Target: ₹3,000
CMP: ₹2,576.70
Supreme Industries Limited (SIL) is expected to benefit from uptick in PVC prices in Q4FY2023, which is likely to lead to sequential improvement in OPMs. Average PVC prices in Q4FY2023 (till date) are up 9.2 per cent q-o-q (up ₹7.9/kg) after witnessing successive declines over the past four quarters.
Further, demand is expected to remain healthy during FY2024 aided by increased allocations towards PMAY, Jal Jeevan Mission and Smart Cities and a positive demand outlook for residential housing.
As per CRISIL, PVC pipe manufacturers are expected to see a 13-15 per cent y-o-y volume growth for FY2024 post a decadal high volume growth of 22-24 per cent y-o-y in FY2023.
Supreme Industries expects plastic piping volume growth of over 35 per cent y-o-y for FY2023, while overall volume growth is estimated at 25 per cent y-o-y. For FY2024, it expects overall volumes to grow by 15 per cent y-o-y. It has also started commercial production of 16,800 tonne Odisha unit in mid-February. The commissioning of additional capacities are likely to aid in over 35 per cent y-o-y volume growth for Plastic Piping systems for FY2023.
Its greenfield capacity additions in FY2023 along with brownfield expansions at existing units are likely to aid in higher than industry growth rate for the company.