SUPREMEIND Q2 FY24 earnings call.
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Revenue
₹2,309 Cr
verified against source
Revenue YoY
11%
reported change
EBITDA
Pending
latest reported figure
Source
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Actual signal trajectory
Where this quarter sits.
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What the record says.
Supreme Industries delivered an exceptional Q2 FY24 with 196% PAT growth (₹243 crore) and 23% volume growth (137,763 tons), driven by strong plastic piping demand (+30% volume, +17% value) and robust packaging segment performance. The company revised full-year volume growth guidance upward to 23% (from 20%+ earlier), with plastic piping now expected at ~28%. EBITDA margin guidance for FY24 is 14.5%, though H1 already achieved 14.79% despite ₹40 crore inventory loss in Q1 from PVC price decline. The Parvati Agro Plast acquisition (₹151 crore, 36,000 tons capacity) was completed on October 7, 2023, adding O-PVC capability. Capacity expansion is on track to reach 1.1 million tons by March 2024, up from 600,000 tons in March 2023. While the Jal Jeevan Mission (7-8% of piping revenue) may moderate post-FY24, the gas piping opportunity provides a growth lever. Raw material price volatility remains a key risk, with PVC prices down 12% in early October; management flagged potential inventory losses in Q3 but maintained conservative guidance amid global economic uncertainty.
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Guidance to track
- Management revised full-year volume growth guidance upward from earlier 20%+ estimate. Plastic piping segment expected to outperform at ~28% growth, supported by Jal Jeevan orders and PE pipe demand. Overall company volume guidance implies ~12% growth in FY25 on higher base.
- Full-year EBITDA margin guidance of 14.5% maintained despite H1 delivering 14.79%. Q3 may see some inventory losses given 12% PVC price decline in early October; management expects H2 margin to normalize below H1 levels.
- Revenue guidance implies ~15% growth for FY24. Management noted that value growth is difficult to forecast given raw material price volatility, preferring to track volume growth instead.
- Piping division capacity expanding from 600,000 tons to 780,000 tons by March 2024, with 180,000 tons of the 200,000-ton total capacity addition allocated to piping. Total company capacity to reach 1.1 million tons.
Risks flagged
- PVC prices declined 12% in first half of October 2023, following an earlier 13% drop in Q2. While Q2 saw no inventory gains/losses, management acknowledged potential small inventory losses in Q3. Rising prices may provide partial recovery, but commodity price forecasting remains unreliable.
- CPVC volumes declined in H1 (company: +1.25%, industry: -14-15%) as PVC prices fell, making CPVC relatively expensive. Management expects H2 recovery as CPVC prices also declined, but substitution risk persists if PVC prices remain lower.
- IOCL order execution ongoing but no new domestic OMC orders received. Export inquiries are under negotiation but remain unconverted. Capacity utilization at the expanded cylinder plant is below optimal levels; management declined to specify customer/geography details.
- Jal Jeevan (~7-8% of piping revenue) expected to complete by end-2024 with potential spillover to 2025. Management acknowledged gas piping as replacement opportunity but did not provide specific revenue visibility or timeline, deflecting detailed questions on the opportunity size.
Key quotes
- This year, super growth is going to be because of poor base of last year. Now, this year is normal, so we anticipate growth to be around 12% next year.
- As of today, our exports are less than 3% of turnover, but with so many exhibitions now we are participating in the international market, and we get trust and more resources we are providing to boost exports.
- We are open to even the existing product, also inorganic growth. We have never closed our mind.
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