Mumbai-based Supreme Industries has outperformed the indices even in a choppy market over the past one year. Strong return on investment has made it attractive to a growing number of institutional investors and helped it maintain a premium valuation over its peers.
The company’s expansion plans for the coming months could further boost its sustained growth.
Supreme Industries is India’s leading plastic goods manufacturer, with 19 plants across the country and annual volumes of close to 2,30,000 tonnes. The company has a comprehensive range of offerings, including piping, packaging, industrial and consumer products.
The company has recently developed a commercial complex in Andheri in Mumbai, which currently has 1,90,000 sq ft of unsold inventory. During the July 2011 – March 2012 period, the company had sold 41,678 sq ft of inventory at . 16,600 per sq ft. At this rate, the unsold inventory is valued at . 315 crore.
In the 12-month period ended March 2012, the company’s sales grew 15.7% to . 2,745.7 crore while net profit grew 16% to . 200.7 crore. It was able to improve its operating profit margins by 50 basis points to 15.4% from the previous year.
The company has been focusing on value-added products to ensure that its operating profit margins improve along with sales growth. For the financial year ending June 2012, the company had chalked out a . 250-crore capital expenditure plan. Its protective packaging unit at Hosur in Tamil Nadu will be operational by June end, while the cross-laminated film plant at Halol in Gujarat is expected to commence operations by September 2012.
Supreme’s 400,000 unit-per-annum composite cylinder plant at Halol is scheduled to be completed by December 2012. By October 2012, its piping systems plant at Malanpur in Madhya Pradesh will be ready. The company, which processed 2,24,673 tonnes of polymers last year, expects to finish the current financial year with 10% higher volumes. Revenue growth, however, is likely to be higher at 20% thanks to higher raw material prices getting passed on to consumers. The growing share of value-added products in its portfolio too is contributing to its bottom line.
The stock continues to command a premium valuation of 13.5 price-toearnings multiple (P/E), which is higher than the 9 to 11 range in which its peers such as Time Technoplast, Astral Poly Technik and Jain Irrigation trade.
Supreme Industries was able to consistently outperform the market due to its strong return on employed capital (RoCE), which stood at close to 35% for the past three years.
The Supreme Industries stock has been witnessing increased institutional participation. Institutional holding in the company has more than doubled to 18.21% at the end of March 2012 from 8.11% a year ago. The promoters have maintained their stake at 49.62%.
The company’s expansion plans for the coming months could further boost its sustained growth.
Supreme Industries is India’s leading plastic goods manufacturer, with 19 plants across the country and annual volumes of close to 2,30,000 tonnes. The company has a comprehensive range of offerings, including piping, packaging, industrial and consumer products.
The company has recently developed a commercial complex in Andheri in Mumbai, which currently has 1,90,000 sq ft of unsold inventory. During the July 2011 – March 2012 period, the company had sold 41,678 sq ft of inventory at . 16,600 per sq ft. At this rate, the unsold inventory is valued at . 315 crore.
In the 12-month period ended March 2012, the company’s sales grew 15.7% to . 2,745.7 crore while net profit grew 16% to . 200.7 crore. It was able to improve its operating profit margins by 50 basis points to 15.4% from the previous year.
The company has been focusing on value-added products to ensure that its operating profit margins improve along with sales growth. For the financial year ending June 2012, the company had chalked out a . 250-crore capital expenditure plan. Its protective packaging unit at Hosur in Tamil Nadu will be operational by June end, while the cross-laminated film plant at Halol in Gujarat is expected to commence operations by September 2012.
Supreme’s 400,000 unit-per-annum composite cylinder plant at Halol is scheduled to be completed by December 2012. By October 2012, its piping systems plant at Malanpur in Madhya Pradesh will be ready. The company, which processed 2,24,673 tonnes of polymers last year, expects to finish the current financial year with 10% higher volumes. Revenue growth, however, is likely to be higher at 20% thanks to higher raw material prices getting passed on to consumers. The growing share of value-added products in its portfolio too is contributing to its bottom line.
The stock continues to command a premium valuation of 13.5 price-toearnings multiple (P/E), which is higher than the 9 to 11 range in which its peers such as Time Technoplast, Astral Poly Technik and Jain Irrigation trade.
Supreme Industries was able to consistently outperform the market due to its strong return on employed capital (RoCE), which stood at close to 35% for the past three years.
The Supreme Industries stock has been witnessing increased institutional participation. Institutional holding in the company has more than doubled to 18.21% at the end of March 2012 from 8.11% a year ago. The promoters have maintained their stake at 49.62%.
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