Top Mutual Funds
- 01 Nov 2022
- ICICIdirect Research
-
Share
-
-
-
-
-
SUPREME INDUSTRIES REPORTS MIXED BAG PERFORMANCE IN Q2FY23
SUPREMEIND - 4763 Change: -9.65 (-0.20 %)News:
Supreme Industries’ revenue growth at 8.2% YoY to ~Rs 2086.6 crore was ahead of our estimate of ~Rs 1817 crore. The revenue growth was led by 9% volume growth during Q2FY23. Segment wise, plastic piping revenue grew by 2.2% YoY to ~Rs 1295 crore (vs I-Direct estimate of ~Rs 1174 crore), packaging products revenue grew by 18.3 YoY to ~Rs 328 crore (vs I-Direct estimate of ~Rs 280.2 crore), Industrial products revenue grew by 32.4% YoY to ~Rs 335 crore (vs I-Direct estimate of ~Rs 252 crore). Consumer products segment reported a flattish revenue growth YoY and was in line with our estimates at ~Rs 111 crore. On a three-year basis, consolidated revenue grew at a CAGR of 18%. The piping, industrial and packaging segment revenue grew at CAGR of 17%, 26% and 18% respectively. The gross margin fall by ~830 bps YoY was wider than our estimate of ~402 bps fall, mainly due to higher raw material costs. EBITDA margin declined by 906 bps YoY to 7.1% (vs I-Direct estimate of 12.8%) as a result of lower gross margin as well as sharp increase in other expenses. PAT declined by ~64% YoY to ~Rs82 crore (vs I-Direct estimate of ~Rs 176 crore) as a result of lower EBITDA and fall in share of profit from associates
View:
We believe that Supreme Industries has reported a decent volume growth of 9% YoY as against our estimate of flattish volume growth. Sharp fall in prices of PVC resin has resulted in inventory losses. As a result, margins remained impacted for this quarter. Lower EBITDA resulted in decline of PAT. In addition, share of profit from associates declined by ~53% YoY (68% QoQ) to ~Rs 19 crore driving further decline in PAT to Rs 82 crore. However, sharp reduction in raw material prices is likely to benefit the company in H2FY23 and we believe that there will be no further inventory losses. On the demand front, we believe, Supreme Ind will report stable revenue growth going forward supported by new product launches and expansion of capacity in the piping segment
Impact:
Neutral