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  • 26 Jul 2022
  • ICICIdirect Research

Supreme Industries posted Q1FY23 numbers

SUPREMEIND - 5316 Change: 85.15 (1.63 %)

News: Supreme Industries' revenue increased by 64.4% YoY to Rs 2,206 crore. During Q1FY23, volume increased by 53%, driving revenue growth. Among the four segments, the piping segment recorded the highest volume growth at 65% YoY, supported by robust demand. Piping segment revenue grew 76% YoY to Rs 1,463 crore. Other three segments, i.e. packaging, industrial, and consumer products, saw significant volume growth during Q1FY23. The packaging and industrial segments reported revenue increases of 34% and 52%, respectively, to Rs 326 crore and Rs 302 crore. In Q1FY23, the consumer product segment reported a ~100% increase in revenue to Rs 96 crore. Consolidated revenue increased at a CAGR of 15% over three years, led by an 18% CAGR in piping segment revenue. Revenue in the industrial and packaging segments increased at CAGRs of 17% and 10%, respectively. The gross margin fell by 900 bps YoY, owing primarily to higher raw material costs. However, savings in employee costs and other expenses by 185 bps YoY and 280 bps YoY, respectively, limited the overall decrease in EBITDA margin by 435 bps YoY to 12.2%. PAT increased by 26% year on year to Rs214 crore, driven by strong topline growth and higher income from associates (up 29% year on year to Rs58 crore).

Views: We believe strong volume growth in the piping segment was led by favourable base and demand revival in the agriculture segment. The management have guided of company level volume growth at 15% in FY23E led by 17-18% volume growth in the piping segment aided by continuous growth momentum from housing and agriculture segment. On the margin front, management guides maintaining EBITDA margin range of 15%-16% (implied margin for 9MFY23 to be about ~16%) despite inventory losses on account of fall in PVC prices and improving product mix. We maintained our positive stance on the company.

Impact: Positive