Please refer to important disclosures at the end of this report
1
Supreme Industries Limited (SIL) is an acknowledged leader of India's plastics
industry. Handling volumes of over 320,000tonnes of polymers annuall
y
effectively makes the country's largest plastics processors. The Management
mentioned that normalcy of growth should return from March 2017, due to the
near term demonetization impact, volume growth guidance for FY17 has been
reduced to 8-10% vs 15% earlier. However, management guides for sustainable
volume growth of 12-14% p.a. for the next 3-4 years from FY18 onwards as
organized players like SIL gain share. For FY17, SIL envisages capex of `250c
r
and is confident of meeting capital expenditure requirement through internal
accruals and suppliers’ credit. It aims to be a zero-debt company and wants to
sell its ~64,000sqft Supreme complex area. The management believes that SIL
will garner a sum of ~`130cr - `140cr net of tax from the sale which can take
care of its capex requirement. SIL plans to do greenfield expansion in South o
f
India for its plastic pipe business. The management’s capex guidance is `250cr -
`300cr for FY18/FY19 each. The company has a good return on equity (ROE) fo
r
the last 3Years at 26.28%. The company has been maintaining a health
y
dividend payout of 38.41%. Hence Buy.
BUY
CMP ` 989
Stock Info
Sector
Beta
Bloomberg Code
Shareholding Pattern (%)
Promoters 49.7
MF / Banks / Indian Fls 22.0
FII / NRIs / OCBs 10.6
Indian Public / Others 17.7
Abs. (%) 3m 1yr 3yr
Sensex 8.2 16.7 32.0
Supreme Inds. 13.7 30.0 125.6
52 Week High / Low 1034/726
Avg. Daily Volume 12,325
Plastics
Market Cap (
`
cr) 12,557
2
BSE Sensex 28,929
Nifty 8,927
Face Value (
`
)
Reuters Code SUPI.BO
0.4
Vaibhav Agrawal
022 – 3935 7800 Ext: 6808
Supreme Industries
Others | Plastics
March 10, 2017
Supreme Industries| Plastics
March 10, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Supreme Industries
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment
p
eriod
)
: Reduce
(
-5% to -15%
Sell
(
< -15
)