📢 5 STEPS TOWARDS WEALTH 🚀 The Indian Stock Market Way
SUPREMEIND: CMP: 4803 LONG TERM GR: 13% Q2_fy25 GR: (-2%) | RESULTS UPDATE
#### **About the Company:**
Supreme Industries Limited founded in 1942 is an Indian plastics company. Supreme Industries Ltd. is a leading player in India's plastics industry, engaged in processing polymers and resins into various finished plastic products. The company operates across multiple business verticals, including plastic piping, industrial products, packaging, and consumer products. Supreme is India's largest plastic manufacturing and processing company. It handles volumes of over 3.2 lakh tonnes of polymers annually. The company manufactures industrial and engineering molded furniture products, storage and material handling crates, multi-layer sheets, multi-layer films, packaging films, expanded polyethylene foam, PVC pipes and fittings, molded furniture, saturant mats, disposable EPS containers. 65% of the sales comes from plastic piping's. They have a 30.78 per cent stake in Supreme Petrochem Ltd.
#### **Industry Overview:**
The plastics industry in India is experiencing robust growth driven by increasing demand in sectors such as construction, automotive, and packaging. The industry is also seeing significant investments in innovation and sustainability, aligning with global trends towards environmentally friendly products.
#### **Peer Group Analysis:**
Supreme Industries operates in a competitive landscape with major peers such as Astral Poly Technik, Finolex Industries, and Prince Pipes. Compared to its peers, Supreme has a diversified product portfolio and a strong market presence, enabling it to maintain a leadership position in the industry.
#### **Historical Performance:**
**fy_1966**: Turnover reached 19 Lakh in 1966 when the Supreme's management was taken over by the Taparia family who defined the core business as Plastic processing.
**Fy_1990**: Cross the landmark 100 Cr turnover in 1990.
**Fy_2004**: Crossed the Production of 1 Lakh MT taking the turnover to 500 Cr and Profits of 20 Cr. Share price was 20.
**Fy_2014**: Production of nearly 3 Lakh MT with turnover of 4000 Cr and Profits of 300 Cr. Share price was 500.
**Fy_2024**: Production crossed 6 Lakh MT with benchmark turnover 10,000 Cr and Profits of 1000 Cr. Share price rallied to 4200.
The boom growth of 20X all with high consistent profitability. Hence if invested 20 years back investors today receive 1.5X of the invested amount annually in dividends while value has appreciated by 250X. Definitely huge wealth creation.
Q2 FY25
Performance Summary
#### 1. *Volume Growth*
- *Q2 FY25 Volume: 138,077 MT of plastic goods sold, reflecting a marginal **volume growth of 0.23%* YoY compared to Q2 FY24.
- *H1 FY25 Volume: 311,912 MT sold, showing a strong **YoY growth of 8.94%* compared to H1 FY24.
#### 2. *Sales Growth*
- *Q2 FY25 Sales: Revenue from operations stood at ₹2,273 crore, a **decline of 1.56% YoY* compared to ₹2,308 crore in Q2 FY24.
- *H1 FY25 Sales: Revenue increased to ₹4,909 crore, a **YoY growth of 4.96%*.
#### 3. *Profit Growth*
- *Q2 FY25 PAT: Profit after tax (PAT) decreased by **15.61% YoY* to ₹219.39 crore compared to ₹259.97 crore in Q2 FY24.
- *H1 FY25 PAT: ₹455.53 crore, a slight **0.26% YoY growth*.
#### 4. *Profit Margins*
- *Q2 FY25 EBITDA Margin*: 14.05%, down from 15.44% in Q2 FY24.
- *H1 FY25 EBITDA Margin*: 14.40%, compared to 14.50% in H1 FY24.
#### 5. *Profitability Ratios*
- *Return on Equity (RoE)*: Based on H1 FY25 results, the company's profitability remains healthy, although marginally lower due to reduced YoY profit growth.
- *EBIT Margin*: Q2 FY25 EBIT margin dropped to 10.09% from 12.32% YoY.
#### 6. *Leverage Ratios*
- Supreme Industries continues to operate with *no debt*, maintaining a cash surplus of ₹674 crore as of September 30, 2024.
#### 7. *Valuations*
- *Earnings per Share (EPS)* for Q2 FY25 is ₹17.27, down from ₹20.47 in Q2 FY24. The company’s trailing twelve-month (TTM) EPS suggests that valuations may have softened due to reduced profit margins.
#### 11. *Future Outlook*
- *Near-Term*: Given the company's volume growth, its cost-saving measures, and a diversified product portfolio, Supreme Industries is expected to maintain stable operational performance. However, margin pressures due to high raw material costs might persist in the near term. We may see this year volume growth of 5% with sales growing by 10% while Profits may fall by 1%. Hence new buying again can be done during any fall near 2956 while a target of 8062 could be seen in the next 3 years where some profits can be booked.
- *Long-Term*: The company's focus on expanding its capacity, especially in the plastics and piping segments, combined with sustainability initiatives (like reducing carbon emissions and increasing renewable energy usage), should drive growth over the long term. The debt-free status and strong liquidity position provide a buffer against market volatility. We can assume 13% sales and Profit growth in future which can take Supreme towards 20000 Cr till fy_2030 & profits near to 2000 Cr. This can give multiyear rally along with consistent profitability over the period of time.
#### 12. *Conclusion for Investors*
- Supreme Industries has shown resilience in maintaining volume growth, despite margin pressures in the current quarter. With stable financials, a debt-free balance sheet, and long-term growth initiatives, the company remains an attractive investment for those looking at steady long-term returns, although near-term challenges in profitability and margins may persist.
### 🔮 *Disclosure:*
We are not a tip provider, we should check the data and invest accordingly if we feel confident.
