Result Update: Supreme Industries Ltd - REDUCE - TP Rs.1155

Supreme Industries Q1FY18 results were below of our estimates on account of destocking by its dealers due to GST which negatively impacted its volume in the quarter. The company reported 2.3% yoy decline in revenue on account of 5% yoy decline in volume across B2C segments except industrial (which is B2B in nature). The company's business got affected since last week of May 2017 due to impending GST introduction resulting in destocking by its dealers and remained slow till 3rd week of July 2017. As per management, most of its customers are registered under GST, the company expects improvement in sales from August 2017 onwards. The EBITDA margins for the quarter also remained below our estimates at 13.6% (Vs our estimates of 16.2%) due to inventory loss, decline in volume and lower contribution of value added products. The company has guided for 12% volume growth (Vs earlier guidance of 12-15% growth) for FY18. The management is positive on the business due to long term benefits of GST, government focus on infra and affordable housing. We maintain our estimates and REDUCE rating on the stock on account of premium valuation with the revised target price of Rs 1155 (Vs 1110 earlier), valuing the stock at 26x (earlier 25x) on FY19E earnings.

Shares of SUPREME INDUSTRIES LTD. was last trading in BSE at Rs.1116.1 as compared to the previous close of Rs. 1121.1. The total number of shares traded during the day was 16855 in over 482 trades.

The stock hit an intraday high of Rs. 1129.95 and intraday low of 1096.5. The net turnover during the day was Rs. 18643924.

Source : Equity Bulls

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