Supreme Industries Reports Robust Performance in Q3, Remains Optimistic Amidst Market Challenges

The company reported a substantial increase in plastic goods sold, amounting to 158,025 metric tons in Q3 FY
Supreme Industries Reports Robust Performance in Q3, Remains Optimistic Amidst Market Challenges

The Supreme Industries Limited, known for its plastic furniture, reported a solid performance for the December quarter, with significant growth in key areas despite challenging market conditions.

The company reported a substantial increase in plastic goods sold, amounting to 158,025 metric tons in Q3 FY 24, a 14.21% increase compared to the same quarter the previous year.

As a result, total consolidated income for Q3 FY 24 reached Rs. 2469.81 crores, a 6.50% increase from the previous year. The increase in revenue was less than the increase in the quantity of products sold because of a decline in prices.

Crude oil prices have softened over the last one year, leading to lower prices for downstream products, including plastics.

Despite showing only 6.5% revenue increase, the company's operating profit rose by 20.77% because of the lower raw material prices.

Net profit also rose 21.97%. Despite facing a weak demand scenario in the Industrial Component Division and a degrowth in the Consumer product division, the company maintained its profit levels through strategic product mix and expansion of its showroom network.

Market and Industry Commentary

Mr. M.P. Taparia, Managing Director noted that polymer prices have stabilized at an affordable level, though the Red Sea conflict has disrupted normal business flow, posing risks of price volatility. He also mentioned the commencement of additional petrochemical plants in India, which bodes well for the company's growth.

Growth and Expansion

Supreme Industries had recently acquired Parvati Agro Plast in Sangli, Maharashtra, with a capacity of 36,000 tons per annum as a part of its expansion strategy. The company is also constructing its fourth plant at Malanpur, expected to be operational in the first quarter of FY 2024-25, which will manufacture Ball valves and Industrial valves.

Furthermore, the company has received BIS approval for supplying HDPE pipes for carrying Natural Gas and has started offering its CPVC pipe system for industrial applications. This diversification into new product lines demonstrates Supreme Industries' commitment to broadening its market reach.

The company's plastic pipe division achieved a 30% volume growth in the first nine months of the year, and similar growth is expected for the full year. The introduction of new products like O-PVC pipes and expansion in the Cross Laminate Film division are set to contribute to future growth.

The Material Handling Division remains robust, with good demand from various sectors.

The company said it continues to invest in growth, with total commitments, including the acquisition of Parvati Agro Plast, expected to exceed Rs. 1,000 crores. However, the total cash outflow is likely to be within Rs. 750 crores for the year, funded entirely from internal accruals.

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