Supreme Industries - Q3FY2013 Result Update - Nirmal Bang

- Supreme Industries (SIL) posted a net profit of Rs758mn for 3QFY13, up 38.5%/14.3% YoY/QoQ, respectively, and 11.3% above our estimate of Rs681mn following healthy volume/realisation growth of 12.9%/5.6%, respectively, 100bps higher operating margin, lower interest costs and a greater contribution from its associate company, Supreme Petrochem (SPL).

- With the commissioning of new capacities, we expect healthy volume growth to sustain in 4QFY13 and FY14.

- After procastinating for over one year, SIL has decided to improve its cash flow by selling a part of its real estate assets for Rs1bn in the next four months.

- We have retained our estimates and Buy rating on the stock with a SOTP-based target price of Rs385, valuing it at 8.3x FY14E EV/EBITDA.

Source : Equity Bulls

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