Supreme will need H2 rebound to plug Q2 leak

Profitability hit by weak agri demand; management eyes revival ahead

- RAM PRASAD SAHU

A weak operating performance in the September quarter and muted near-term outlook led to a 4 per cent fall in the stock price of the country’s largest plastic pipe maker, Supreme Industries.

The stock was the biggest loser on the BSE 200 in trade. It is down about 10 per cent in the last year and has underperformed the Sensex and the Nifty in this period.

For Q2, the company consolidated revenues rose 5 per cent YoY. This was largely led by volumes which went up 12 per cent. However, realisations declined by 5 per cent given the falling polymer prices. The growth was led by the plastic pipe segment which saw a volume growth of 17.2 per cent on a low base and value growth of 11.4 per cent.

The company’s operating profit margins declined by 160 basis points Y-0-Y to 12.4 per cent and was below estimates. The margins were hit by fall in raw polymer prices leading to muted realisations.