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Supreme Industries Shares Gain After Analysts Raise Target Price

The company's third-quarter revenue rose 19% year-on-year to Rs 2,310.7 crore, while net profit declined 15% to Rs 210 crore.

<div class="paragraphs"><p>Supreme Industries' Insuflex tubes (Source: company website)</p></div>
Supreme Industries' Insuflex tubes (Source: company website)

Shares of Supreme Industries Ltd. gained after most analysts raised the target price for the stock after its third-quarter earnings.

"Supreme reported strong Q3 results with revenue up 19% YoY. Despite an inventory loss, its Ebitda margin rose to 13.1%, and volume increased 51% YoY on a low base," CLSA said in its investor note.

Supreme Industries Q3 Earnings ( Consolidated, YoY)

  • Revenues gained 19% to Rs 2,310.7 crore.

  • Net profit declined 15% to Rs 210 crore.

  • Ebitda stood at Rs 303.4 crore versus Rs 317.9 crore.

  • Ebitda margin stood at 13.1% versus 16.3%.

Shares of the company ended 0.51% higher, compared with a 1.25% decline in the NSE Nifty 50 Index. The relative strength index stood at 50.

Of the 28 analysts tracking the stock, 21 maintained a 'buy', five kept a 'hold', and two recommended a 'sell', according to Bloomberg data. The stock's return potential is 6.9% over the next 12 months.

Here's what analysts made of the results:

Jefferies

  • Retains 'buy' and raises price target to Rs 3,060 from Rs 2,920 earlier, implying a potential upside of 30%.

  • Views company as a holistic play on revival in housing, capex, infrastructure, and agri demand, led by diversified product mix and entrenched reach.

  • Expects FY23-25 earnings per share CAGR at 25%.

  • Says Supreme Industries is a high-conviction, small and medium cap pick for the brokerage.

  • Pegs demand slowdown and sharp PVC volatility as key risks.

  • Forecasts sales at Rs 9,500 crore, operating margins at 11.7% and volume growth at 26% for the current fiscal.

  • Estimates sales, profit after tax to post a compound annual growth rate of 14% and 26% respectively, driven by new capex, housing and capex, government schemes and new launches.

CLSA

  • Maintains 'outperform' rating on the stock and raises price target to Rs 2,670 from Rs 2,100.

  • Says capacity expansion and stable PVC prices augur well for the company's medium-term outlook.

  • Cuts FY23 Ebitda 4%, but raises FY24-25 Ebitda 13%-14% to factor-in its recent results.

  • Overall capacity is to rise by 90kt to 815kt by March. With 500kt in sales in FY23, it provides a long runway for growth.

  • The new capacity could reach 65% utilisation in 12–14 months.

  • Full-year capex is likely to be Rs 400–500 crore.

Investec 

  • Retains 'buy' on stock and raises target price to Rs 2,900 per share from Rs 2,550 apiece.

  • Says incremental capex to yield attractive return ratios, which is a positive.

  • The third quarter stands out optically due to gains on low base and channel re-stocking on recent resin up-move.

  • Supreme's pan-India manufacturing reach, wide product basket and scale benefits are positives.

  • Company's strong cash flow conversion, incremental growth capex and strong bull/sell position are noteworthy.

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