Dolat Capital Market's research report on Supreme Industries
Results above estimates on revenue front as there was an overall revival seen in volumes across segments except the piping segment. Gross margins contracted by 184 bps YoY. Inventory gains of Rs. 800-1,000 Mn in Q4FY21 due to increase in PVC prices. Share of value added products increased by 20% YoY. SI reported volume de-growth of 1.7% in piping segment in Q4FY21, as the sales of the products were not good due to elevated prices. Overall volume growth registered for Q4FY21 was 8% which was due to stable/positive performance from all the segments. Industrial segment grew 44.8% followed by packaging segment which grew 40.2% and consumer segment which grew 11.9% YoY. However, the recovery in FY21 was better and faster than expected at the start of the year.
Outlook
However, maintaining margins at these levels will be the key monitorable to be watched for. As the stock has already factored in the positive performance and run up a lot and with the negativity around the Pandemic with business slowdown in April’21, we maintain our rating on the stock with a target price of Rs 2,238 to trade at 31x FY23E earnings.
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