SUPREMEIND Q1 FY24 earnings call.
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Revenue
₹2,383 Cr
verified against source
Revenue YoY
8%
reported change
EBITDA
₹343 Cr
latest reported figure
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record provenance
Actual signal trajectory
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What the record says.
Supreme Industries delivered strong volume growth of 36% YoY (148,544 tons) in Q1 FY24, driven by robust demand in Plastic Piping (+48% volume) from Agriculture and Infrastructure segments, particularly Nal Se Jal scheme supplies. However, EBITDA margin compressed to 14.39% from 14.79% YoY due to INR 40 crore inventory loss from falling polymer prices and an unfavorable product mix (higher share of lower-margin Agri/Infra pipes vs value-added products). Management maintained FY24 guidance of 20%+ volume growth and 14%+ EBITDA margin, targeting INR 11,000 crore revenue. Key growth initiatives include capacity expansion to 760,000 tons in piping by FY24-end, new PVC windows/doors business (INR 160 crore CapEx, INR 350 crore potential revenue), and four new piping systems. Risks include margin pressure from government order mix (Nal Se Jal at 30-day credit, lower margins), CPVC counterfeit issues in North/East India causing 12% degrowth in that segment, and ongoing polymer price volatility with recent upward bias ($50-80/ton increase in July). New East India plants (Bhubaneswar, Cuttack, Rayagada) are gaining market share.
Colored figures show movement against the previous available record.
Guidance to track
- Company anticipates overall volume growth exceeding 20% for FY24, with Plastic Piping segment expected to grow 23-25%. Industrial and Packaging segments guided at 10-12% volume growth each.
- Operating profit margin guidance maintained at 14%+ for FY24. Management noted Q1 margin was impacted by INR 3/kg inventory loss and unfavorable mix, which should normalize in remaining quarters.
- Revenue guidance of approximately INR 11,000 crore for FY24, factoring in volume growth, value-added product mix improvement, and some polymer price firming in remaining quarters.
- Installed capacity to increase to 760,000 tons per annum by FY24-end from current 600,000 tons, through expansion at existing sites and new Malanpur greenfield facility for industrial and ball valves.
Risks flagged
- Q1 volume growth was driven by lower-margin Agri and Infrastructure pipes (Nal Se Jal, Maharashtra government order ~INR 480 crore over 40 months) which carry 30-day credit terms and nominal margins. Management expects mix to improve in remaining quarters but this represents a structural margin headwind if government orders accelerate.
- Company reported 12% volume degrowth in CPVC segment due to counterfeit pipe producers in North and East India. While legal action has been taken, management acknowledged losing some business volume during the enforcement period. Recovery is expected but timing uncertain.
- PVC prices increased $50-80/ton internationally over four weeks, after Q1 decline of INR 5-13/kg. Management noted volatility will persist but expects prices to remain range-bound with current upward bias. Sharp price increases could impact competitive positioning vs. CPVC alternatives.
- Analyst asked about CPVC raw material prices declining and whether this would be passed to channels. Management confirmed prices are falling due to multiple suppliers entering the market. This could pressure realizations in the CPVC segment which already faced 12% volume degrowth from counterfeit competition.
Key quotes
- Overall company, we anticipate volume growth of 20%+. The operating profit margin, 14%+.
- In piping system, the first quarter, we earned 14.27%. It's much better than last year, first quarter. Last year was very poor. Last year was, margin was 12.55%.
- Our company with many location now in operation. We will be taking some share from other people also. We are quite happy with our growth in those markets.
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