Supreme Industries - Q1FY21 First Cut - ICICI Securities

(CMP: Rs. 1134; MCap Rs. 14405 crore)

Supreme industries Q1FY21 results were ahead of our estimates on all fronts supported by robust demand from rural and Tier III & IV cities post relaxation from lockdowns. Factory plants for Piping and Packaging products have seen faster recovery and reached near normalcy by the end of June'20, however plants for Furniture and Industrial Components are operating between 50% to 70% capacity utilization.

Q1FY21 Earnings Summary

- Revenues came in at ~Rs. 1054 crore, decreased by ~27% YoY (better than our estimate of ~51% decline to Rs. 708 crore). The volume decline of 19% YoY was much better than our expectation of de-growth of 50% YoY. The plastic piping segment revenue de-grew by 15% YoY to Rs. 765 crore led by 12% YoY decline in volume. The other three segments, Packaging products, Industrial products and consumer products reported a decline in revenue by 23%, 63% and 71% respectively during Q1FY21 due to lockdown

- The gross margins declined by ~200 bps YoY mainly due to change in product mix. However, sharp decline in other expenditure (down by 41% YoY) helped restricting fall in EBITDA margin by mere 54 bps YoY to 11.1% (Vs I-direct estimate: 8.4%)

- PAT came in at ~Rs. 40.5 crore (Vs I-direct estimate: ~Rs. 14 crore) down by 54% YoY, mainly tracking lower sales, higher interest cost and losses from associates during Q1FY21

We believe Supreme Industries performance in Q1FY21 was better than our estimates mainly due to near to pre-covid-19 level demand recovery in the piping segment. However, we believe intermediary lockdowns may likely delay recovery process of other segments (industrial and consumer products). We await management commentary on sustainability of the recovery in the piping segment. The detailed Q1FY21 result update will be released post conference call.

Shares of SUPREME INDUSTRIES LTD. was last trading in BSE at Rs.1132 as compared to the previous close of Rs. 1149.4. The total number of shares traded during the day was 1540 in over 344 trades.

The stock hit an intraday high of Rs. 1150.05 and intraday low of 1130. The net turnover during the day was Rs. 1753505.

Source : Equity Bulls

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