Supreme Industries share price surges over 8% buoyed by Q4 result; is the stock buy-worthy? Here's what experts say

Supreme Industries share price: Shares of Supreme Industries continued witnessing strong buying interest on Monday, April 29, as the stock jumped over 8 per cent in morning trade on BSE, buoyed by the company's healthy March quarter result.

Supreme Industries share price opened at ₹4,430.55 against its previous close of ₹4402.30 and rose over 8 per cent to hit the day's high of ₹4,758.85 in Monday's trade so far. Around 11:30 am, Supreme Industries share price traded 7.88 per cent higher at ₹4,749 apiece. Equity benchmark Sensex was 0.77 per cent up at 74,298 at that time.

Till April 26 close, Supreme Industries share price share price has surged over 64 per cent over the last year. In comparison, equity benchmark Sensex has gained slightly over 22 per cent in the same period.

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Supreme Industries Q4 result

Supreme Industries, during market hours on Friday, April 26, reported a 38.51 per cent quarter-on-quarter (QoQ) rise but a 1.28 per cent year-on-year (YoY) fall in Q4FY24 consolidated net profit to ₹354.82 crore.

Total consolidated income in Q4 rose nearly 22.52 per cent QoQ and 15.95 per cent YoY to ₹3,025.98 crore.

The operating profit of India’s leading plastics product manufacturing company rose 0.37 per cent year-on-year.

"The company has a total cash surplus of ₹1,178 crores as on March 31, 2024, as against a cash surplus of ₹738 crores as on March 31, March 2023. The overall turnover of value-added products increased to ₹3,737 crore as compared to ₹3,329 crore in the previous year achieving growth of 13 per cent," said Supreme Industries.

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The company announced it would pay a final dividend of ₹22 per share of fair value of ₹2 each for FY24.

The stock ended 2.34 per cent higher on Friday after the Q4 result announcement.

Buy-worthy stock?

Several brokerage firms expressed positive views about the stock after Supreme Industries' March quarter earnings. Some of them have upgraded their ratings on the stock and revised their target prices upward.

YES Securities has upgraded the Supreme Industries stock to a 'neutral' from a 'reduce', pegging the target price at ₹4,546 as the brokerage firm believes the company will continue to see robust growth supported by healthy demand from agri, infra and plumbing segments.

Moreover, YES Securities observed that the company’s focus on expanding market share via adding more SKUs (stock-keeping units), finding newer applications and increasing the distribution network are also the key positives.

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"We have factored pipe volume growth of 17 per cent CAGR over FY24-FY26E and overall volume growth of 15 per cent CAGR over a similar period. We expect revenue growth of 16 per cent CAGR over FY24-FY26E with EBITDA margins of 15.5 per cent and 15.2 per cent in FY25E and FY26E respectively," said YES Securities.

"We have valued the company at P/E (price-to-earnings ratio) of 40 times (versus 35 times earlier) on FY26E standalone EPS (earnings per share) of ₹108 (revised upwards by 3 per cent), arriving at a target price of ₹4,546, including ₹220 per share value of Supreme Petrochem. Hence, we have upgraded the stock from 'reduce' to 'neutral'," said the brokerage firm.

Brokerage firm Sharekhan by BNP Paribas upgraded Supreme Industries to a 'buy' with a revised target price of ₹5,200, factoring upwardly revised estimates on a strong demand environment.

Sharekhan pointed out that Supreme Industries expects strong 25 per cent year-on-year volume growth in plastic piping for FY25 owing to the stabilisation of PVC prices at lower levels and sustained demand.

"Supreme Industries continues to benefit from sustained agriculture and infrastructure demand aided by stabilisation of PVC prices at lower levels. It is expected to see high growth over the next two years aided by healthy demand and rangebound movement in PVC prices," Sharekhan observed.

"Aggressive expansions, funded entirely through internal accruals, are expected to keep its balance sheet strong. A healthy demand outlook and incremental capacity additions will likely drive a 21 per cent net earnings CAGR over FY24-FY26. The stock is currently trading at a P/E of 41 times and 36 times its FY25E and FY26E earnings respectively. Factoring in upwardly revised estimates led by a strong demand environment," said Sharekhan.

Brokerage firm Prabhudas Lilladher maintained a buy call on the stock but raised the target price to ₹5,188 from ₹5,094 earlier.

"We continue to maintain our positive view on Supreme Industries given (1) capacity expansion in different geographies, (2) new product expansion, (3) wide pan India distributors, and (4) cash surplus of ₹11.8 billion for funding expansion plans," Prabhudas Lilladher said.

The brokerage firm estimates Supreme Industries' FY24-26E revenue, EBITDA and PAT CAGR of 17.7 per cent, 21.9 per cent and 21.4 per cent, respectively, with volume CAGR of 16.1 per cent and EBITDA margin improvement of 110bps.

"We have upward revised our earnings estimates for FY25 and FY26 by 3.9 per cent and 1.9 per cent and revised target price to ₹5,188 ( ₹5,094 earlier), based on 40 times FY26 EPS plus 25 per cent discount to Supreme Petrochem’s stake," Prabhudas Lilladher said.

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