Supreme Industries Q4 Review - Strong Beat Led By Inventory Gains: ICICI Securities

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ICICI Securities Report

Supreme Industries Ltd. reported an all-time high Ebitda margin of 24.5% (our estimate: 18.2%), up 540 basis points/270 basis points year-on-year/quarter-on-quarter, largely driven by sharp inventory gains (Rs 1 billion in Q4 FY21 and Rs 2 billion in FY21) on the back of steep increase in polyvinyl chloride prices.

However, plastic piping volumes, which declined 1.7% YoY (due to sustained weakness in agriculture pipe segment and regional lockdowns post March 20, 2021), were a key disappointment.

Management guidance of 17% Ebitda margin for FY22 (on the back of increasing mix of value added products, cost efficiencies and operating leverage) however came as a positive surprise.

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