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Target: ₹2,730
CMP: ₹2,204
Driven by volume growth, Supreme Industries’ Q2 revenue grew 8.2 per cent year-on-year to ₹2,100 crore even as blended realisations continued soft. Inventory losses, led by a steep fall in raw material prices, curbed profitability. The gross, EBITDA and PAT margins shrank 830 bps, 906 bps and 793 bps y-o-y to 23.2 per cent, 7.1 per cent and 3.9 per cent respectively.
Revenue grew 2.2 per cent y-o-y to ₹1,300 crore driven by higher volumes sold, up 9.3 per cent y-o-y, as realisation was 6.5 per cent lower y-o-y to ₹1,63,432 a tonne. Inventory losses cut into profitability; the EBIT margin at 1.9 per cent contracted 1,340 bps y-oy, 864 bps q-oq.
Revenue from value-added products (VAP) increased 5 per cent y-o-y to ₹798 crore. Revenue from VAP was 39 per cent (35 per cent the quarter prior and 40 per cent a year ago). Product launches would add to revenue from VAP. The cash surplus was ₹490 crore, against ₹520 crore at end-Q4 FY22 and ₹330 crore at end-Q2 FY22.
The encouraging demand outlook and margin tailwinds would boost the H2-FY23 performance. The management expects ₹9,000 crore revenue and a 12-12.5 per cent EBITDA margin for FY23.
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