–7%) and consol. OPM of 14.5–15.5% for FY26. We cut our FY26–27E EBIDTA by ~4.5–5.9% and believe SI’s near-term profitability shall remain tepid due to slack in demand and increased competition.

Outlook

Maintain HOLD with a rolled-over SoTP-based Mar’26E TP of INR 3,441 (vs. INR 4,015) set at a core business target P/E of 35x (~10% premium vs. 20% earlier to 10-year avg. 1-year forward P/E).