Result Update

July 29, 2016

Rating matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

Supreme Industries (SUPIND)

Buy
| 1011
12 months
10%

Subdued volume growth hits performance

Whats Changed?
Target
EPS FY17E
EPS FY18E
Rating

Changed from | 924 to | 1011

Changed from | 33.2 to | 32.8
Changed from | 39.7 to | 39.8
Unchanged

Quarterly Performance
Revenue
EBITDA
EBITDA (%)
PAT

Jun'16
1,184.6
196.4
16.6
115.2

Jun'15
1,270.3
250.2
19.7
159.8

YoY (%)
-6.7
-21.5
-312bps
-27.9

Mar'16
1,191.4
206.3
17.3
114.6

QoQ (%)
-0.6
-4.8
-74bps
0.6

Key Financials
| Crore
Net Sales
EBITDA
Net Profit
EPS (|)

FY15
4,219
630.5
322.4
25.4

9MFY16
2,959
444.9
221.2
17.4

FY17E
4,645
709.5
416.1
32.8

FY18E
5,567
871.0
505.6
39.8

FY15
36.1
39.8
18.7
9.6
26.6
26.6

9MFY16
52.7
58.0
26.6
8.9
17.2
17.2

FY17E
28.0
30.9
16.5
7.4
26.3
26.3

FY18E
23.0
25.4
13.3
6.4
27.8
27.8

Valuation summary
P/E
Target P/E
EV / EBITDA
P/BV
RoNW (%)
RoCE (%)

Stock data
Particular
Market Capitalization (| Crore)
Total Debt (9MFY16) (| Crore)
Cash & Invest. (9MFY16) (| Crore)
EV (| Crore)
52 week H/L
Equity capital (| Crore)
Face value (|)

Amount
11,648.4
232.1
28.9
11,851.5
1004/ 520
25.4
2.0

Price performance (%)

Supreme Ind
Finolex Ind
Astra Poly

1M
2.5
13.0
10.6

3M
18.3
31.7
16.8

| 917

6M
27.4
53.8
25.9

Supreme Industries (SIL) recorded subdued volume growth of ~3%

YoY led by lower offtake by dealers in Q1FY17, change in product
mix and absence of revenue from the construction business. Plastic
piping recorded volume growth of 6% YoY while volume growth of
packaging products declined ~11% YoY. Contribution of value
added products categories increased from 34.7% to 34.9% in
Q1FY17 led by the plastic piping and furniture division
Benign raw material prices helped in expanding the gross margin by
~100 bps YoY. However, sharp growth in other expenses negated
the impact of saving in raw material prices. As a result, the operating
margin declined ~312 bps YoY. Despite saving in interest cost by
11% YoY, PAT recorded a decline of 28% YoY mainly due to a
decline in sales and EBITDA margin

Piping, packaging segment to drive future growth

In FY11-15, the piping and packaging segment (out of four segments of
SIL) recorded a volume CAGR of ~11% and ~6%, respectively, led by
demand from housing and industrial segments. Going forward, with the
ramp up in infrastructure activities coupled with rising demand for quality
products in India, we believe SIL will record volume CAGR of ~13% in
FY15-18E led by piping, packaging and consumer product categories. We
have modelled ~15% volumes CAGR for each piping and packaging
products, supported by ~11% volume CAGR in the consumer product
segment for FY15-18E. With the strong distribution channel (~2500
dealers) in India, we believe sales of piping, packaging and consumer
product segment will likely record CAGR of 13%, 12% and 11% for FY1518E with the flat realisation. Additionally, we have modelled revenue
CAGR of ~7% in FY15-18E for industrial products segments on the back
of a revival in demand of consumer durable and automobile segments.
We have modelled revenue CAGR of ~11% for FY15-18E (vs. ~1% CAGR
in FY11-15) in the consumer product segment supported by capacity
addition in the furniture segment (upcoming plant in south India).

Valued added products; play on premiumisation

SIL is taking concrete steps to increase valued added products (VAP)

contribution to total sales from 31.7% in FY13 to 35% by FY20. VAPs
12M command EBITDA margin of 17% vs. 14.9% (in FY15) at the company
47.9 level. SIL foresees strong demand for cross laminated products, CPVC
73.2 and bathroom fittings from housing & industrial segments. It is further
38.6
awaiting government approval for a full fledged launch of composite LPG
cylinder in India that would further aid its revenue and margin. We believe
it would partially pass on the benefit of lower raw material prices to
customers. We have modelled a moderate 60 bps increase in EBITDA
margin by FY18E in the backdrop of the ongoing expansion plan.

Strong fundamentals justify premium valuations

Research Analyst
Sanjay Manyal
sanjay.manyal@icicisecurities.com
Hitesh Taunk
hitesh.taunk@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

At the CMP, SIL is trading at a PE multiple of 28x FY17E and 23x FY18E
earnings. We expect the company to maintain high RoE and RoCE
considering 1) healthy topline growth backed by capex plan, 2)
maintaining higher operating margin and 3) efficient working capital
management turning into lower debt/equity ratio. We believe the strong
brand coupled with sustained growth justify SIL commanding premium
valuations. We maintain our BUY rating on the stock and ascribe PE
multiple of 25x on FY18E earnings with a target price of | 1011/share.

Variance analysis
Jun'16

Jun'16E

Jun'15

YoY (%)

1,184.6

1,345.7

1,270.3

-6.7

1,191.4

-0.6

5.3

5.5

8.6

-38.7

7.9

-33.2

725.5

732.3

772.0

-6.0

752.9

-3.6

32.7
51.4

67.3
74.8

48.2
52.7

-32.1
-2.4

15.7
61.7

107.9
-16.7

Other expenditure

178.6

138.9

142.1

25.7

118.1

51.2

EBITDA

196.4

263.6

250.2

-21.5

206.3

-4.8

EBITDA Margin (%)

16.6

19.6

19.7 -312 bps

17.3

-74 bps

Depreciation

37.0

48.4

35.5

4.2

37.5

-1.3

Interest
PBT
Total Tax
Profit from associates

9.7
155.0
53.4
13.7

10.3
210.4
71.5
22.9

10.9
212.4
71.5
19.0

-11.2
-27.0
-25.4
-27.9

8.1
160.9
62.6
16.2

19.6
-3.7
-14.7
-15.7

PAT

115.2

161.8

159.8

-27.9

114.6

0.6

Plastic Piping

686.0

813.3

702.0

-2.3

711.8

-3.6

Packaging Products

255.5

274.1

269.0

-5.0

221.2

15.5

Industrial Products

150.2

154.1

154.0

-2.4

150.3

0.0

Consumer Products
84.2
Source: Company, ICICIdirect.com Research

93.5

86.0

-2.1

85.3

(1.2)

Revenue
Other Income
Raw Material Exp
Cost of traded goods
Employee Exp

Mar'16 QoQ (%)

Comments
Decline in sales was largely on account of a decline in realisation and
absense of revenue from construction business.
Benign raw material prices helped in saving overall raw material cost as
percentage of sales

Notable grwoth in other income attributable to higher fixed cost

Benefit of benign raw materia prices was partially offset by higher other
expenditure. Hence, margin declined 312 bps YoY

Repayment of debt helps in reducing overall tax outgo

Decline in PAT was largely on account of decline in sales coupled with lower
EBITDA margin during the quarter

Key Metrics
The segment recorded volume growth of 6% YoY while the decline in
realisation was largely on account of passing on the benefit of lower raw
material prices
Volume growth in the packaging segment declined ~11% YoY mainly due to
a change in product mix. The realisation increased 6% YoY
Industrial products sales hit by lower offtake of material handling and
industrial components (largely automotive segment)
New product launch helped volume growth of 3% YoY

Change in estimates
FY17E

(| Crore)
Old
Revenue
EBITDA
EBITDA Margin %
PAT
EPS (|)

Comments

FY18E

New % Change

Old

New % Change

5,098.9

4644.9

(8.9)

6,181.7

5566.8

(9.9)

739.8

709.5

(4.1)

952.6

871.0

(8.6)

14.5

15.3

78bps

15.4

15.6

25bps

380.5
30.0

416.1
32.8

9.3
9.4

503.6
39.7

505.6
39.8

0.4
0.4

We have tweaked our revenue estimates for FY17E-18E considering a slow pick-up in
demand of plastic products
Margin is expected to remain in the range of 15-16% considering fluctuation in raw
material prices and higher fixed cost due to addition of new capacity

Source: Company, ICICIdirect.com Research

Assumptions
FY15 9MFY16

Current
FY17E
FY18E

Earlier
FY17E
FY18E

Comments

2.6

13.8

59.7

19.4

80.5

Sales growth to largely be driven by capacity addition in eastern India. This coupled with
15.3 a revival in the economy will boost infrastructure, which may finally translate to better
utilisation of piping industry

12.7

6.1

49.2

25.4

48.5

22.2

Industrial Products

8.1

-15.8

60.5

18.4

51.0

Consumer Products

6.7

14.6

54.3

12.2

68.7

30.7 Industrial product sales growth to be largely driven by revival in the demand of material
handling products and industrial component categories
Better sales growth in consumer product segment supported by capacity addition in the
14.1 furniture segment (upcoming plant in south India) and focused on launch of premium
category products

Plastic Piping

Packaging Products

Sales growth to be largely on the back of good traction of demand from agriculture,
construction and white goods segments

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 2

Company Analysis
SIL operates with 25 manufacturing facilities (two are yet to start)
covering almost all regions in India. The company has five business
segments in the plastic division, contributing ~97% of the consolidated
topline in FY15. These are: plastic piping, packaging, industrial, consumer
and composite product segments that contribute ~51%, 21%, 15%, 6%
and 7% of total plastic products revenue, respectively. SIL exhibited
revenue CAGR of 14.7% in FY11-15 to | 4219 crore led by ~8% volume
CAGR in the same period. The plastic piping segment recorded revenue
CAGR of ~20% led by segment volume CAGR of 11% in FY11-15. Despite
continuous capacity expansion (average annual capex of | 220 crore), the
debt/equity ratio improved from 0.9x in FY11 to 0.3x in FY15 as SIL
generated strong cash flow from operations during the same period.
Exhibit 1: Revenue break-up in FY15

Exhibit 2: Revenue break-up of plastic segment

p
Consumer
Products
6%
Construction
3%

Plastic segment
97%

Cylinders &
Others
7%

Industrial
Products
15%

Plastic Piping
51%

Packaging
Products
21%

Source: Company, ICICIdirect.com Research

Exhibit 3: Business segments

Business verticals
Plastic piping system

Packaging products

Source: Company, ICICIdirect.com Research

Product Portfolio
uPVC pipes, injection moulded fittings, handmade fittings, polypropylene random,
copolymer pipes & fittings, HDPE pipe systems, CPVC pipes systems, inspection
chambers, water tanks, septic tanks, bath fittings, solvents
Specialty films, protective packaging products
Cross Laminated film products
Industrial components, material handling products (crates, pallets, bins & dustbins)

Industrial products
Consumer products
Composite products

Furniture
LPG cylinders

Target Customer segment

Potable water supply, irrigation, drainage &
sanitation, housing
Electronics, food industry, sports goods, insulation,
construction, agriculture, floriculture, horticulture,
grain storage, tarpaulin, pond lining
Auto sector, electronic household appliances,
Water Purification - filters, soft drink companies,
agriculture & fisheries,
Household, office establishments, institutions
Retail/household

Source: Company, ICICIdirect.com Research

Plastic piping segment: Sales to record 13% CAGR in FY15-18E

The plastic piping capacity of SIL is expected to increase at

a CAGR of 10% in FY15-18E. This would help in sales
volume CAGR of 15%

ICICI Securities Ltd | Retail Equity Research

While the piping industry has been growing at 12-15% CAGR in the last
10 years, SILs piping revenue recorded a CAGR of 30% in the same
period largely driven by the construction sector and replacement
demand. Further, we have modelled revenue CAGR of 13% in FY15-18E
for the piping division, led by ~15% volume growth. Plastic piping
capacity is expected to increase at 10% CAGR in the same period. To
summarise, the demand for plastic pipes would largely be driven by:
1. Replacement of conventional piping systems like galvanised iron
and cast iron piping systems with plastic is ongoing and will
continue in the near term

Page 3

2. Growth in construction, mainly in rural, Tier-II & III cities is going

to be supported by demographic change, aspirations of better
lifestyle, nuclear family concept & continuous rise of middle class
3. Increase in demand for branded agriculture and plumbing pipes
because of increase in income levels
4. The company has introduced a silent pipe system made of PVC
for the first time in the country. This is mainly used in high rise
buildings, hospitals and high quality hotels

Safety measures to drive packaging revenue at ~12% CAGR in FY15-18E

The Indian packaging industry is pegged at US$33.8 billion (rigid
packaging US$26.7 billion, flexible packaging US$7.1 billion) at a CAGR of
13-15%. Processed food packaging with ~48% market share in the
overall packaging industry dominates the other three segments i.e.
personal care packaging with ~27% market share, pharmaceutical 6%
market share and others 19% market share. Plastics are preferred for their
ability to pack the processed food. Government data showed the size of
the Indian food processing industry is ~US$83 billion and has grown at
8.4% CAGR in the last five years. The growth of the food processing
industry is a blend of increasing urbanisation, young population and
income level. According to Ficci, the industry is expected to continue to
record 8% CAGR for FY15-18E.
In the packaging segment, we have modelled ~12% revenue CAGR in
FY15-18E led by 11% volume growth, on the back of good traction of
demand from agriculture, construction & white goods segments. The
company introduced premium brand Silpaulin (cross laminated films
products), which contributes ~49% to packaging products sales. The
product is considered to be a value-added one wherein the product
margin is above ~17%. In the last three years, cross laminated film
products sales have recorded ~11% CAGR led by ~6% price hike. SIL is
focused on increasing the proportion of higher margin product (by
expanding its distribution network) to sales to improve its overall EBITDA
margin.

1277.3

1018.6

913.7

811.0

700.0

200

FY13

600

650.0

(| crore)

CAGR 12%

800

FY12

3061

2564
1605

2113

2060

1000

400

Source: Company, ICICIdirect.com, Research

ICICI Securities Ltd | Retail Equity Research

FY18E

FY17E

9MFY16

FY15

FY14

FY18E

FY17E

9MFY16

FY15

FY14

FY13

FY12

0
FY11

CAGR 12%

1200

FY11

500

1320

1500

1691

CAGR 19.5%

2000

1036

(| crore)

2500

1000

1400

CAGR 13%

3000

580.0

3500

Exhibit 5: Packaging segment revenue to record ~12% CAGR in FY15-18E

682.7

Exhibit 4: Piping segment revenue to record 13% CAGR in FY15-18E

Source: Company, ICICIdirect.com, Research

Page 4

Launch of premium products coupled with expansion plans to drive sales

During the last five years, SIL recorded sales CAGR of 14.7% driven by
volume CAGR of 8%. The volume growth was largely driven by good
demand for piping products. However, rising contribution of value-added
products in the total portfolio helped drive realisation growth to the tune
of 6.4% during the same period.
We have modelled revenue CAGR of 10% for FY15-18E (in line with
historical growth rate) largely supported by volume CAGR of ~13%
during the same period. The volume growth is expected to be largely
driven by strong demand for piping products (volume CAGR ~16%) from
the expansion in new geographies. Packaging products contribute 21% to
the topline and are expected to record sales CAGR of ~12% supported by
good traction of cross laminated products. Further, industrial segment
sales are expected to record CAGR of 7% largely supported by a revival
in demand for automotive and consumer durable segment, going
forward. Additionally, the consumer products segment where the
company remained a passive player for the last few years, is expected to
record sales CAGR of 11% on account of increasing the focus on the
premium product category. In addition, we have not considered any
revenue from the construction business.
Exhibit 6: Segment wise revenue break-up
Sales | crore
Plastic piping
Packaging Prod
Industrial Prod
Consumer Prod
Others
Total

Jun'16
686.0
255.5
150.2
84.2
0.9
1176.8

Jun'15
702.0
269.0
154.0
86.0
0.0
1211.0

Mar'16
711.8
221.2
150.3
85.3
0.5
1168.6

YoY (%)
-2.3
-5.0
-2.4
-2.1
NA
-2.8

QoQ (%)
-3.6
15.5
0.0
-1.2
NA
0.7

Volume (MT)
Plastic piping
Packaging Prod
Industrial Prod
Consumer Prod
Others
Total

70872
11739
9436
4976
22
97045

66789
13131
9296
4828
0
94044

75450
10868
10019
5310
0
101647

6.1
-10.6
1.5
3.1
NA
3.2

-6.1
8.0
-5.8
-6.3
NA
-4.5

96792.8
217616.5
159209.4
169232.3
413636.4
121263.3

105107.1
204858.7
165662.7
178127.6
NA
128769.5

94345.9
203560.9
149995.0
160583.8
NA
114968.5

-7.9
6.2
-3.9
-5.0
NA
-5.8

2.6
6.9
6.1
5.4
NA
5.5

15.9
23.2
12.1
19.5

18.0
27.0
16.0
21.0

15.4
26.0
16.0
11.2

-212bps
-384bps
-391bps
-152bps

46bps
-289bps
-389bps
826bps

Realisaton (|/MT)
Plastic piping
Packaging Prod
Industrial Prod
Consumer Prod
Others
Total
EBITDA Margin (%)
Plastic piping
Packaging Prod
Industrial Prod
Consumer Prod

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 5

5,566.8

25
20
15

2,958.6

(%)

10
1,184.6

1,191.4

997.6

769.6

1,270.3

1,143.7

751.8

1,256.4

990.7

1,000

962.0

3,000
696.0

(| crore)

4,000

1,053.7

3,905.2

5,000

2,000

4,219.5

6,000

4,644.9

Exhibit 7: Sales growth to be largely driven by plastic piping, packaging segment

(5)
FY18E

FY17E

Q1FY17

Q3FY16

9MFY16

Q2FY16

FY15

Sales (| crore)

Q1FY16

Q4FY15

Q3FY15

Q2FY15

Q1FY15

FY14

Q4FY14

Q3FY14

Q2FY14

(10)
Q1FY14

YoY growth

Source: Company, ICICIdirect.com Research

Rising contribution of VAPs coupled with lower raw material prices to drive margin
In the last five years, the EBITDA margin has grown ~160 bps to 14.9%
on account of a strong brand, rising contribution of value added products
(VAPs), lower commodity prices, higher contribution of in-house
manufactured product into sales. We believe raw material (largely
derivative of crude oil like PVC, polypropylene and polyethylene) prices
will remain subdued in the near term. The company, being a strong brand
in the plastic business, is least likely to pass on the entire benefit of lower
raw material prices. This, coupled with rising focus on launching premium
products and increasing the contribution of value added products (as
value added products command EBITDTA margin of more than 17%) in
revenue, would drive EBITDA margins, going forward. On a conservative
basis, we have modelled 60 bps expansions in EBITDA margin by FY18E.
The moderate expansion in margin is expected in the backdrop of the
ongoing expansion plan into new geographies, coupled with stabilisation
of raw material prices, going forward.
871.0

709.5

630.5

20.0

10.0
5.0

FY18E

FY17E

Q1FY17

9MFY16

Q3FY16

Q2FY16

Q1FY16

FY15E

Q4FY15

Q3FY15

Q2FY15

Q1FY15

FY14

Q4FY14

Q3FY14

EBITDA (| crore)

EBITDA Margin (%)

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

(%)

15.0
196.4

206.3

151.0

87.6

250.2

190.1

116.6

73.6

444.9

531.7
201.5

114.1

133.4

82.9

25.0

Q2FY14

1,000
900
800
700
600
500
400
300
200
100
-

Q1FY14

(| crore)

Exhibit 8: Benign commodity prices, value added products to help maintain margin (FY15-18E)

Sales growth coupled with lower interest cost to drive PAT

The company recorded a net profit CAGR of 13% in the last five year led
by increase in sales and EBITDA margin. However, being a capital
intensive business, SIL required continuous capex to fund expansion and
working capital requirement. Over the years, capital expenditure has
yielded better inflows resulting in a reduction in debt by 35% from FY11.
As a result, interest expanses reduced 24% YoY in FY15 leading to a 100
bps YoY increase in PAT margin. A further reduction in interest outgo (Idirect estimate: reduction by ~43% YoY by the end of FY18E) coupled
with sales CAGR of ~10% for FY15-18E would further help in driving PAT
growth by 16% for FY15-18E.

24.5

12.0
10.0
8.0
6.0

115.2

221.2

114.6

82.1

159.8

102.2

119.4
25.1

100

58.3

43.0

200

62.6

300

35.3

283.4

(| crore)

400

322.4

500

14.0

4.0
2.0

PAT (| crore)

FY18E

FY17E

Q1FY17

Q3FY16

9MFY16

Q2FY16

Q1FY16

FY15E

Q4FY15

Q3FY15

Q2FY15

Q1FY15

FY14

Q4FY14

Q3FY14

Q2FY14

Q1FY14

PAT Margin

Source: Company, ICICIdirect.com Research

40

35.8

34.7

35
30

38.9

(%)

25
20

33.0

32.9

27.3

26.6

31.8

32.4

26.3
17.2

26.4

15

31.9

27.8
35.5

21.6

10
5
FY11

FY12

FY13

FY14
RoE

FY15

9MFY16 FY17E

45
40
35
30
25
20
15
10
5
-

(%)

Exhibit 10: Lighter balance sheet to help drive return ratios

FY18E

RoCE

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

(%)

416.1

600

505.6

Exhibit 9: PAT likely to grow at 16% CAGR in FY15-18E

Outlook and valuation

SIL is further planning an aggressive expansion with a capital outlay of
| 1500 crore across business segments for the next five years. This would
increase the companys capacity to over 6.5 lakh tonnes by FY20. We
believe the company would record revenue CAGR of ~10% for FY15-18E
largely supported by volume CAGR of ~13% during the same period.
With the volume growth, the company is also planning to increase the
contribution of value added products in sales to over 35% by the end of
FY20. This would further help in driving the EBITDA margin. The company
has a strong balance sheet with comfortable debt/equity ratio at ~0.3x
(declined from 0.9x during FY11) and strong RoE and RoCE at 27% and
32%, respectively, in FY15. We believe the company would keep
maintaining its return ratios at elevated levels by generating better
returns. It will also continue rewarding shareholders by maintaining a
payout ratio of over 40% in the coming years. If we compare the plastic
business with other leading companies like Astral Polytechnik and Finolex
Industries, SIL performance is better or in line with its peers.
Historically, the stock has traded at an average one year forward PE
multiple of 17x. At the CMP, the stock is trading at 28x FY17E and 23x
FY18E earnings. We reckon that a revival of the plastic industry is on the
cards with a major government infrastructure push as well as continued
demand from tier II and tier III cities. Moreover, a better economic
scenario would lead to a further re-rating of the stock. We believe there
are multiple upside catalysts to our estimate such as visibility of
composite cylinder, Silpaulin and CPVC revenues. We maintain our BUY
recommendation on the stock and ascribe PE multiple of 25x on FY18E
earnings with revised target price of | 1011/share.
Exhibit 11: Valuation

FY15
9MFY16E
FY17E
FY18E

Sales
(| cr)
4219.5
2958.6
4644.9
5566.8

Growth
(%)
-29.9
57.0
19.8

EPS
(|)
25.4
17.4
32.8
39.8

Growth
(%)
-31.4
88.1
21.5

PE
(x)
36.1
52.7
28.0
23.0

EV/EBITDA
(x)
18.7
26.6
16.5
13.3

RoNW
(%)
26.6
17.2
26.3
27.8

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 8

RoCE
(%)
32.4
21.6
31.9
35.5

Company snapshot
1,200

90.0
80.0

1,000

70.0

800

50.0

600

40.0

400

30.0
20.0

200
0

(%)

(|)

60.0

Jul-14

Sep-14

Dec-14
Price

Feb-15

May-15

Idirect target

Jul-15

Oct-15

Consensus Target Mean

Dec-15

Mar-16

May-16

10.0
Jul-16
0.0

% Consensus with BUY

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date
Apr-09

Event
Plans to exit the flexible film business as a part of its divestment plan and looks to sell its flexible packaging unit at Khopoli in Maharahstra

Feb-12

Aims at 20% growth in revenues during the fiscal ending June, as it expects consumption of plastic to rapidly increase

Jul-14

Announces capex of | 200 crore to increase capacity at its manufacturing facilities located across the country and introduce new products in furniture and pipe
fittings segments.
Reports disruption of production activity at its plastic piping system manufacturing units in Maharashtra. permanent workers of the company at its Jalgaon &
Gadegaon Unit have stopped entry of contract workmen inside the company premises thereby affecting all loading, unloading and ancillary activities
WestBridge Capital sells almost all of its stake in Supreme Industries

Sep-14
Nov-14
Feb-15
Jul-15
Sep-15

In Dec ember 2014 quarter, recorded volume growth of 10% and value growth 9% with operating margin declining by 530 basis points due to inventory loss of
around | 50 crore arising from continuous fall in polymer prices. Various polymer prices fell 23-32% from the peak level in the quarter
Board recommends payment of final dividend | 7/share on which together with interim dividend of |2 /share and tax on distribution of dividend absorb a sum of
|137.18 crore against | 118.89 crore in previous year
RBI allows FIIs)/registered foreign portfolios investors (RFPIs) to invest up to 30% (revised from default 24%) of the paid-up capital of Supreme Industries under the
portfolio Investment Scheme (PIS)

Source: Company, ICICIdirect.com Research

Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10

Shareholding Pattern

Name
Boon Investment & Trading Co., Pvt. Ltd.
Jovial Investment & Trading Co., Pvt. Ltd.
Venktesh Investment & Trading Co., Pvt. Ltd.
Nalanda Capital Pte Ltd
Capital Research Global Investors
HDFC Asset Management Co., Ltd.
Matthews International Capital Management, L.L.C.
Capital World Investors
SBI Funds Management Pvt. Ltd.
DSP BlackRock Investment Managers Pvt. Ltd.

Latest Filing Date % O/S Position (m) Change (m)

31-Mar-16 0.16
20.2
0.0
31-Mar-16 0.16
19.9
0.0
31-Mar-16 0.16
19.7
0.0
31-Mar-16 0.06
8.2
0.0
30-Jun-16 0.04
5.1
5.1
31-Mar-16 0.03
3.8
-0.1
31-Mar-16 0.02
3.0
-0.1
31-Mar-16 0.02
2.8
0.0
31-Mar-16 0.01
1.9
0.0
31-Mar-16 0.01
1.6
-0.1

(in %)
Promoter
FII
DII
Others

Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

49.7
49.7
49.7
49.7
49.7
22.3
21.2
20.3
20.1
22.0
6.3
6.9
8.4
8.8
6.7
21.8
22.2
21.7
21.4
21.6

Source: Reuters, ICICIdirect.com Research

Recent Activity
Investor name
Investor name
Capital Research Global Investors
Norges Bank Investment Management (NBIM)
BlackRock Asset Management North Asia Limited
Taparia (Bajranlal Lal)
Mirae Asset Global Investments (India) Pvt. Ltd.

Value

Shares
68.6
9.9
4.7
4.7
1.3

5.1
1.0
0.4
0.3
0.1

Investor name
Investor name
William Blair Investment Management, LLC
Grandeur Peak Global Advisors, LLC
Schroder Investment Management (Singapore) Ltd.
Grantham Mayo Van Otterloo & Co LLC
Matthews International Capital Management, L.L.C.

Value

Shares
-5.9
-2.4
-1.8
-1.4
-1.4

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 9

-0.6
-0.2
-0.2
-0.1
-0.1

Financial summary
Profit and loss statement
(Year-end June)
Net Sales
Growth (%)
Other Income
Total Revenue
Expenditure
Raw Material Expenses
Cost of goods traded
Cost of premises sold
(inc)/dec in stock
Employees cost
Power & fuel Exp
Other Expenditure
Total Operating Exp
Operating Profit (EBITDA)
Growth (%)
Depreciation
Interest
PBT after Excep Items
Total Tax
PAT before MI
Profit from Associates
Reported PAT
Growth (%)

| Crore
FY14
3905.2
16.3
60.3
3965.4
0.0
2562.4
164.3
20.8
-59.3
143.9
139.3
402.0
3373.4
531.7
8.4
101.5
76.1
414.3
140.0
274.3
9.1
283.4
-2.3

FY15
4219.5
8.0
38.1
4257.6
0.0
2632.5
169.4
37.3
-0.1
168.0
146.4
435.4
3588.9
630.5
18.6
139.0
58.0
471.7
160.0
311.7
10.6
322.4
13.7

9MFY16
2958.6
NM
17.2
2975.8
0.0
1917.0
53.2
0.0
-70.2
148.5
110.1
355.2
2513.7
444.9
-29.4
104.6
27.6
322.3
117.8
204.5
16.7
221.2
NM

FY17E
4644.9
NM
18.4
4663.3
0.0
2937.7
130.3
0.0
-6.9
208.4
120.9
545.1
3935.4
709.5
59.5
148.6
31.5
547.8
186.8
360.9
55.1
416.1
NM

FY18E
5566.8
19.8
19.9
5586.7
0.0
3420.5
166.3
0.0
0.0
257.2
148.9
702.9
4695.8
871.0
22.8
178.1
15.7
697.1
215.5
481.6
24.0
505.6
21.5

Cash flow statement

| Crore

(Year-end June)

FY14

FY15 9MFY16E

FY17E

FY18E

Profit/(Loss) after taxation

Add: Depreciation & Amortization
Add: Interest Paid
C/F bef working cap changes
Net Increase in Current Assets
Net Increase in Current Liabilities
Net cash flow from operating Act

283.4
101.5
76.1

322.4
139.0
58.0

221.2
104.6
27.6

416.1
148.6
31.5

505.6
178.1
15.7

-80.1
-19.3
361.7

40.0
91.1
650.4

-104.7
40.0
288.7

-70.9
81.2
606.6

-199.6
167.9
667.7

(Inc)/Dec in Other Investments

(Purchase)/Sale of Fixed Assets
Net Cash flow from Investing Act

2.5
-146.7
-138.9

-13.3
-165.3
-229.3

-5.5
-224.4
-197.1

-100.0
-100.0
-269.4

-150.0
-100.0
-278.6

Proceeds/(Rep) of debt
(Payment) of Div & Div Tax
Net Cash flow from Financing Act
Net Cash flow
Cash & Cash Equ at the begin.
Cash & Cash Equ at the end

-22.7
-118.9
-222.1
0.8
23.9
24.6

-55.9
-137.2
-263.8
157.2
24.6
181.8

-99.4
-114.9
-244.4
-152.9
181.8
28.9

-100.0
-152.4
-281.5
55.7
28.9
84.6

-50.0
-266.7
-332.5
56.6
84.6
141.3

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet

| Crore

(Year-end June)
Equity Capital
Reserve and Surplus
Total Shareholders funds
Total Debt
Deferred Tax Liability
Total Liabilities

FY14
25.4
1013.8
1039.2
387.4
116.8
1543.3

FY15
25.4
1186.1
1211.5
331.5
89.5
1632.5

9MFY16E
25.4
1289.9
1315.3
232.1
105.3
1652.6

FY17E
25.4
1556.0
1581.4
132.1
105.3
1818.8

FY18E
25.4
1794.8
1820.2
82.1
105.3
2007.6

Gross Block
Accumulated Depreciation
Net Block
Capital WIP
Total Fixed Assets
Other Investments
Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Creditors
Provisions
Total Current Liabilities
Net Current Assets
Long term loans and advances
Total Asset

1753.8
665.9
1087.9
18.1
1106.0
107.4
497.6
234.8
136.2
1.6
24.6
894.9
277.7
112.2
633.4
261.5
68.2
1543.3

1844.5
812.0
1032.5
99.8
1132.3
120.7
464.7
238.0
126.2
1.4
181.8
1012.1
300.4
165.7
724.5
287.6
91.7
1632.5

2069.0
916.6
1152.4
99.8
1252.2
126.2
558.6
236.2
138.4
1.7
28.9
963.9
338.3
35.4
764.5
199.4
74.6
1652.6

2169.0
1065.2
1103.7
99.8
1203.5
226.2
585.4
280.0
139.0
1.5
84.6
1090.5
330.9
230.4
845.7
244.8
144.0
1818.8

2269.0
1243.4
1025.6
99.8
1125.4
376.2
701.6
335.5
166.5
1.8
141.3
1346.7
396.5
276.2
1013.6
333.2
172.6
2007.6

Source: Company, ICICIdirect.com Research

Key ratios
(Year-end June)
Per share data (|)
EPS
Cash EPS
BV per share
DPS
Operating Ratios (%)
EBITDA Margin
PAT Margin
Turnover Days
Inventory Days
Debtor Days
Creditor Days
Return Ratios (%)
RoNW
RoCE
RoIC
Valuation Ratios (x)
P/E
EV / EBITDA
EV / Net Sales
Market Cap / Sales
Price to Book Value
Solvency Ratios
Debt / EBITDA
Debt / Equity
Current Ratio
Quick Ratio

FY14

FY15 9MFY16E

FY17E

FY18E

22.3
30.3
81.8
9.4

25.4
36.3
95.4
10.8

17.4
25.6
103.5
9.0

32.8
44.5
124.5
12.0

39.8
53.8
143.3
21.0

13.6
7.3

14.9
7.6

15.0
7.6

15.3
9.0

15.6
9.1

46.5
21.9
26.0

40.2
20.6
26.0

51.7
21.9
31.3

46.0
22.0
26.0

46.0
22.0
26.0

27.3
31.8
25.7

26.6
32.4
32.4

17.2
21.6
18.5

26.3
31.9
31.6

27.8
35.5
35.8

41.1
22.6
3.1
3.0
11.2

36.1
18.7
2.8
2.8
9.6

52.7
26.6
4.0
3.9
8.9

28.0
16.5
2.5
2.5
7.4

23.0
13.3
2.1
2.1
6.4

0.7
0.4
2.2
1.0

0.5
0.3
1.8
0.8

0.5
0.2
2.5
1.0

0.2
0.1
1.8
0.7

0.1
0.0
1.8
0.7

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 10

ICICIdirect.com coverage universe (Consumable)

Sector / Company

CMP
(|)
1,118
267
388
333
763
917
917
2,465
1,631
351

M Cap EPS (|)

P/E (x)
EV/EBITDA (x)
RoCE (%)
RoE (%)
TP(|) Rating
(| Cr) FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E
FY16E FY17E FY18E FY16E FY17E FY18E
1,310
Buy 107,239 18.8 24.0 28.5 59.5 46.6 39.3 38.1 31.9 27.5
42.1 42.0 42.8 32.1 33.8 34.8
245
Hold
2,663
9.6 11.4 14.0 27.9 23.5 19.0 10.8 10.4
9.2
26.6 25.7 27.0 12.8 13.8 15.1
416
Buy 24,207 11.5 10.3 13.2 33.8 37.5 29.3 30.0 24.3 18.5
26.6 27.1 29.2 21.1 19.8 21.6
342
Buy 17,946
5.0 24.8
7.0 66.1 20.1 47.6 40.4 30.6 30.2
23.3 22.0 20.6 17.0 58.5 14.6
714
Buy 39,114 14.7 16.3 18.7 51.8 46.8 40.8 31.8 28.5 24.7
36.6 36.0 36.5 27.3 26.6 26.8
1,011
Buy 11,648 25.4 17.4 32.8 36.1 52.7 28.0 18.7 26.6 16.5
32.4 21.6 31.9 26.6 17.2 26.3
1,011
Buy 11,648 17.4 32.8 39.8 52.7 28.0 23.0 26.6 16.5 13.3
21.6 31.9 35.5 17.2 26.3 27.8
2,745
Buy
8,622 33.9 49.1 70.0 72.8 50.2 35.2 63.6 39.6 27.6
48.5 60.2 65.7 35.1 44.1 48.0
1,650
Hold
4,868 37.4 45.2 55.0 43.6 36.1 29.6 27.3 23.5 19.9
34.1 32.9 32.6 23.7 23.8 23.4
370
Buy 11,609 11.5 12.5 13.9 30.5 28.1 25.3 24.2 20.3 17.5
16.2 17.5 18.3 15.7 16.1 16.3

Asian Paints (ASIPAI)

Bajaj Electricals (BAJELE)
Havells India (HAVIND)
Kansai Nerolac (GOONER)
Pidilite Industries (PIDIND)
Essel Propack (ESSPAC)
Supreme Indus (SUPIND)*
Symphony (SYMCOM)*
V-Guard Ind (VGUARD)
Voltas Ltd (VOLTAS)
* FY16E for nine months
Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 11

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Head Research

Pankaj Pandey

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 12

ANALYST CERTIFICATION
We /I, Sanjay Manyal, MBA (Finance) and Hitesh Taunk, MBA (Finance), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research
report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s)
or view(s) in this report.

Terms & conditions and other disclosures:

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engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is Indias largest private sector bank and has its various
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available on www.icicibank.com.
ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking
and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts
and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and
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ICICI Securities Ltd | Retail Equity Research

Page 13