Sharekhan's research report on Supreme Industries
Company reported a marginal beat on net earnings as OPMs bettered estimates. Overall volume growth lagged. Management raised volume growth guidance for plastic piping to 30% y-o-y owing to stable PVC prices at lower levels. Barring plastic piping, other segments may yield better margins, while lagging in terms of volume growth. SIL continues to focus on raising capacities majorly plastic piping, and increasing share of value-added products. Capex increased to Rs. 1000 crore with cash outflow of Rs. 750 crore for current year.
Outlook
We retain a Hold rating on Supreme Industries Limited (SIL) with an unchanged PT of Rs. 4,600, owing to an unfavourable risk-reward at current valuations.
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