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HDFC Securities Retail Research
Supreme Industries Ltd. is India’s largest plastic product manufacturer, commanding leadership position in most product categories– plastic pipes, furniture, material handling, and protective packing products.
It has a phenomenal track record of operating at low leverage and generating strong cash flows resulting in consistently high return on capital employed (25% plus).
Supreme Industries has managed this feat despite having had aggressive capex spend of over Rs 2500 crore in the past decade. It has been a market leader, which has performed better than the industry, mainly driven by-
diversified product portfolio with largest product offering;
pan-India manufacturing set-up with 25 plants and largest distribution network comprising 3,500 plus channel partners;
higher asset turns (~3.5 times of gross block) which ensures efficient utilisation of assets;
lean net working capital structure (~35 days); and
constant focus on expanding its margin accretive -add portfolio of products (37% of overall revenue as on March 2022).
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