With a market valuation of ₹ 26,815.37 crore, Supreme Industries Ltd. is a large-cap industrial firm

With a market valuation of ₹ 26,815.37 crore, Supreme Industries Ltd. is a large-cap industrial firm. With seven business units, Supreme Industries Limited is the leading plastic processing corporation in India. The company is engaged in a variety of plastic processing techniques, including extrusion, rotational moulding (ROTO), compression moulding, blow moulding, and injection moulding. Additionally, the company provides its customers with plastic chairs, plastic furniture, moulded plastic chairs, moulded furniture, storage and material handling products, industrial moulded products, protective packaging products, composite plastic products, plastic piping system, and petrochemicals. According to Value Research's statistics, Supreme Industries is a debt-free company, which may seem intriguing to potential investors. However, what may sound even more fascinating are the stock's remarkable long-term returns, which have assisted investors to become crorepati.

Supreme Industries Share Price History

Today's closing price for Supreme Industries Ltd shares was ₹ 2,110.00 per share, a gain of 1.45% from the previous close of ₹ 2,079.85. A multibagger return and an all-time high of 11,888.64% have been achieved by the stock price, which climbed from ₹ 17.60 on January 1st, 1999 to the current market price. Therefore, if an investor had made a ₹ 1 lakh investment in Supreme Industries shares 23 years ago, that amount would today be worth ₹ 1.19 crore. 

In the last 5 years, the stock has gained 81.23% and 92.76% in the last 3 years. The stock has dropped 1.35% over the past year, and it has shed 5.39% YTD so far in 2022. On the NSE, the stock had touched a 52-week-high of ₹ 2,693.90 on (19-October-2021) and a 52-week-low of ₹ 1,666.25 on (23-June-2022) indicating that at the current market price the stock is trading 21.67% below the high and 26.63% above the low. At today's closing price, the stock was seen trading above 5 days, 10 days, 20 days, 50 days, 100 days and 200 days Exponential Moving Average (EMA).

Q1FY23 Results of Supreme Industries

Revenue climbed by 64% during Q1 FY23 to ₹ 2206 crore from ₹ 1342 crore in Q1 FY22. In Q1FY23, sales volume climbed by 53% to 108,922 MT from 71,264 MT in Q1FY22. The company's EBITDA for Q1FY23 climbed by 21% to Rs. 269 crore from Rs. 222 crore in Q1FY22, while the EBITDA margin fell to 12.16% from 16.49% in Q1FY22. The company recorded a profit after tax (PAT) of ₹ 156 crore for Q1FY23, as opposed to ₹ 125 crore for Q1FY22, representing a YoY growth of 24.80%. For the quarter that ended in June 2022, the company was still debt-free and had a cash surplus of Rs. 533 crores.

Should you buy the shares of Supreme Industries Ltd (SIL)?

The research analysts of the broking firm ICICI Securities have given a buy rating on the stock and have recommended keeping a stop loss of 1,878.00, and have set a target price of ₹ 2,340.00. The analysts have set a target period of 3 months for the stock and have said in a note that “Consumer discretionary stocks are seen resuming their primary up trend after preceding nine month’s corrective decline. Within consumer discretionary space we remain constructive on Supreme Industries as it has generated a breakout above the falling channel containing the entire decline since October 2021. This signals resumption of up move. The current decline in crude oil prices also provides support to the bullish stance, thus providing a good entry opportunity with a favourable risk reward set up."

They have further added that “We expect the stock to resolve higher and head towards its January 2022 high of ₹ 2340 in coming months as it is the 61.8% retracement of the entire decline ( ₹ 2693-1667). Buying demand has recently emerged from the support area of ₹ 1650-1750 as it is the confluence of the 100 week’s EMA (currently at ₹ 1894) and the 80% retracement of the CY21 rally ( ₹ 1600-2693). Weekly 14 period’s RSI is in uptrend and is seen diverging from its nine period’s average, thus validating positive bias."

“In Q1FY23, SIL witnessed strong demand revival in its piping segment both from agri and housing sector amid sharp fall in PVC prices (declined 32% from its peak in April 2022). We believe SIL’s piping segment will report a volume CAGR of 19% over FY22-24E supported by revival in agri, housing and infrastructure pipe demand. Government sponsored schemes such as Nal Se Jal Mission, Swatch Bharat Abhiyan, Sanitation, affordable housing we believe can be the key catalysts for SIL’s volume growth. The EBITDA margin is likely to be in the range of 14.5-15% for FY23 considering softening of PVC prices. We model revenue, earnings CAGR of 11%, 7%, respectively, over FY22-24E led by piping segment revenue CAGR of 12%. Supreme Industries’ balance sheet remained robust with net cash balance of ₹ 526.4 crore on the book in FY22 and RoCE, RoE of ~26%, ~25% respectively," said the research analysts of the broking firm ICICI Securities.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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