SUPREMEIND - Supreme Industries Ltd. Share Price

The management of The Supreme Industries Limited provided a positive outlook during the earnings call held on July 24, 2025. Key forward-looking points include:

1. Volume and Growth Expectations: The company expects its plastic piping business to grow between 15% to 17% for FY 2026, despite a modest 6% growth in the first quarter. They anticipate overall volume growth for the company to be around 14% to 15% for the full year.

2. Financial Results: For the first quarter ended June 30, 2025, the company reported sales of 1,83,793 tons and a net product turnover of Rs. 2,579 crores, compared to 1,73,835 tons and Rs. 2,612 crores in the same quarter of the previous year. Operating profit and profit after tax decreased to Rs. 344 crores and Rs. 202 crores, respectively.

3. Optimism on Market Conditions: Positive rainfall is expected to boost agricultural and housing demand. The management noted that inflation is decreasing, and government infrastructure spending is on the rise, which should help revitalize demand.

4. Acquisition of Wavin Industries: The company is set to complete the acquisition of Wavin Industries by July 31, 2025, for approximately Rs. 310 crores. This deal is expected to enhance its plastic piping business capacity and market offering.

5. CAPEX Plans: The company anticipates a cash outflow of about Rs. 1,350 crores for capital commitments, including the Wavin acquisition and ongoing capacity expansions across various divisions.

6. Emission Reductions and Sustainability: They are targeting a significant increase in renewable energy usage, aiming for about 30% in the current year, with a vision for 100% renewable sourcing in the long term.

7. New Product Launches: They have successfully executed their first order for polyethylene pipes for gas applications, marking a new market entry, and are likely to commence trial production for a new silent pipe next month.

Overall, the management's expressed confidence in a strong recovery and growth trajectory sets a positive tone for the company's future performance.

Question: "In June, we have kind of a degrowth by close to 3.74-odd percent. First is, for this quarter at an industry level, how do you see what kind of growth was there? And what is the new revised guidance?"
Answer: "In June, the business was affected by the monsoon, particularly for agricultural piping. This quarter's growth was below our expectations, but we are now revising our projection for plastic piping volume to grow by 15% to 17% for the year."

Question: "What is the margin expectation going forward?"
Answer: "We anticipate that the Company's overall EBITDA margin will be in the range of 14.5% to 15.5% by year-end, despite current challenges with margins being lower due to inventory losses and raw material price fluctuations."

Question: "How much of the cash outflow of Rs. 1,350 crores is allocated towards capacity expansions?"
Answer: "Most of the expansion will occur in the plastic piping division, where we expect to reach 1 million tons by March 2026. A significant portion of this cash outflow contributes toward this expansion, enabling us to enhance our capacities."

Question: "What size is the market for the gas pipes, and how does it affect our revenue?"
Answer: "The gas pipe market is projected to be around 700,000 tons over the next 7 years. We have just begun our operations in this domain, hence quantifying revenue at this stage is premature, as we continue to explore opportunities."

Question: "Can you clarify the impact of the Anti-Dumping Duty extension?"
Answer: "We expect the Anti-Dumping Duty to be finalized by October or November 2025. This could potentially improve margins by limiting imports that undercut local prices, thereby stabilizing market conditions."

Question: "What is the growth expected from Wavin's integration?"
Answer: "From Wavin, we anticipate we can sell approximately 30,000 tons in the remaining 8 months post-acquisition, contributing positively to our overall volume growth expectations for the year."

Question: "Can we quantify the inventory loss experienced this quarter?"
Answer: "Yes, we estimate the inventory loss to be between Rs. 50 crores and Rs. 60 crores this quarter, mainly resulting from fluctuations in raw material prices."

Question: "How do you foresee channel inventory levels impacting future sales?"
Answer: "Channel inventory levels are currently below normal, which suggests that dealers will begin restocking in September. This should help revive demand in the coming months."

Question: "What was the revenue contribution from value-added products this quarter?"
Answer: "In this quarter, we achieved Rs. 933 crores from value-added products, which was marginally higher than previous year, and we anticipate this category will continue to grow as we expand market offerings."