23 Jan 2014

2QFY14 Results Update |Sector: Real Estate

Supreme Industries

CMP: INR 450

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SUPREME INDUSTRIES 2QFY14: Disappointing results; Not Rated

Supreme Industries (SIL) reported Q2FY14 numbers with revenue of INR9.3b

as compared to INR8.1b in 2QFY13, marking a YoY growth of 14.9%. The

company sold 66,318MT of polymers in 2QFY14 as compared to 66,382 MT

in 2QFY13, marking a volume de‐growth of 0.1%.

During Q2FY14, company saw 2.6% volume growth in piping segment, 21.2%

de‐growth in Industrial segment, 15.9% growth in packaging and 15.3% de‐

growth in consumer segment.

While piping and packaging divisions continue to witness robust growth,

industrial product segment is under pressure. Management highlighted that

demand from the soft drink industry is quite weak; and the company has

been withdrawing from certain low‐margin segments like fruit and retail

trade market where more recycled material is being used by un‐organized

makers which is putting additional pressure on sales.

EBITDA grew by 2%. EBITDA margins stood at 13.0% in 2QFY14 as compared

to 14.7% in 2QFY13 primarily due to 210bp decline in gross margins.

Other income stood at INR248m primarily from sale of real estate.

Consequently, PAT for 2QFY14 stood at INR627m as compared to INR664m

in 2QFY13 marking a YoY de‐growth of 5.7%, primarily due to subdued

EBITDA growth (2.0%). However excluding real estate and Supreme

Petrochem (subsidiary), PAT for 2QFY14 stands at INR501m resulting in 14%

de‐growth. Supreme Petrochem reported a loss of INR40m as against a

profit of INR81m.

Supreme has revised its annual guidance for FY14 to a growth in volume

terms between 9%‐10% and in revenue terms between 20% to 22%.

At CMP of INR450, the stock is trading at 19.9x FY13EPS of INR22.6

(excluding real estate). We do not have a rating on the stock.

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Supreme Inds.

Segmental details: Piping and Packaging witness strong growth; Industrial and Consumer growth under pressure

23 Jan 2014

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Supreme Inds.

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Supreme Inds.

No

No

No

No

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