Earnings Review
Supreme Ind Oct-Dec consol PAT down for second qtr in a row
This story was originally published at 17:04 IST on 20 January 2025
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--Supreme Ind Oct-Dec consol net profit INR 1.87 bln
--Analysts saw Supreme Ind Oct-Dec consol net profit INR 2.43 bln
--Supreme Ind Oct-Dec consol net profit INR 1.87 bln vs INR 2.56 bln yr ago
--Supreme Ind Oct-Dec consol revenue INR 25.10 bln vs INR 24.49 bln year ago
--Supreme Ind Apr-Dec consol net profit INR 6.67 bln vs INR 7.15 bln yr ago
--Supreme Ind Apr-Dec consol revenue INR 74.19 bln vs INR 71.26 bln year ago
--Supreme Ind sold 162,733 tn plastic goods in Oct-Dec vs 158,025 tn yr ago
--Supreme Ind Oct-Dec plastic goods turnover INR 24.88 bln vs INR 24.29 bln
--Supreme Ind Oct-Dec plastic pipe sales INR 16.6 bln vs INR 16.4 bln yr ago
--Supreme Ind Oct-Dec industrial pdts sales INR 3.32 bln, unchanged on year
--Supreme Ind Oct-Dec packaging product sales INR 3.98 bln vs INR 3.54 bln
--Supreme Ind Oct-Dec plastic goods sales volume up 3% on year
--Supreme Ind Oct-Dec consol operating profit INR 3.31 bln, down 17.2% on yr
--Supreme Ind Oct-Dec consol operating profit margin 13.13% vs 16.18% yr ago
--Supreme Ind Oct-Dec value-added goods turnover INR 9.61 bln, up 13% on yr
--Supreme Ind: Cash surplus of INR 2.90 bln as on Dec. 31
--Supreme Ind expects FY25 capex to reach INR 10 bln
--Supreme Ind: Spent INR 7.18 bln on capex during Apr-Dec
--Supreme Ind: Not to give specific volume guidance as PVC prices uncertain
--Supreme Ind: Expect to grow 3-4% above India's plastic pipe growth FY25
--Supreme Ind: Expect piping system capacity in FY25 to reach 900,000 tn/yr
--Supreme Ind: Plastic piping system capacity 820,000 tn/year as on Dec 31
--Supreme Ind: Plastic pipe ops affected due to adverse PVC resin prices
--Supreme Ind: Plastic pipe ops affected as infra demand pick up below view
--Supreme Ind: Expect good demand from agri, housing segments in Jan-Mar
--Supreme Ind: Expect some improvement in demand from infra sector in Jan-Mar
--Supreme Ind: Await govt order on anti-dumping duty on PVC resin
--Supreme Ind:To execute 3 greenfield pipe units in Jammu, Bihar, MP in FY26
--Supreme Ind Oct-Dec plastic pipe sales volume 126,515 tn, up 3.7% on year
By Aman Aryan
MUMBAI – The plastic manufacturing and processing company Supreme Industries Ltd.'s earnings growth in the December quarter was affected by lower-than-expected infrastructure spending and unfavourable polyvinyl chloride resin prices.
The extended winter rainfall in southern and some eastern states of India adversely affected polyvinyl chloride prices during the quarter, the company said. Despite booking a 3% on-year growth in volumes, the company reported an on-year decline in consolidated net profit for the second consecutive quarter.
The company's consolidated net profit for the December quarter fell 27% on year to INR 1.87 billion, marking the highest on-year fall in nine quarters. Analysts had estimated the company to post a consolidated net profit of INR 2.43 billion. The net profit for the quarter was even lower than INR 2.03 billion, the lowest among the eight brokerage estimates available with Informist. The net profit fell 9.5% sequentially.
Supreme Industries' consolidated revenue grew 2.5% on-year to INR 25.10 billion, missing the Street estimate by a wide margin. According to the average of estimates from eight brokerages, the revenue was seen at INR 27.18 billion. The company's volume rose nearly 3% on year and 18% sequentially to 162,733 tonnes in the reporting quarter.
The company's turnover from the sale of plastic goods rose 2.4% to INR 24.88 billion in the December quarter. The turnover from value-added products rose 13% on year during the quarter to INR 9.61 billion, after registering a 3.7% on-year fall in the previous quarter.
As in the case of net profit, the company's earnings before interest, tax, depreciation, and amortisation too fell for the second consecutive quarter. Supreme Industries' EBITDA for the December quarter fell 18.5% on year, compared with a 10.4% on-year fall in the previous quarter.
A 7% on-year increase in the cost of raw materials consumed and an over 57% fall in its other income also hurt the company's earnings for the latest quarter.
The Mumbai-based company had in October cut its volume growth guidance for 2024-25 (Apr-Mar) to 16-18% from 25%. However, this time the company said it was not in a position to give any specific figure due to the uncertainty around polyvinyl chloride prices. The proposed anti-dumping duty on the import of polyvinyl chloride suspension grade resin and the stable prices of resins at a lower level raises uncertainty about resin prices, the company said in a release.
The agriculture and housing segments are expected to witness better demand in the last quarter, the company said, and added that it also expects some improvement in demand from the infrastructure sector. Supreme Industries expects its plastic pipe system business to grow 3-4% more than the overall growth of the segment in India due to several brownfield projects and a large portfolio of stock keeping units, the company said.
All brownfield expansion projects of plastic piping systems are progressing smoothly, Supreme Industries said. As of Dec. 31, the company's total capacity was 820,000 tonnes per year, which is expected to go up to 900,000 tonnes per annum by the end of the current financial year, the company said. For its greenfield plants in Jammu and Kashmir, Bihar, and Madhya Pradesh, the company expects the execution to start in the next financial year.
In October, the company had set a target of 835,000 tonnes of annual capacity by FY25-end. Among segments, revenue from plastic piping products rose to INR 16.65 billion in the December quarter from INR 16.44 billion a year ago and the revenue from the packaging products segment rose to INR 3.98 billion from INR 3.54 billion. However, revenue from the consumer products segment fell to INR 1.06 billion from INR 1.12 billion a year ago. The revenue from industrial products was almost flat at INR 3.32 billion.
Although the plastic piping products segment, a major business for Supreme Industries, posted healthy volume growth, the earnings before interest and tax from the segment saw a sharp on-year contraction. The company sold 126,515 tonnes of plastic piping products in the December quarter, up from 122,003 tonnes a year ago. However, the segment's EBIT contracted more than 35% on year to INR 1.38 billion for the December quarter, according to the company's investor presentation.
The company raised its estimate for cross laminated film business' volume growth to 20% from 15% for FY25, along with an improvement in profitability. Supreme Industries said it plans capital expenditure, including carry-forward commitments, of around INR 15 billion.
Total cash outflow during Apr-Dec was INR 7.18 billion and is likely to reach INR 10 billion in the current financial year, the company said, adding it will be funded entirely from internal accruals. Supreme Industries' cash surplus fell to INR 2.90 billion as on Dec. 31 from INR 6.74 billion a quarter ago and INR 11.78 billion as of Mar. 31.
The company said the order to supply 10-kilogram liquefied petroleum gas cylinders from Indian Oil Corp. Ltd. is expected to be completed by February 2025. Work on cylinders for all oil marketing companies is in progress and is expected to generate good business going forward.
Supreme Industries consolidated operating profit fell 17.2% to INR 3.31 billion for the December quarter. Its operating profit margin for the quarter contracted to 13.13% from 16.18% a year ago.
The company's consolidated net profit in Apr-Dec fell to INR 6.67 billion from INR 7.15 billion a year ago. The consolidated revenue for the nine months was INR 74.19 billion, up from INR 71.26 billion a year ago.
On Monday, shares of the company closed 4.3% lower at INR 4,021.90 on the National Stock Exchange. The company announced the results during market hours. End
Edited by Saji George Titus
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