Supreme Industries - Q2FY21 First Cut - ICICI Securities

(CMP: Rs. 1474; MCap Rs. 18727 crore)

Supreme Industries reported a healthy set of Q2FY21 numbers wherein topline was in line with our estimate while margin expansion and profitability was much ahead of our estimates for the quarter.

Q2FY21 Earnings Summary

- Revenues came in at ~Rs. 1375 crore, up by ~8% YoY (in line with our estimate of Rs. 1322 crore) led by higher realisation (up by ~7% YoY) during the quarter. The plastic piping segment revenue increased by 4% YoY to Rs. 847 crore led by strong recovery in demand and better product mix. Additionally, packaging and industrial products segment revenue growth of ~11% and ~8% YoY to Rs. 220 crore and 182 crore respectively was led by strong demand from agriculture sector and automotive/consumer durable industries respectively

- The gross margins increased by ~424 bps YoY mainly due to inventory gain and change in product mix. Additionally, saving in other expenditure (down by 60bps YoY) helped driving EBITDA margin up by 500 bps YoY to 18.6% (Vs I-direct estimate 14.5%)

- The PBT increased by 75% YoY to Rs. 200 crore led by expansion in margin and saving in interest outgo (down by ~65% YoY). Despite reversal of tax benefits in the base period, company managed to report a PAT growth of ~25% YoY at Rs. 175 crore (Vs I-direct estimate of ~Rs. 95 crore)

We believe Supreme Industries' performance in Q2FY21 was better than our estimates on profitability front mainly due to better product mix and benign raw material prices. Addition to this, despite a challenging scenario company maintained its debt free status while free cash flow of the company increased sharply by 32% YoY to 452 crore in 1HFY21, led by stringent working capital management. We maintain our positive stance on the stock and detailed report will be released post Q2FY21 result con-call.

Shares of SUPREME INDUSTRIES LTD. was last trading in BSE at Rs.1462.9 as compared to the previous close of Rs. 1487.15. The total number of shares traded during the day was 4795 in over 793 trades.

The stock hit an intraday high of Rs. 1499.8 and intraday low of 1446.65. The net turnover during the day was Rs. 7076433.

Source : Equity Bulls

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