Objective: ₹ 3,527
CMP: ₹ 3,475.70
The revenues Q4-FY25 (₹ 3,030 million rupees) or the Supreme Industries (SIL) grew by 1 by CEET YOY, due to only a yoy volume growth of 2 % (such as the increase of yoy in Q2/Q3-FY25) and a 2 percent decrease in the penny in the realization. The gross margin (29.5 percent) decreased by 311 bp due to PVC prices 3 percent higher. This led to a 9 percent drop in gross profits.
We believe that this was due to a weak demand. The fall in gross gain led to Ebita (₹ 420 million rupees) to reject 15 percent. EBITDA/KG (₹ 20.8) was 25 percent below the Q4 (Fy17-25). Excluding the extraordinary period of Pilo de Covid-19 (Fy21-22), Ebitda/Kg was 17 percent below the average quarter quarter.
We have cut EBITDA FY26F/27F by 15/14 percent, respectively. We estimate a volume of 9 percent cag on fiscal year 2015-27, USA. 10 percent Cag on fiscal year 2010-25. We have an annual increase in Ebitda/Kg around the 2015-27 fiscal year. In the last six years, Sil has negotiated in a wide range of one -year EV/ EBITDA.
We have reduced our objective price to ₹ 3,527 (₹ 4,125 before), valuing SIL to 22x Fy27F EV/EBITDA (the same), but updated its qualification to maintain (reduce before). Since we started coverage in SIL (January 2, 2025) with a reduction rating, the action has decreased by 25 percent.
The growth of the volume more clear than the expected is an upward risk, while a continuous weak demand environment is a downward risk.
Posted on April 25, 2025