Company Data
Volume growth muted...margin declines Market Cap (cr) Rs. 12,625
Supreme Industries Ltd (SIL) is India’s leading player in plastic products;
Enterprise Value (cr) Rs. 12,865
the wide range of offering includes Plastic Piping system, Packaging,
Outstanding Shares (cr) 12.7
Industrial and Consumer products.
Free Float 50.3%
Despite 10% YoY revenue growth in Q3FY19, PAT declined by 22% YoY
Dividend Yield 1.3%
due to weak operating performance.
52 week high Rs. 1,434
Volume growth was muted at 4% YoY due to poor performance of
packaging segment and industrial segment. 52 week low Rs. 936
EBITDA declined by 11% YoY and margins declined by 300bps YoY to 6m average volume (cr) 0.3
12.5% due to inventory loss & weak product mix. Beta 0.8
With gradual revival in demand from agriculture and housing segment, Face value Rs. 2
we expect volume & revenue growth to pick-up. Shareholding (%) Q1FY19 Q2FY19 Q3FY19
However, rising competition and near term demand headwind is likely Promoters 49.7 49.7 49.7
to keep margins under pressure. FII‟s 7.3 7.2 7.0
We lower our EPS estimates by 7% & 11% for FY19E & FY20E to factor in MFs/Institutions 21.2 22.0 22.8
near term impact on margins. Public 16.6 16.6 16.5
Given its market leadership position, strong balance sheet and ROE of
Others 5.2 4.5 4.0
~22%, we value SIL at a P/E of 25x on FY20E. However, given weak
Total 100.0 100.0 100.0
earnings outlook in the near term we downgrade SIL to “Hold” from
“Accumulate” with a target price of Rs1,018. Price Performance 3 Months 6 Months 1 Year
Absolute Return 0.5% -17.2% -22.7%
Weak volume & Revenue... Absolute Sensex 5.2% -5.0% -1.7%
SIL‟s Q3FY19 revenue grew by 10% YoY, led by piping segment which grew Relative Return* -4.7% -12.2% -21.0%
by 20% YoY and consumer segment by 19% YoY. While packaging segment *over or under performance to benchmark index
(Rs cr) Q3FY19 Q3FY18 YoY Growth % 9MFY19 9MFY18 YoY Growth %
Sales 1,410 1,278 10.3 4,072 3,495 16.5
EBITDA 176 198 (11.2) 574 500 14.7
EBITDA margins 12.5 15.5 300bps 14.1 14.3 (20bps)
Depreciation 45 43 6.4 135 126 7.6
EBIT 130 155 (16.0) 438 375 17.0
Interest 5 8 (33.6) 20 16 19.9
Other Income 7 1 - 14 1 -
PBT 132 148 (10.3) 432 359 20.3
Tax* 46 52 (10.9) 167 128 30.0
Share of profit from Associate (5) 8 (162.3) 3 22 (84.4)
Exceptional - (1) - - - -
Reported PAT 81 104 (22.0) 269 253 6.0
Adjustments - - - -
Adjusted PAT 81 104 (22.0) 269 253 6.0
No. of shares (cr) 12.7 12.7 - 12.7 12.7
EPS (Rs) 6.4 8.2 (22.0) 21.1 20.0 6.0
Change in estimates
Y.E March (Rs cr) FY17A FY18A FY19E FY20E FY21E Y.E March FY17A FY18A FY19E FY20E FY21E
Net inc. + Depn. 531 564 612 728 863 Profitab. & Return
Non-cash adj. 58 8 6 8 4 EBITDA margin (%) 17.1 15.8 14.5 14.6 15.2
Changes in W.C (124) (63) (74) (161) (212) EBIT margin (%) 13.6 12.5 11.3 11.3 12.1
C.F.O 465 509 544 575 656 Net profit margin.(%) 9.6 8.7 7.6 8.0 8.5
Capital exp. (210) (286) (362) (340) (370) ROE (%) 28.6 24.0 21.2 22.4 23.5
Change in inv. 2 3 (5) (40) (70) ROCE (%) 17.8 14.8 19.7 21.0 22.1
Other invest.CF 6 15 - - -
W.C & Liquidity
C.F - investing (202) (267) (367) (380) (440)
Receivables (days) 20.9 24.2 26.3 26.2 26.7
Issue of equity - - - - -
Issue/repay debt (133) (31) 5 20 - Inventory (days) 54.6 54.2 50.2 51.7 52.1
Dividends paid (46) (229) (184) (184) (184) Payables (days) 50.0 52.4 53.3 54.6 52.1
Other finance.CF (31) (26) (25) 930) (31) Current ratio (x) 2.8 2.6 2.3 2.5 2.7
C.F - Financing (210) (286) 204 194 215 Quick ratio (x) 0.7 0.8 0.7 0.7 0.8
Chg. in cash 52 (44) (27) 1 1 Turnover &Leverage
Closing cash 76 32 5 6 7 Gross asset T.O (x) 2.1 2.1 2.1 2.2 2.3
Total asset T.O (x) 1.8 1.8 1.9 1.9 1.9
Int. coverage. ratio (x) 17.9 23.0 25.6 24.5 28.9
Adj. debt/equity (x) 0.1 0.1 0.1 0.1 0.1
Valuation ratios
EV/Sales (x) 2.9 2.6 2.3 2.0 1.7
EV/EBITDA (x) 16.8 16.3 15.7 13.6 11.4
P/E (x) 29.2 29.1 29.5 24.4 19.9
P/BV (x) 7.4 6.6 5.9 5.1 4.3
Recommendation Summary (last 5 years) Dates Rating Target
28-Jan-15 Hold 630
1600
04-May-15 Buy 797
1400 27-July-15 Accumulate 715
02-November-15 Accumulate 704
1200 29-January-16 Hold 768
22-April-16 Hold 836
1000 02-August-16 Reduce 895
28-October-16 Reduce 885
800
27-january-16 Accumulate 1033
600 02-May-17 Hold 1209
31-July-17 Hold 1150
400 01-Novomber-17 Buy 1307
200 1-March-18 Accumulate 1335
27-April-18 Accumulate 1440
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 06-August-18 Accumulate 1328
06-November-18 Accumulate 1108
29-january-19 Hold 1018
Source: Bloomberg, Geojit Research
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