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Supreme Industries Q4 Results Review - Healthy Volume Growth Momentum Continue: Prabhudas Lilladher

Reported all-time high quarterly sales volume of 147,414 million tonne (up 14.6% YoY).

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

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Prabhudas Lilladher Report

We tweak our FY24/FY25 earnings estimate by -1.1%/+2.2% to factor in-

  1. higher volume growth guidance of 15% and

  2. reduction in Ebitda margin guidance from ~15% to 13.5%-14%.

Supreme Industries Ltd. delivered healthy performance with volume growth ahead of expectations, mainly led by plastic pipe segment (up 16.4% YoY on higher base) and improvement in Ebitda/kg at ~Rs 33/kg (versus Rs 22 QoQ and Rs 30 YoY).

We believe Supreme Industries is structurally placed to capture plastic processing industry demands given-

  1. healthy capacity expansion in different geographies,

  2. benefit of local manufacturing (~3.5% logistic cost saving) to be passed-on to channel for driving volume growth,

  3. wide pan India distributors n/w of 4500 channel partners, with 1443 distributors for pipe business; additional 100 in FY24, and

  4. cash surplus of Rs 7.4 billion for funding expansion plans.

We estimate FY23-25E sales/Ebitda/profit after tax compound annual growth rate of 12.5%/19.2%/18.0%, with volume CAGR of 13.1% and Ebitda margin improvement of 160 bps.

Click on the attachment to read the full report:

Prabhudas Lilladher Supreme Industries Q4FY23 Results Review.pdf
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