Supreme Industries - Q3 FY13 results review - Dolat Capital

Supreme Industries (SIL) for Q3FY13 has reported net revenues at Rs. 9.04bn (Dolat Est. Rs. 9.1bn), growth of 19% YoY on the back of impressive revenue growth of ~42% YoY in its plastic piping segment. On the other hand, while consumer & industrial product segment grew 9% & 1% respectively, the packaging product segment de-grew by 5% YoY for the quarter under review. Overall volume growth was quite impressive with 13% YoY growth at 74,526 tonnes (Dolat estimates at 75,000 tonnes) while realization grew by impressive 4.1%.

Impressive operating performance powered by 110 bps expansion in margins

Higher operating margins during the quarter resulted in EBIDTA growing by 28% YoY to Rs. 1.34bn (Dolat estimates at Rs. 1.3bn). SIL's operating margins improved by 110bps from 13.8% in Q3 FY12 to 14.9% in Q3 FY13 (Dolat estimates at 14.2%) due to: a) strong 14.7% margins (an increase of 170 bps YoY) reported by plastic piping segment (53% of overall revenues) and b) inventory gains.

Core profitability rises 38% to Rs. 680mn (higher than estimates)

Profits from the core business (adjusted for construction business profits & excluding share of associates) grew by 38% to Rs. 680mn (Dolat estimates at Rs. 631mn) as compared to Rs. 493mn. On consolidated basis (including share of associates & construction business), SIL has reported a YoY growth of 39% to Rs. 758mn from Rs. 547mn YoY.

View: We roll our numbers to FY15. Thus change our rating to 'BUY'from 'ACCUMULATE' with a revised target price of Rs. 409 (14xFY15E EPS)

Source : Equity Bulls

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