Comments
Kotak Securities
Supreme Ind (Buy)
Target: ₹1,205
CMP: ₹987.05
Supreme Industries Q2FY19 results was mixed bag. Results after adjusted for one off was ahead of estimates at topline, but was below our estimates in terms of margins.
The company reported 24.7 per cent y-o-y growth in revenue which was driven by ₹80.85 crore contribution from sale of commercial real estate. Adjusted for the same, the revenue for the quarter grew 17.1 per cent (vs 15.9 per cent y-o-y growth estimates). The adjusted revenue growth was driven by 5.2 per cent growth in volume and 11.7 per cent y-o-y growth in realisation.
The volume growth was below our estimates due to company’s focus on high value products, low volume in cross laminated films and plant shutdown in packaging segment for maintenance.
In core business, the EBITDA margin was at 13.3 per cent and was below our estimates of 14.2 per cent due to impact of rupee depreciation on imported raw materials, higher raw material prices due to rise in crude prices and lag effect in pass on of input cost.
The company is positive on demand of its products and expects value driven growth in the coming years. We have marginally reduced FY19 & FY20 estimates based on lower volume assumptions.
We upgrade our rating on the stock to Buy (Vs Accumulate earlier) with revised target price of ₹1,205 (vs ₹1,324), valuing the stock at 28x (Vs 29x) on FY-20 earnings.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.