Analyst Concall
Supreme Ind says higher volumes to aid margins in FY26
This story was originally published at 21:01 IST on 21 January 2026
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--Supreme Ind:Expect margins to rise 13.5-14.0% in FY26
--CONTEXT: Comments by Supreme Industries mgmt in post-earnings analyst call
--Supreme Ind:Rise in finance costs in Q3 was temporary
--Supreme Ind:Expect new plants in Gwalior, Patna to be operational in FY28
--Supreme Ind:No doubt about interest cost normalising from FY27
--Supreme Ind:Will announce precise capacity of Gwalior, Patna plants in Apr
--Supreme Ind:Gross debt as on Dec 31 INR 1.32 bln, to be debt-free by Mar
By Afra Abubacker and Sunil Raghu
NEW DELHI/AHMEDABAD – Supreme Industries Ltd. expects its margins to grow 13.5-14.0% in the financial year ending March, supported by higher volumes and recent uptick in polymer prices. Sales of plastic piping systems are likely to improve in the next quarter with strong agricultural demand in view of rabi harvesting, the company said in a post-earnings analyst conference call.
"Because of the higher volume, our manufacturing costs, our administrative costs, gets spread on the larger volume. And therefore, for the year, we are targeting 13.5% to 14% margin," the management said Wednesday. For overall volumes, the company has a growth guidance of 12-14%, with plastic piping business expected to grow 15-17% in FY26.
Supreme's consolidated net profit declined nearly 18% on year and 7% sequentially to INR 1.53 billion in the December quarter, and missed analysts' estimate of INR 2.03 billion. The company's consolidated revenue from operations rose over 7% on year and over 12% sequentially to INR 26.87 billion in Oct-Dec. Analysts had estimated the company's top line for the quarter at INR 26.84 billion.
The company said prolonged lower ploymer prices and inventory losses hit its earnings. However, polymer prices have started inching higher from January amid plant shutdowns and weaker rupee.
The consolidated operating profit in the December quarter fell 3% on year to INR 3.23 billion and the consolidated operating profit margin in Apr-Dec declined to 12.01% from 13.13% year ago.
The company said the jump in finance costs in the December quarter was "temporary", mainly driven by short-term borrowings for funding capital expenditures. Finance costs in the third quarter rose over 280% on year to INR 1.14 billion from INR 29.8 million year ago. The company's total expenditure for the third quarter rose nearly 9% on year and over 13% on quarter to INR 24.94 billion.
However, going forward, the company expects interest costs to normalise. "We have to wipe out this small borrowing, which we have taken. So, the interest cost will come down," the company said. Supreme Industries' gross debt as of Dec. 31 was INR 1.32 billion, and the company expects to go debt-free by March.
The company said the total installed capacity of the plastic piping business will reach 1 million tonnes per annum by the end of FY26, and the three units acquired from Wavin Business are expected to be available with full potential from February. The company expects the new plants in Gwalior and Patna to be operational by FY28. The company is, currently, planning to add an overall capacity of 100,000 tonnes, but said it will announce the precise capacity of these plants in April.
On Wednesday, shares of Supreme Industries closed nearly 1% down at INR 3,348.70 on the National Stock Exchange. The company detailed its December quarter earnings during market hours earlier in the day. End
US$1 = INR 91.69
Edited by Akul Nishant Akhoury
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