Supreme Industries manufactures a wide range of polymers products. The company manufactures products like Cross-Laminated Films, HMHD Films, Multilayer Films, SWR Piping Systems, PP Mats, moulded furniture, and many more.
The company has registered excellent numbers for the quarter ending June 2012. On consolidated basis, the company has posted a rise of 57.82% in its net profit at Rs 95.04 crore for the quarter ended June 30, 2012 as compared to Rs 60.22 crore for the same quarter in the previous year. Total income has increased by 23.77% at Rs 926.30 crore for quarter as compared to Rs 748.43 crore for the quarter ended June 30, 2011.
The Company envisages a total capital investment outlay in excess of about Rs.1100 Crores over a period of five years from 2011-12 to 2015-16 in addition to Capex for new products in Composites. During the financial year 2012-13, the Company intends to commit fresh investment of around Rs.200 Crores to augment the products produced at existing units and to initiate action to support green field projects.
Value breakup- Plastic Piping System for Q4FY12 stood at 475 crore whereas last year of 357 crore. Packaging Product 198 crore, last year was 165 crore. Industrial Product 151 crore, last year 137 crore and Consumer Product 82 crore, last year it was 75 crore. Volume breakup- Plastic Piping system 43,959 metric ton, vis-a-vis 35,462 last year. Packaging Products, 9,360 vis-a-vis 8,148 metric ton last year. Industrial Products 9,917 metric ton vis-a-vis 8,375 last year. And Consumer Product 5,025 metric tons vis-a-vis 5,008 metric ton last year.
Valuation
With excellent fundamentals, robust growth across all product verticals and huge capex ahead, Supreme Industries Ltd. revenue visibility looks strong. We believe SPL is trading at an attractive valuation at 12.6x and 9.92x of FY13EPS of Rs.22.06 and FY14EPS of Rs.28.02. We initiate a 'BUY' on the stock with a target price of Rs.350 (appreciation of about 26%) with the long term investment horizon.
