SUPREMEIND Q2 FY25 earnings call.
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Revenue
₹2,273 Cr
verified against source
Revenue YoY
-2%
reported change
EBITDA
₹347 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Supreme Industries reported a weak Q2 FY25 with consolidated PAT declining 15% YoY to INR 207 crores due to severe PVC resin price volatility and channel destocking. July volume dropped 20% YoY before recovering to 3% growth in August and 15%+ growth in September. Management lowered plastic piping volume growth guidance to 16-18% from 25% given H1 weakness, requiring ~41% H2 growth to meet targets. Segment mix was a bright spot—packaging grew 11% in volume and 14% in value, while CPVC volumes surged 33% YoY, outperforming the broader PVC pipe market. The company maintains strong balance sheet with INR 674 crores cash surplus and is executing INR 1,500 crore capex program. Channel inventory has normalized post price correction, and management expects PVC prices to remain stable at lower levels. Key risks include 65% PVC resin import dependence, potential BIS certification non-extension, and steep H2 volume growth requirements against ~90% capacity utilization.
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Guidance to track
- Revised down from 25% due to H1 weakness from PVC price volatility, extended monsoon, and low government infrastructure spending. Implies ~41% H2 growth requirement.
- Management expects normalized EBITDA margin in this range for the piping segment. Current quarter adjusted for inventory losses was ~15.5%.
- Packaging margins expected in this range going forward, above piping segment due to better product mix and higher value-addition.
- Management guided overall company volume growth of 14-15% for FY25, reflecting segment mix (piping 16-18%, packaging stronger, consumer/industrial subdued).
Risks flagged
- Company faces 65% PVC resin import dependence. BIS certification expires December 24 with only 5 suppliers qualified—potential supply crisis could cause 100% PVC price spike and plant closures if not extended.
- Revised 16-18% piping guidance requires ~41% H2 volume growth. Current capacity ~790,000 tons with 835,000 tons by March 2025, implying ~90% utilization—any demand shortfall directly impacts targets.
- When PVC prices dropped 17.5% between July-August, distributors reduced inventory. This destocking caused July's 20% volume decline and continues to impact reported volumes versus end-consumption.
- Government spending was weak in H1 due to elections and monsoon. Company expects improvement from October onward but is a small player in government business (2-3 thousand tons monthly) with limited visibility on execution.
Key quotes
- Quarterly number in July was a very bad month. In July, our business had gone down from 34,710 to 27,700. It dropped by 20% in the month of July, and I guess there was marginally 3% growth. In September, it was more than 15% growth, and now onward, normally second half is always better.
- We don't anticipate PVC price to go down now further. So when PVC price is not going to go down, we do not see any reason why the value will decline compared to the volume growth.
- Country growth should remain between 10-12% going forward next three years.
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