Supreme Industries hits record high on strong March quarter results

The long-term outlook for the company remains positive given its market leading position in the piping segment where government reforms will keep the demand strong, ICICI Securities said

Shares of Supreme Industries rose 4 per cent to hit a record high of Rs 2,200 on the BSE in intra-day trade on Tuesday after the company reported a strong set of January-March quarter (Q4FY21) numbers with consolidated profit after tax more than doubling at Rs 450 crore, on the back of higher revenue. The plastic products maker had reported a profit of Rs 114 crore in the year-ago quarter.

The company’s revenue grew 46 per cent year on year (YoY) at Rs 2,085 crore. The consolidated operating profit (PBDIT) jumped 112 per cent YoY to Rs 584 crore against Rs 276 crore in the corresponding quarter of previous fiscal. The strong performance of the company was backed by healthy realisations (up 35 per cent YoY) and expansion in EBITDA margin while volume growth was steady at around 8 per cent in Q4FY21.

The board had recommended payment of final dividend at 850 per cent i.e. Rs 17 per equity share for the year ended 31st March, 2021. The company said it has become debt free during the year and has cash surplus funds of Rs 759 crore as on 31st March, 2021 as against net borrowings of Rs 217 crore as on 31st March, 2020.

Even with temporary setback which the Company is experiencing in the month of April 2021, the management said the company has not reduced its capex plan for the year 2021-22 (FY22). During FY22, the Company envisages new capex in the range of about Rs 400 crore (including carry forward commitments of Rs 198 crore at the beginning of the year).

The Government at the Centre and States has put the priority focus on Jal Jeevan Mission, Swatch Bharat Abhiyan, Sanitation and affordable houses to all and development of 100 smart cities on all India basis will boost the business of plastic piping system division. Cross Laminated film products demand will boost in the coming year as weather forecast by SKYMET the monsoon in India is predicted to be normal with no La Nina scare, the company said.

However, analysts at ICICI Securities believe the company will witness near term pressure in volume growth amid sporadic lockdowns in various key states. The long term outlook for the company remains positive given its market leading position in the piping segment where government reforms will keep the demand strong, the brokerage firm said.