SUPREMEIND - Supreme Industries Ltd. Share Price

Management provided a cautious yet optimistic outlook for The Supreme Industries Ltd., highlighting several key points for FY26. The company anticipates achieving a turnover of approximately Rs.12,000 crores, which marks a growth from Rs.10,295 crores reported in FY25. Notably, it expects to grow the plastic piping system business by 3% to 4% above the industry growth, which is projected to be around 7% to 8%.

In terms of capital expenditures, Rs.1,100 crores is earmarked for FY26, which includes the integration of the Wavin business, anticipated to contribute an additional 73,000 MT capacity. Management noted that this acquisition will improve their product portfolio and enhance production capabilities. The optimism extends to agriculture and housing sectors, bolstered by a significant budget allocation increase for drinking water supply projects from the government, expected to triple compared to the previous year.

For margin expectations, operating margins are projected between 14.5% to 15.5%, notwithstanding the integration of Wavin, which may initially carry losses. Management indicated they would be consolidating Wavin's operations from July 2025, further boosting expected sales volumes in the months following the acquisition.

The management also emphasized their product expansion plans within the plastic pipe division and consumer segments, aiming to introduce new products and SKUs. This approach, along with expected improvements in operational efficiencies, is likely to drive sustainable growth going forward. Overall, the management's outlook reflects a balance of cautious optimism with strategic planning for enhancing operational capabilities and responding to market demands.

Questions and Answers from the Earnings Transcript

1. Question: How are you now looking at in terms of the revenue volume growth and particularly the plastic pipe volume growth and the margin front for this year FY26?

   • Answer: Overall, we anticipate our turnover to rise around Rs.12,000 crores this year. For our plastic piping system business, we expect growth of 3% to 4% above the country's growth rate. Last year, we outperformed with a 6% growth when the country faced a 6% decline.

2. Question: On the EBITDA margin front, would be how much we are looking at for this year FY26?

   • Answer: We project our EBITDA margin to be between 14.5% to 15.5% for FY26.

3. Question: How much was the inventory loss for the full year?

   • Answer: We estimate the inventory loss for the full year to be around Rs.150 crores due to the drop in PVC prices.

4. Question: Can you give some indication of how much revenue contribution comes from HDP pipe and fittings?

   • Answer: Overall, the trade demand was okay, contributing roughly around 18,000 tons for the full year.

5. Question: What sort of volume are you targeting in FY26 and FY27?

   • Answer: We hope to utilize Wavin's capacity of 73,000 metric tons, and we anticipate selling approximately 51,000 tons annually from that capacity.

6. Question: Can you provide your effective tax rate for fiscal '26?

   • Answer: It's difficult to predict; however, we know that the reversal of deferred tax liabilities offers some help, influencing our effective tax rate this year.

7. Question: Why are we not seeing a pickup in volume despite the increase in affordability of piping products?

   • Answer: The continuous drop in prices led to negative market sentiment, prompting substantial de-stocking throughout the supply chain, affecting volumes.

8. Question: How do you see the composite cylinder business performing in FY26 after a challenging year?

   • Answer: We expect significant improvements this year as BPCL and IOC are planning tenders for procuring composite cylinders, which could greatly benefit our sales.

Each answer summarizes critical points while staying within the character limit, reflecting key financial insights and updates from the company's management.