Prabhudas Lilladher downgraded Supreme Industries to an accumulate rating with a target price of Rs 3,583. The firm revised its FY27 volume growth guidance downward to 10 percent. While Q2FY27 margins fell due to rising raw material costs, the company said it is maintaining adequate inventories to handle ongoing shipping uncertainties.
Prabhudas Lilladher's research report on Supreme Industries Supreme Industries (SI) revised its FY27 volume growth guidance downward, with overall company volume growth now expected at ~10% (vs. 12-13% earlier) and plastic piping growth at 13% (vs. 15-17% earlier). Management maintained its EBITDA margin guidance at 14-14.5%, EBITDA margins in Q2FY27 were impacted due to a lag of 10- 15-day in passing on PVC and CPVC prices, along with sharp increases in polyethylene prices, which weighed on the packaging and consumer segments. CPVC volumes grew 30.5% YoY in H1 FY27, while further price hikes of 3-7% were announced.
SI is maintaining adequate raw material inventories to mitigate import and shipping uncertainties and expects FY27 capex cash outflow of INR 7-7.5bn, with ongoing greenfield and brownfield expansions progressing as planned. Outlook We estimate FY26-29E revenue/EBITDA/PAT CAGR of 15.5%/16.1%/19.5%, with volume CAGR of 13.1% and EBITDA margin expansion of ~20bps. We have downgraded our earnings estimates for FY27/FY28E by 2.9%/2.4%. We downgrade to 'ACCUMULATE' rating from 'BUY' with a TP to INR 3,583 (earlier INR 4,414) based on 30x Sep'28E earnings For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management.
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