27-Oct-2026 07:50:37
CITI on Supreme Ind ; Sell, TP Rs 3000
At Rs4.3bn (~8% ahead of est) Supreme’s 2Q EBITDA was up 45% yoy on higher volumes (+19% yoy) and likely inventory gains from higher PVC (and other polymer) prices. EBITDA/kg was Rs23.4 vs Rs25.3 in 1Q and Rs19.3 in 2QFY26. Supreme has lowered their FY27 total volume growth guidance to ~10% (vs 12-13% earlier) & 13% for plastic pipes division (vs 15-17% earlier). Note that Supreme’s revised guidance would still imply a volume growth of 22% in 2HFY27 for the plastic pipes segment (vs 2% growth in 1HFY27). With a strong base in 2HFY26 (+17% yoy, channel restocking), think there is further downside risk to FY27 volume guidance. Further, with PVC prices close to peak, some channel destocking and reversal of some of the inventory gains recorded so far is likely.
SUPREME INDUSTRIES LTD