Supreme Industries (SIL) reported net sales of Rs 13.4 billion in Q1FY22, declined by 23.7% YoY, while EBITDA came in at Rs 2.2 billion, a robust growth of 89.6% over Q1FY21. It reported net profit of Rs 1.7 billion, higher by 319% YoY. Higher sale of value-added products supported margins expansion despite lower net sales in Q1FY22. The management reiterated to remain focused on capacity addition and increasing share of value-added products in total sales in future.
IDBI Capital has recommended 'Sell' on Supreme Industries with new target price of Rs 1,829.
Commenting on the result review, the broking firm said, "Supreme Industries Q1FY22 result was below our and consensus estimates. State wide lockdowns amid second wave of Covid-19 dented product sales volume in April and May, particularly for agri-pipes which generally attracts higher traction pre-monsoon.
We have marginally cut our FY22E/FY23E net sales/PAT estimates for SIL. Though we like the company in agri-pipes space, we believe valuations are priced in at current level. SELL with a revised TP of Rs 1,829, assigning 25x PER on FY23E."
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