Hold Supreme Petrochem; target of Rs 592: KR Choksey

KR Choksey recommended hold rating on Supreme Petrochem with a target price of Rs 592 in its research report dated January 29, 2024.

Broker Research

January 31, 2024 / 09:33 IST

hold

26 Aug, 2025 12:21

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KR Choksey's research report on Supreme Petrochem

For Q3FY24, Supreme Petrochem reported revenue of INR 11,877 Mn which grew 0.6% YoY but declined 7.0% QoQ. The revenue missed our estimates by 8.3% as exports to USA, Europe including Turkey have been impacted due to missile attack by Yemen’s Houthi rebels on commercial ships starting from late November. The 9MFY24 revenue declined 5.4% YoY to INR 36,905 Mn. • EBITDA for the quarter was INR 948 Mn which declined by 20.4% YoY and 10.8% QoQ. The EBITDA missed our estimates by 23.1% because the Chennai EPS plant was shut due to cyclone causing heavy rains and floods for 15 days. The EBITDA margin contracted 211 bps YoY and 33 bps QoQ to 8.0%. We expected EBITDA margins to be 9.5% but it was lower by 150 bps. For 9MFY24, EBITDA was INR 2,916 Mn which declined by 35.2% YoY. The EBITDA margin contracted 363 bps YoY to 7.9%. • Adj PAT for the quarter was INR 677 Mn which declined by 24.7% YoY and 13.3% QoQ. The Adj PAT missed our estimates by 27.4% primarily due to weaker than expected operating performance. Adj PAT margin contracted 191 bps YoY and 41 bps QoQ to 5.7%. We expected Adj PAT margin to be 7.2% but it was lower by 150 bps. For 9MFY24, Adj PAT declined by 36.5% YoY to INR 2,150 Mn. The Adj PAT margin contracted by 286 bps YoY to 5.8%.

Outlook

We have introduced FY26E estimates and currently, the stock is trading at PE multiples of 21.8x/16.2x based on FY25E/FY26E EPS estimates, respectively. We expect the revenue to grow at 14.6% CAGR over FY23-FY26E, and PAT to grow at 9.8% CAGR over FY23-FY26E. We maintain the target price of INR 592/share and a HOLD rating on the stock, implying an FY26E P/E multiple of 16.9x. We believe that in CY24E the demand from OEMs in appliance manufacturing will go up and support the topline, although margins may continue to remain under pressure.

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