(CMP : Rs. 2363; MCap Rs. 30015 crore)
Supreme Industries reported a mixed bag of performance in Q2FY22 wherein topline was much ahead of our estimate while EBITDA margin was below our estimate due to higher raw material costs.
Q2FY22 Earnings Summary
- Supreme Industries' revenue growth at 40% YoY to ~Rs. 1929 crore was better than our estimate of Rs. 1807 crore, mainly due to better than expected realisation growth. The volume growth at 8.3% is slightly better than our estimate of 7%
- On the segment front, plastic piping segment revenues increased by 50% YoY to Rs. 1267 crore (53% QoQ) led by strong realisations growth of 38% YoY. The segment volume growth came in at 9% YoY. The other three segments, Industrial, packaging and furniture products also reported a strong revenue growth of 39%, 26% and 31% YoY to Rs. 253 crore, Rs. 277 crore and Rs. 111 core respectively mainly on a favourable base and improved demand
- The EBITDA margin declined by 250 bps YoY to 16.1% (Vs I-direct estimate of 17.5%) mainly due to sharp fall in gross margin by 675 bps YoY. However, savings in employee costs and other expenses has helped restrict overall decline in EBITDA margin
- PAT at Rs. 229 crore was higher by 31% YoY and it was in line with our estimate of Rs. 235 crore mainly tracking strong sales growth and increase in the profit from associates (up by 48% YoY)
We believe the steep rise in PVC prices (The Polymer prices have risen between 7% to 28% during this quarter) and a delay in passing on the same would have weighed on gross margin during Q2FY22. We await management commentary on future outlook of piping demand and EBITDA margin outlook. We would be revisiting our estimates and target price post the conference call.
Shares of Supreme Industries Limited was last trading in BSE at Rs. 2366.50 as compared to the previous close of Rs. 2325.75. The total number of shares traded during the day was 7811 in over 2502 trades.
The stock hit an intraday high of Rs. 2424.00 and intraday low of 2308.50. The net turnover during the day was Rs. 18422551.00.
Source : Equity Bulls