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Shares of Supreme Industries soared 10 per cent to Rs 4,830 on the BSE in Monday's intra-day trade on strong business outlook as the management said the company's entire range of plastics products are poised to grow this year. The stock is trading close to its record high of Rs 4,883.75 touched on October 20, 2023.
Supreme Industries is a plastics product manufacturer, offering a wide and comprehensive range of plastic products in India. The company operates in various product categories viz. plastic piping system, cross laminated films & products, protective packaging products, industrial moulded components, moulded furniture, storage & material handling products, performance packaging films and composite LPG cylinders.
The company has plans to commit capex of about Rs 1,500 crore including carry forward commitments of Rs 496 crore at the beginning of the year.
The Central and State Governments are taking several initiatives towards creating improved infrastructure, to provide houses for all and supplying gas to households by piping system, which in turn will further boost the demand for the company's products.
Supreme Industries is also taking several initiatives to boost export of Plastics products out of its product range. The response to this initiative is encouraging, the management said.
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To meet the growth in demand for piping products company has initiated steps not only to do brownfield expansion at existing manufacturing sites but also to put up new plants near Patna (Bihar) and Vijayawada (Andhra Pradesh).
The company has 36 plastic piping systems in the division and plans to add another 5 new systems viz. Acoustic PP Pipe System in collaboration with Poloplast GmbH of Austria, Polyethylene Gas Piping System, PERT Piping System, PE single wall corrugated Pipes, and Rainwater Harvesting System (Infiltration modules for ground recharge and storage) during the current year.
Meanwhile, in the financial year 2023-24 (FY24), Supreme Industries surpassed the market's volume growth of 13.8 per cent by a significant margin, with 33.6 per cent growth. Growth in volumes was fueled by 'Jal Jeevan Mission' contributing 7 per cent to overall volume growth (25K additional volumes in FY24) and strong growth in real estate.
Other segments of industrial/packaging/consumer products recorded volume growth of 2.2 per cent/11.2 per cent/ (8.4 per cent) in Q4, led by strong demand in material handling division and higher volumes in the protective packaging business. Sales of value-added products grew 13 per cent and contributed 37 per cent to FY24 sales.
Supreme Industries aims for volume growth of 20 per cent in FY25, led by a 25 per cent increase in volumes from the piping segment. This growth will be supported by new piping systems, enhanced distribution, and expanded capacity. By FY25, Supreme Industries plans to boost overall capacity to 1,050,000MT from the current 950,000MT, with 96 per cent of the additional capacity allocated to plastic piping, analysts at Elara Capital said with an accumulate rating on stock and target price of Rs 4,940 per share.
