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Supreme Industries Ltd. – Long-Term Investment Report 🔹

Lesson 150/225 | Study Time: 15 Min

Course: Top Quality Companies

Supreme Industries Ltd. – Long-Term Investment Report

🔹 Company Overview

Supreme Industries Ltd. is one of India’s largest plastic products manufacturers, with leadership across plastic piping systems, industrial products, packaging solutions, and consumer products. Over the past 25 years, the company has delivered 350X stock price growth while also maintaining consistent dividends (approx. 3X annual dividend yield on invested value).

The company has a diversified product portfolio and operates in essential infrastructure-linked sectors, making it a structural long-term growth story.

🔹 Industry & Growth Prospects

Plastics & Piping Industry: Driven by housing, urban infrastructure, irrigation, and industrial demand. India’s rapid urbanization and government’s thrust on “Jal Jeevan Mission” & smart cities will support long-term demand.
Packaging & Consumer Products: Rising demand for flexible packaging, storage, and lifestyle products adds resilience.
Industrial Products: Benefiting from modernization of manufacturing and rising industrial capex.

Overall, the industry is expected to grow at 10–12% CAGR, with piping systems as the main driver.

🔹 Historical Performance (Volumes, Revenue & Profits)

Year	Volume (MT)	Revenue (₹ Cr)	Net Profit (₹ Cr)	Margin %
FY2001	–	465	3	0.6%
FY2006	118,115	982	40	4.1%
FY2011	224,673	2,469	175	7.1%
FY2016	242,968	2,975	213	7.2%
FY2021	409,109	6,357	978	15.4%
FY2024	639,701	10,134	1,070	10.6%
FY2025	674,510	10,446	961	9.2%
Trail FY2026	684,468	10,419	891	8.6%

🔹 20-year CAGR:

Volume: 10%
Revenue: 14%
Net Profit: 20%

🔹 Profit Margins Trend

Peak margins during FY2021 (15.4%) supported by strong demand & lower costs.
Normalized margins now at 8–10%.
Sustained efficiency in material sourcing & scale can help maintain 8–9% margins long-term.

🔹 Valuations – PE & PBV History

PE Range: From 2.4x (2009 lows) to 85x (FY2025 highs).
PBV Range: From 0.2x (2003 lows) to 14.5x (FY2025 highs).
Current valuations are rich compared to long-term historical averages.

📌 Future reasonable range:

PE: 25x – 45x
PBV: 5x – 9x

🔹 Latest Q1 FY26 Results

Sales: ₹2,609 Cr (↓1% YoY)
Profit: ₹201 Cr (↓26% YoY)
Volume: 1.83 lakh MT (↑2% YoY)
Margins: 7.7% (vs 10.3% YoY)
Segmental Performance:

Plastic Piping: -4% (69% share)
Packaging: +9% (15% share)
Industrial: -1% (12% share)
Consumer: +1% (4% share)

⚠️ Key pressure: Higher raw material costs (+8%) & inventory losses.

🔹 Cost Structure (Q1 FY26)

Raw Material: 80%
Employee: 6%
Others: 15%
D&A: 4%
Finance: negligible

Observation: Heavy dependence on material cost – global crude & polymer price volatility directly impacts profitability.

🔹 Growth Outlook & Estimates

Year	Revenue (₹ Cr)	Net Profit (₹ Cr)	EPS	BV	Blended Fair Value
FY2026E	10,550	812	64	478	₹2,784
FY2030E	16,363	1,440	114	603	₹4,203
FY2035E	28,319	2,538	201	807	₹6,639

🔹 Technical View (Chart Attached)

Buying Range: ₹2,450 – ₹3,704
Profit Booking Zone: Near ₹6,212
Long-term Trend: Still intact, but short-term corrections possible.

🔹 Peer Comparison

Supreme Industries: Market leader in plastic piping & diversified portfolio.
Astral: Strong growth in CPVC piping, higher valuations.
Finolex Industries: Regional stronghold, lower margins.

Supreme remains a steady compounder with balanced business model.

🔹 Conclusion – Long-Term Risk & Reward

✅ Pros:

Market leadership & diversified segments
Strong long-term compounding track record
Dividend-paying & consistent FCF generator

⚠️ Risks:

Volatile raw material costs
Slower demand in real estate/agri cycles
High valuations

🎯 Long-Term View:
Supreme Industries remains a structural play on India’s infrastructure & consumption. For long-term investors, accumulating during corrections in the buying range could provide favorable risk-reward.

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