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Informist, Monday, Oct. 21, 2024

By Aman Aryan

MUMBAI – Plastic manufacturing and processing company Supreme Industries Ltd. is likely to have outperformed its peers in the September quarter due to an aggressive volume push and pricing. A healthy growth in volumes for the plastic pipes and industrial goods segments is expected to have driven the company's total revenue for the September quarter, analysts said. Although the company's revenue is seen up on year, the company is likely to report an on-year fall in net profit for the latest quarter.

Supreme Industries is expected to post a consolidated net profit of INR 2.39 billion, down 1.9% from the year-ago quarter, according to the average of estimates from eight brokerage firms. Elara Securities has estimated the company's consolidated net profit at INR 2.63 billion for the September quarter, the highest among the eight estimates, while the lowest estimate for the consolidated net profit was INR 2.10 billion by YES Securities.  

The company's consolidated revenue for the latest quarter is expected to grow 7.3% to INR 24.77 billion, according to the average of estimates from eight brokerage firms. Sequentially, the company's net profit is seen down 12.8% and its revenue down 6%. For the June quarter, the company had reported a consolidated net profit of INR 2.73 billion on revenues of INR 26.36 billion. Antique Stock Broking gave the highest estimate for the company's consolidated revenue for the latest quarter at INR 26.55 billion, whereas YES Securities gave the lowest estimate at INR 23.20 billion. 

Although some analysts saw the volumes of the pipe-making company affected by volatile polyvinyl chloride prices, Sharekhan said Supreme Industries is expected to post volume-driven revenue growth in the latest quarter. The volatility in the raw material prices delayed or deferred the decision making of customers, dealers, or distributors, Anand Rathi said. Most plastic pipe making companies are expected to post only a marginal growth in their net earnings this quarter, analysts said.

The overall demand for plastic pipes has been challenging due to lower infrastructure-related activities in the monsoon, YES Securities said. The brokerage, however, expects the company's total volumes to be up 10% on year but down 12% sequentially. On the segment front, analysts expect volumes of the company's plastic pipes and industrial goods segments to grow the most. The company's pipe segment volume is expected to grow 12% and the industrial goods segment will post a 10% growth in volume, Nuvama said. Prabhudas Lilladher, on the other hand, expects the company's consumer goods segment volume to fall 10% on year.                     

Supreme Industries will likely report earnings before interest, taxes, depreciation, and amortisation of INR 3.69 billion, according to the average of estimates from six brokerage firms. The company's EBITDA was INR 3.56 billion in the year-ago quarter. While the consensus sees the company's EBITDA to rise on-year, YES Securities expects Supreme Industries to clock a 3.4% fall in its EBITDA to INR 3.44 billion for the latest quarter. 

Since the channel inventory was moderate at the beginning of the quarter, Anique Stock Broking said it expects the declining resin prices to be a catalyst for channel restocking. Five brokerage firms expect the company's EBITDA margin would have fallen in the latest quarter. Corrections in realisation and inventory losses due to volatility in resin prices have likely contracted the company's EBITDA margin by 100 basis points on-year to 14.4%, Prabhudhas Lilladher said. However, Nuvama said it expects the company's EBITDA margin would have risen 70 bps on year.

Monday, shares of Supreme Industries closed at INR 4,979.95 on the National Stock Exchange, down 1.6%. Shares of the company have risen 19.4% since the beginning of the current financial year, but are down 19.5% from their recent high hit on Jun. 19. The company is scheduled to report its earnings for the September quarter Tuesday.

Following are the Jul-Sept earnings estimates of Supreme Industries Ltd. based on reports compiled by Informist from eight brokerages:

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Edited by Deepshikha Bhardwaj

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