The Supreme Industries Ltd

Initiating coverage

Enhancing investment decisions

Explanation of CRISIL Fundamental and Valuation (CFV) matrix
The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process – Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The valuation grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP).

CRISIL Fundamental Grade
5/5 4/5 3/5 2/5 1/5

Excellent fundamentals Superior fundamentals Good fundamentals Moderate fundamentals Poor fundamentals

CRISIL Valuation Grade
5/5 4/5 3/5 2/5 1/5

Strong upside (>25% from CMP) Upside (10-25% from CMP) Align (+-10% from CMP) Downside (negative 10-25% from CMP) Strong downside (<-25% from CMP)

Analyst Disclosure
Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest that can bias the grading recommendation of the company.

This Company-commissioned Report (Report) is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. The Data / Report are subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this Report. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information only of the authorized recipient in India only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person – especially outside India or published or copied in whole or in part, for any purpose.

© CRISIL Limited. All Rights Reserved.

com ndave@crisil.1% 42.5 FY10 20.6 3. CRISIL RESEARCH | 1 . Source: Company.3 3.2 in FY10 to Rs 22.0% 45.6 11.8 in FY13.4% 110. Raw material price and competition remain key monitorables Prices of key raw material like PVC resin.974 1. This fair value implies P/E multiple of 10x FY13E EPS.402/547 26.8 36.3% KEY FORECAST (Rs mn) Operating income EBITDA Adj Net income Adj EPS-Rs EPS growth (%) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x) FY09 16.543 19. While the company is likely to pass on any increase in raw material costs in their value added products. With constant innovation. to maintain its strong competitive position.126 16.0 39.8 FY13E 33. Fundamental Grade 5 4 3 2 1 Poor Fundamentals 1 2 3 4 5 Valuation Grade Strong Downside Strong Upside KEY STOCK STATISTICS NIFTY/SENSEX NSE/BSE ticker Face value (Rs per share) Shares outstanding (mn) Market cap (Rs mn)/(US$ mn) Enterprise value (Rs mn)/(US$ mn) 52-week range (Rs) (H/L) Beta Free float (%) Avg daily volumes (30-days) Avg daily value (30-days) (Rs mn) 5585/18554 SUPREMEIND 2 127.4 6.5 38.1% 4. iii) packaging products and iv) industrial products.2 5. in FY12 and FY13. which is gearing up for growth with an aggressive expansion plan.543 5. 2011 Fair Value Rs 239 CMP Rs 192 CFV MATRIX Excellent Fundamentals The Supreme Industries Ltd (Supreme) is India’s largest plastic products company. polypropylene and polyethylene are primarily linked to crude oil and subject to volatility.587 2.890 22.000 3.1 PERFORMANCE VIS-À-VIS MARKET Returns 1-m SUPREME NIFTY 7% 2% 3-m 24% -6% 6-m 31% -3% 12-m 67% 3% ANALYTICAL CONTACT Sudhir Nair (Head) Niyati Dave Bhaskar Bukrediwala Client servicing desk +91 22 3342 3561 clientservicing@crisil.6 2. Consistent diversification and innovation are Supreme’s key strengths One of Supreme’s key strengths is its ability to constantly move away from competitive segments into those where it can have the first mover advantage.6% 49.6% 49.2 82.2% 1.1 41. CRISIL Equities expects the growth in demand for plastic products in India augurs well for the company.547 852 6. an associate company.8% 45.155 NM: Not meaningful.8% 46.5% 4. indicating that its fundamentals are superior relative to other listed securities in India. Over the past 45 years.4 43. While EBITDA margin for plastic products is expected to remain at 14-15%.459 2.7 14.121 2. The fair value estimate includes Rs 9. Financial year ending June Note: Financials have been adjusted for a 5-for-1 stock split in October 2010. CMP: Current Market Price.1 33.1% 1.6 19.9% 0.3% 6.9 FY12E snair@crisil.5 50. Expect three-year revenue CAGR of 19% We expect revenues to register a three-year CAGR of 19% to Rs 33.6% 49.8 36. We initiate coverage on Supreme with a valuation grade of 4/5.855 14. with intensifying competition.0 24.6% 0.447 1. value added products.6 FY11E 24. EPS is expected to increase from Rs 12. The company is well-placed to benefit from the rising demand for plastic products in India.2 7. ii) consumer products.2 4. Further.7 76.3 13.5 bn in FY13 driven by growth across product bsbukrediwala@crisil. the company has diversified its products over various segments and occupies a prominent position in most of them.506/594 192/136 0. CRISIL Equities estimate © CRISIL Limited.3 5.4% 3. which is expected to double from 8 million tonnes at present to 16 million tonnes by 2018.2 36.4 3.5 3.6 39.2 29.7 from 29. Valuations – the current price has ‘upside’ CRISIL Equities has used the discounted cash flow method to value Supreme and arrived at a fair value of Rs 239 per share. Reigning “supreme” over the Indian plastic products industry Supreme is the largest player in the highly unorganised plastic products industry in India.4 7. All Rights Reserved.0 8. margin expansion in the more competitive and commoditised products categories may be restrained.The Polaris Software Limited Business momentum remains intact The Supreme Industries Ltd Maintaining its supreme-acy in plastics Fundamental Grade Valuation Grade Industry 4/5 (Strong fundamentals) (Superior fundamentals) 5/5 strong upside) 4/5 (CMP has upside) Information technology Chemicals July 14.88% share of Supreme in Supreme Petrochem Ltd (Supreme Petrochem).555 12. It has a well-diversified product portfolio comprising i) pipes and fittings.2 40.6 9.8 SHAREHOLDING PATTERN 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Jun-10 Promoter Sep-10 FII Dec-10 DII Mar-11 Others 49. the company has successfully kept pace with technological improvements and churned its product portfolio to include more of premium. timely diversification into newer product categories will be key to maintain margins as well as market position.933 4. We assign Supreme a fundamental grade of 4/5. profits from the one-off real estate project will increase the overall EBITDA margins.

Astral Polytechnik and Ashirvad Pipes Key risks • Entry of new players in plastic pipes segment • Raw material price fluctuations • Increasing competition in some segments. etc • Performance films Increasing thrust on packaged food • Urbanisation and rising per capita income in rural and semi-urban segments • Increasing acceptance of plastic furniture among tier 2 and tier 3 cities in India • 12-13% growth in automobile industry over FY11-13 to boost demand for plastic components • Rising income levels to boost consumer durables industry • Soft drinks industry to grow at over 20% • Nilkamal. Kriti Industries India Ltd. Tulsi Extrusions Ltd.5% 28.3% 20.3% 21. Sintex Industries Ltd.Finolex Industries Ltd. CPVC.4% 15.5% 18.9% Plastic pipes and fittings Packaging products Consumer products Industrial products 6-7 large players and other unorganised players © CRISIL Limited. CRISIL Equities • Competition • Raw material price fluctuations • Client-specific demand and off take risk since company has dedicated plants for certain clients • Raw material price fluctuations • Protective packaging Growth directly linked to growth in varied end user industries such as manufacturing. All Rights Reserved.4% 18. PPRC and HDPE pipes.8% 10. necessitating entry into new categories • Raw material price fluctuations *Balance constitutes “Others” which includes income from trading of raw materials and real estate project Source: Company. crates and bins Market position Second largest player with 18% of the organised plastic pipe market • 33-39% market share in protective packaging.7% Second largest player with 18% market share in material handling products. CRISIL RESEARCH | 2 .The Supreme Industries Ltd Table 1: Supreme: Business environment Product / Segment Revenue contribution (FY10)* Revenue contribution (FY13E)* Product / service offering PVC. automobiles.7% 22. which has a 30% share Large and mid-sized competitors such as Tata Auto Comp Systems Ltd. white goods.0% 39.1% 16.7% 20.3% 22.2% 11.8% 19. market leader in cross laminated films Sales growth (FY08-FY11E – 3-yr CAGR) Sales forecast (FY11E-FY13E – 2-yr CAGR) Demand drivers • Government's thrust on development of irrigation facilities and urban sanitation • Demand for pipes for new houses • Replacement demand from GI pipes in housing and industry Key competitors • PVC . Motherson Sumi Systems Limited. injection moulded and handmade fittings Performance films. preferred supplier to OEMs across various products 15% market share 40. Varroc Group. cross laminated films Moulded furniture and mats • Moulded parts like dashboards and other interior and exterior parts for automobiles • Plastic body for consumer durables • Material handling products like pallets. Mutual Industries Ltd 15. Chemplast Sanmar Ltd. Jain Irrigation Systems Ltd • CPVC . protective packaging films.

with more than 7.000 industrial as well as consumer products categorised into i) pipes and fittings. infrastructure. Given the low penetration of plastics in India as compared to other countries. Supreme is a prominent player in most of these product segments despite its diverse product range.650 tonnes products. The company has also been successfully adding new high value added products. consumer durables. This diversified product portfolio protects the company from major threats to any single product. over a period of time. Diversified product range is Supreme’s forte Supreme has. CRISIL Equities Well-placed to ride the growth in Indian plastic consumption Indian plastic consumption has grown at a CAGR of 10% over the past 10 years largely due to growth in end-user segments such as industry. ii) consumer products. CRISIL RESEARCH | 3 . The company has largely a domestic focus with exports constituting a negligible portion of its business. automobiles. established itself as a diversified plastic products company by innovating and coming up with new products and applications of polymers. All Rights Reserved. with the unorganised segment constituting 60% of the market. Fig 1: Segment wise revenue break up (FY10) Industrial products 19% Others (including commercial real estate) 8% Plastic pipes and fittings 40% Packaging products 23% Consumer products 10% Source: Company.650 tonnes. iii) packaging products and iv) industrial Supreme has the highest polymer processing capacity in India at 328. Supreme has the largest polymer processing capacity in India at 328. agriculture. indicates plenty of room for plastic consumption to grow © CRISIL Limited. housing etc. Plastic pipes and fittings is Supreme’s largest segment constituting 40% of revenues. The plastic products industry in India is highly fragmented. plastic demand in India is all set to grow. Low per capita polymer consumption.The Supreme Industries Ltd Grading Rationale Reigning “supreme” products industry over the Indian plastic Supreme is a dominant player in the Indian plastics industry.

rainwater drainage as well as irrigation.7 22. as newer applications of plastics find a wider acceptance among the end users. With a prominent presence in plastic products. CPVC pipes. which are used in hot and cold water plumbing. are gaining increasing acceptance due to reliability and durability. Supreme has a diverse piping products portfolio Supreme manufactures a wide range of pipes including PVC. Going forward. PPRC. CRISIL Equities kgs 71. HDPE (High Density Polyethylene) and LLDPE pipes. The company has 18% share of the organised plastic pipe market (7. Supreme is well poised to benefit from this growth in consumption of plastics. CRISIL RESEARCH | 4 .7 Replacement demand to support growth Plastics have been rapidly replacing conventional materials such as steel. paper. aluminium and leather largely due to its cost effectiveness and durability. plastic tarpaulins are fast replacing conventional cotton tarpaulins since there is a marked cost differential and frequency of replacement is also low. Similarly. iron. total plastic consumption in India is expected to double from the present 8 million tonnes to 16 million tonnes by 2018 and 20 million tonnes by 2020. etc. All Rights Reserved. Indo-green.3% of overall market) estimated at Rs 110 bn. which have applications in housing. recording 100% y-o-y growth for the past two years.5 30.The Supreme Industries Ltd Table 2: International comparison of polymer consumption Per Capita Polymer consumption US China Brazil India Source – Industry sources. For instance. CPVC. Plastic is fast replacing many conventional materials Second largest player in plastic pipes Supreme is one of the largest players in manufacturing of plastic pipes and comes a close second to Finolex Industries Ltd. © CRISIL Limited. plastic pipes have replaced almost 80% of galvanised iron (GI) pipes in plumbing since GI has zinc-oxide and corrodes over time.7 5. The company markets its pipes under various brand names such as Aqua Gold. Eco-drain. glass. some of these have a good brand recall and a loyal customer base.

Construction of new houses is creating a robust demand for plastic pipes.The Supreme Industries Ltd Fig 2: Supreme’s pipe portfolio (FY11E) Fittings 11. CRISIL Equities Source: Industry. The estimated market size of moulded furniture industry is Rs 16 bn with Supreme having a market share of 15%.8% PVC 72.4% Cement 12. All Rights Reserved. New demand .0% Plastic 34. Demand for piping products from housing and irrigation segments to be robust Fig 4: Indian pipe market (4. second only to Nilkamal Ltd. CRISIL RESEARCH | 5 .0% Fig 3: Supreme .4% Polyehylene 12. The proportion of plastic pipes in the overall pipe industry is expected to increase further driven by: Replacement demand – Plastic pipes are rapidly replacing cement and GI pipes (which cost twice as much as PVC pipes and last half as long) in housing applications.0% Polypropylene 1.0% PVC 86.Pipes by end-use (FY11E) CPRC 6.7 mn tonnes) CPVC 1.9% Agriculture and infrastructure 41.0% Steel (ERW) 7. CRISIL Equites Source: Company.7 mn tonnes) Ductile Iron 18.3% Fig 5: Indian plastic pipe market (1.2% Housing 29. Also.4% Source: Company.2% Source: Industry sources. CRISIL Equities Demand for PVC pipes to grow at 10% CAGR The Indian pipe industry is dominated by plastic pipes.3% Sewerage &rainwater drainage 29.4% CPVC 9. higher government thrust on irrigation is creating a pull for PVC pipes. CRISIL Equities Moulded plastic furniture . within which PVC pipes are the most prominent. The company manufactures and sells commodity Supreme is the second largest player in moulded plastic furniture segment © CRISIL Limited. (against Nilkamal’s ~30%).8% Steel (SAW) 27.another segment with a strong foothold Supreme is one of the largest players in manufacturing moulded plastic furniture.

covering of agriculture produce. ii) protective packaging products (PE foam. These products find applications in protective packaging of food. etc). stools). automobiles. Rasmussen Polymer Development. Fig 6: Supreme – Packaging products portfolio (FY11E revenues) Protective Packaging Products 31% Cross laminated Films 54% Performance films 13% Others 2% Source: Company.agricultural applications such as pond lining. Supreme is sole manufacturer and supplier of cross laminated films in India and South Asia CRISIL RESEARCH | 6 . tables. and general applications such as covering of raw materials. Technology for this product has been acquired from a Switzerland-based company. XF films are used for a variety of applications . household appliances. office furniture. All Rights Reserved. industrial goods. CRISIL Equities Only Indian player manufacturing cross-laminated films Supreme is the only Indian company to have the technology to manufacture cross laminated XF films under the brand name “Silpaulin”. The USP of the © CRISIL Limited. Dominant player in packaging products Supreme is a dominant player in the packaging products segment. which constitutes 23% of its business currently. civil engineering applications such as basement capping. this segment is likely to grow faster than commodity furniture. bubble wraps. While the commodity furniture is mainly sold through dealers. which comprise 70% of total furniture sales. cross linked foam) and iii) performance films (extruded plastic sheets used for packaging). mostly through retail Sales of premium furniture to grow faster Supreme markets its premium furniture through more than 200 pan-India showrooms. swimming pool capping. Supreme has the sole rights for manufacturing and marketing this product in India and South Asia.The Supreme Industries Ltd furniture (plastic chairs. the premium furniture are marketed outlets. cattle sheds. where plastic furniture is displayed alongside steel and wood furniture. and increased penetration of plastic furniture. it manufactures i) cross laminated films. machinery etc. With rising income levels in Tier 2 and Tier 3 cities. Under this segment. while the remaining consists of high-margin premium furniture (sofa sets. etc.

In this competitive segment. Protective packaging competitive industry – leading player in a highly Supreme has a basket of protective packaging products including thermoplastic polyethylene foam sheets and profiles. these products typically have lower margins (10-12%). low focus Performance films are extruded plastic packaging films used for food items. the company has been unable to fully tap the potential of the product due to paucity of semi-skilled labour. largely edible oil (~40% of revenues from the segment).The Supreme Industries Ltd product is that it is one-seventh the weight of conventional cotton tarpaulin. However. Supreme is the preferred supplier to renowned players in the automobile and electronics space © CRISIL Limited. Within this segment. air bubble films and customized products including foam and bubble films that are corrosion resistant. the company is trying to partially automate the fabrication process. anti-static. etc. All Rights Reserved. Supreme supplies performance films to clients such as Ruchi Soya Industries Ltd. especially in fabrication. plastic body for electronic appliances as well as material handling products. Cargill Oil (for the Gemini refined oil products). Adani Wilmar Ltd. cap cells. It is a highly competitive segment and entails relatively lower EBITDA margins of ~10%. Supreme has a 33-39% market share in various categories of protective packaging products. Supreme manufactures dashboards for automobiles. Around 35% of the business comes directly from OEMs while the rest is distributed through dealers. cross-linked and blending PE foams. while entering higher value added segments such as seven-layer films. Since this segment has many products which are low-value adding and the company has to compete with a large number of unorganised players. CRISIL RESEARCH | 7 . CRISIL Equities Performance films – low margin. Supreme is the preferred supplier to an elite corporate clientele. Table 3: Market share in protective packaging products Estimated Market Products EPE Foam Air Bubble Film Cap Cell Size (Rs mn) 2200 1600 2100 Supreme's Share in FY10 (%) 39% 33% 33% Source: Company. the company has been able to maintain margins by gradually exiting competitive segments such as two-layer films. but has a high strength-to-weight ratio. UV resistant and metal laminated. The estimated market size of the segment is Rs 200 bn. resulting in less manual intervention. To overcome this. Industrial products – catering to an elite client base In the industrial products segment.

A few other Indian players such as Time Technoplast Ltd are also eying the composite LPG cylinders space. having capacity of 400. Supreme will get technical know-how from European consulting firm(s) and expects to commence production of cylinders by December 2011. is the sole supplier for complete plastic requirement for washing machine model “Radiance” for Whirlpool India Ltd Coca Cola India. is the major supplier to Samsung (India) for Hitachi India Pvt. Ltd. in Puducherry for Whirlpool. largely fibre glass.The Supreme Industries Ltd Table 4: Industrial products – snapshot Product categories Moulded parts like dashboards and other parts for automobile interiors and exteriors 44 % of FY11E revenues Clients Mahindra and Mahindra Ltd. Source – Company. Pepsico India Reliance Retail Material handling products like pallets. the company also has dedicated plants – in Khushkheda (Rajasthan) for Maruti. to replace conventional LPG cylinders. Composite products – Supreme still has some way to go Composite products refer to products manufactured using non-plastic materials along with plastic. however. These are explosion-free. CRISIL RESEARCH | 8 . Samsung plastic requirements ranging Plastic body for consumer durables 22 India Electronics Ltd. Supreme has plans to invest Rs 650 mn in setting up a manufacturing unit for composite LPG cylinders. Maruti Suzuki India Ltd. we believe product acceptance is still some way off. Till the clarity on the regulatory front emerges and domestic demand picks up. translucent and light-weight cylinders. progress has been slow and no tenders have been floated yet. CRISIL Equities Largest supplier of bottle crates to the soft drinks industry To provide customised and dedicated products to large clients. which will be sold directly to oil marketing companies. Tata Chemicals Ltd. All Rights Reserved.000 cylinders. and in Sriperumbudur for Samsung. Tata Motors Ltd Comments Is the major supplier of plastic parts for Tata Motors’ “Prima” at Jamshedpur Largest player in the consumer durables segment. Composite products industry is still nascent in India © CRISIL Limited. Whirlpool India Ltd from television sets to computers. crates and bins. Although the Government of India has expressed interest to procure composite cylinders. the company will explore export markets for the same. Hindustan 34 Unilever Ltd.

sound absorbing open cell foam. But. the company began reducing its exposure to the milk packaging segment and entered the 5-layer film segment (edible oil packaging) and even the 7-layer film segment. Lacquered and upholstered furniture in the furniture segment Injection moulded plastic pellets for industrial products • • • Continuous portfolio churn with new products With constant innovation. Supreme was the first in the industry to use the high-end injection moulding technology in the manufacturing process in consumer products. All Rights Reserved. which helps it to gain the requisite market share • temperature and fire resistant foam in protective packaging SWR drainage systems. Among the many firsts. some of them are not strictly comparable since they may be backward integrated (such as Finolex) or may compete with Supreme in only a single product category (such as Nilkamal). the company was. high Supreme has been the first mover in many new product segments. Aqua Gold high pressure plumbing system. the company has introduced various technologies in the market. Likewise. CRISIL RESEARCH | 9 . the company has successfully kept pace with technological improvements and churned its product portfolio to include less of commoditised products and more of premium. into those where it can have first mover advantage. value added products. either through international tie-ups or on its own. For instance. they are more or less comparable with Supreme.The Supreme Industries Ltd Product diversification and innovation give Supreme the edge One of Supreme’s key strengths is the company’s ability to constantly move away from competitive segments. as competition intensified. such as: Instant polyurethane foams. at one time. milk packaging makes negligible contribution. Supreme scores higher than peers on operational and return parameters Supreme has superior returns and working capital management compared with its peers in the plastic products industry. © CRISIL Limited. the largest supplier of plastic sheets for milk packets (over 90% market share). IndoGreen PP-R hot and cold water system in the plastic piping division. While. currently.

8 20 15 25.950 10. (Rs mn) 35..000 0 20. where competition was pulling down margins.000 10.000 30. CRISIL Equities Intense competition will keep Supreme on its toes The competitive nature of the plastic-based industry requires nimble response to changes in market trends and timely exit from the more competitive segments. Source: Industry sources.due to excellent working capital management Kemrock Industries* 229 Sintex Industries 97 Time Technoplast 107 Nilkamal 81 Finolex Industries 14 Supreme Industries 22 Supreme Industries Nilkamal Sintex Industries Finolex Industries Time Technoplast Kemrock Industries* 0 50 100 150 200 250 Working capital days (FY10) Source: Industry sources. While Supreme already faces competition from the unorganised market in various product segments. sustaining the pace of growth through constant product innovation will be key. CRISIL Equities Fig 9: . CRISIL RESEARCH | 10 .2 19..5 15.003 32.078 36% 29% 41% 63% 70% 60% 50% 40% 30% 20% 10 10% 0% 5 0 Supreme Industries Finolex Industries Nilkamal Time Sintex Technoplast Industries Kemrock Industries* 14.9 12. CRISIL Equities *Kemrock Industries data is for 15 months.000 5...but returns are considerably higher than peers’ RoCE (%) 45 40 35 30 25 20 15 10 5 0 10 15 20 25 30 35 40 45 RoE (%) Fig 10: . In the past. BoPP and rigid PVC film... the entry of newer players in segments such as PVC pipes (where large steel pipe makers are eyeing the PVC space) and consumer products is expected to further intensify competition. All Rights Reserved..000 15. In an intensifying competitive scenario.3 Fig 8 : . CRISIL Equities Source: Industry sources.816 6.2 21.The Supreme Industries Ltd Fig 7: Supreme has relatively lower revenue growth.and lower EBITDA margins (%) 30 25 Supreme Industries Finolex Industries Nilkamal Time Technoplast Sintex Industries Revenue (FY10) 3-yrs revenue growth (FY07-10) Kemrock Industries* EBITDA margin (FY10) Source: Industry sources.. Competition is expected to intensify both from organised and unorganised players © CRISIL Limited.000 20.155 20% 12% 10. Supreme had to sell off lower-margin businesses such as food service wares (plastic cups).527 14.000 25.

the company expects to incur a capex of ~Rs 2000 mn each year till FY15 across various product segments. consequently supporting Supreme’s profits. Supreme Petrochem is one of the largest single-site polystyrene producers globally. Supreme has a clearly laid out expansion plan to tap the growth opportunity in plastics Supreme has chalked out a well laid out expansion plan across products to tap the growth opportunity that lies ahead. All. CRISIL RESEARCH | 11 . accounting for 2% of world capacity.72.88% stake in Supreme Petrochem. The company plans to increase the number of plants from 19 currently to 32 by FY15. While the company is successfully able to pass on raw material price increases in its more value added products.154 mn. polypropylene. Sales from the real estate project will also provide the necessary funding support. Sales from the real estate project will take some time to complete Prospects of Supreme Petrochem appear good Supreme has a 29. due to strong international demand for polystyrene.000 tonnes and is further expanding capacities with a capex of Rs 1250 mn in FY11. in which the R. Real estate project is a one-off venture Supreme has developed a commercial real estate project in Andheri. We expect Supreme Petrochem’s PAT to grow at a CAGR of 12% in FY11-13. given the prevailing slowdown in the real estate market. The project is spread over a 2. with a PAT of Rs 605 mn. The company owns 60% of domestic installed capacity of polystyrene at 2. LLD polyethylene and High Density Polyethylene (HDPE). Raheja Group also has a 29. All Rights Reserved. a listed company. With help from R. the company executed the commercial real estate project. While the management has indicated that the balance will be sold in 2011. Mumbai. a sustained increase in raw material prices can have an impact on margins of the more commoditised products. LD. Funding of capex not a concern Supreme has strong operating cash flow given a lean working capital cycle. The project was undertaken to unlock the value in the company’s factory plot located in Mumbai. © CRISIL Limited.88% stake. Raheja Group (who are equal partners with The Supreme Industries Ltd in Supreme Petrochem Ltd). To this end.The Supreme Industries Ltd Rising raw material price is a risk The main raw materials used across segments are PVC.550 mn. The company has also zeroed in on the proposed locations for the expansion. we believe the same may happen in the next two years.000 sq ft has already been sold for ~Rs 600 mn.65 lakh sq ft. Supreme Petrochem’s FY10 revenues stood at Rs 16. except PVC – which is 48% chlorine . Proceeds from the sale will help fund the company’s capex requirements. The company will be able to fund its future expansion from these cash flows and will not require any dilution of equity.have a strong linkage with crude oil. of which 40. at a total cost of Rs 1.

Intensifying competition Since Supreme operates in a highly competitive market.000 mn each year. constitutes ~45% of total raw material costs. Delay in capacity expansion plan The company has outlined capacity expansion to the tune of ~Rs 2. Price of other crude-linked materials. CRISIL RESEARCH | 12 . will limit the company’s ability to maintain margins in the 14-15% range. they remain a monitorable. such as polyethylene and polypropylene. Any major fluctuation in crude prices will have a corresponding impact on prices of PVC as well as other raw materials that the company uses.The Supreme Industries Ltd Key risks Increasing raw material price PVC resin (48% chlorine and 52% petrochemicals). Forex fluctuations The company imports ~50% of its raw material and also has foreign currency borrowings. Raw material price and competition are key monitorables Delay in sale of commercial real estate project Given the prevailing slowdown in the real estate market. © CRISIL Limited. if not adequately countered by a corresponding introduction of innovative products. All Rights Reserved. we remain cautious about the timing of cash flows from sale of the company’s commercial real estate project. one of the key raw material used by Supreme. will also be a key monitorable. While the management has indicated that all forex transactions are sufficiently hedged. Any delay in commissioning of these capacities may have an impact on the financial performance of the company. which is also dominated by a large number of unorganised players. intensifying competition in any product category. Any further delay in sales could have an impact on our cash flow assumptions which may affect our valuation estimates.

before returning to the ~14% range. At the same time.447 4. revenues from the real estate project will cause EBITDA margins to expand briefly. CRISIL Equities © CRISIL Limited.The Supreme Industries Ltd Financial Outlook Revenues to grow at three-year CAGR of 19% We expect revenues to grow at 19% CAGR in the next three years led by growth across all the product segments.8% 3.000 20.000 2.000 25.974 3.000 14.000 10.4% 4.933 33.459 13% 14% 14.587 0 FY09 FY10 Revenues FY11E FY12E FY13E 20.8% in FY10 and 14. We expect the revenue mix (excluding real estate income) to remain largely unchanged. we believe intensifying competition will put pressure on the company’s core business margins.1% 20% 15% 10% 26.000 EBITDA Margin (RHS) Source: Company.000 5.000 21.6% in the nine months ended March 2011. CRISIL Equities Core business EBITDA margins to remain stable at around 14% Supreme reported an EBITDA margin of 14.5 bn in FY13 Fig 11: Expect strong growth in revenues (Rs mn) 40. All Rights Reserved.000 35.155 24.547 0 FY09 FY10 EBITDA FY11E FY12E FY13E 2.8% 15% 16% 5. CRISIL Equities Source: Company. CRISIL RESEARCH | 13 .5% 30. in FY12 and FY13. Revenues likely to grow at a three-year CAGR of 19% to Rs 33.000 16.543 0% 5% 19. once the sale is through.000 14.4% 15% 2. While the company is continuously expanding its range of value added products in most of the segments.3% 17% 16% 15.1% 16.4% 20.000 16. Growth will be primarily driven by volumes.000 27.000 15.000 14% 1. restricting margin expansion.4% 30% 25% Fig 12:Revenue mix to remain unchanged in FY13 Others 8% Industrial products 18% Plastic pipes and fittings 40% Consumer products 12% Packaging products 22% growth % (RHS) Source: Company. Fig 13: EBITDA margins to expand due to real estate sale (Rs mn) 6.121 5.

Excellent working capital management The company sells cross laminated films and a large portion of plastic piping products on cash basis. we expect EPS to be Rs 18 in FY13. primarily driven by a strong growth in revenues. Strong bottom-line growth led by higher operating profits and comfortable interest outflow © CRISIL Limited.2 in FY10 to Rs 22. Fig 14: Debtor days have been on a decline (Days) Fig 15:Inventory days also expected to decline (Days) 45 40 35 30 25 20 15 25 10 5 0 FY07 FY08 FY09 FY10 FY11E FY12E FY13E 24 24 24 24 40 38 80 70 60 50 40 30 20 10 0 FY07 FY08 FY09 FY10 FY11E FY12E FY13E 43 68 55 49 62 58 43 Receivable days Inventory days Note – Inventory decline is owing to realisation of proceeds from real estate project Source: Company. Excluding the real estate project.2 in FY10 to Rs 22. stable EBITDA margins (excluding real estate project) and income from the real estate project. The company has been able to consistently lower its debtor days.The Supreme Industries Ltd Raw material price risk does not seem imminent CRISIL Research expects crude prices to soften from the current levels to ~US$100 per bbl in FY12 and US$90 per bbl in FY13 and chlorine prices (48% of PVC cost) to remain stable over FY12-13. All Rights Reserved.555 mn in FY10 to Rs 2. CRISIL Equities PAT to grow at a three-year CAGR of 23%. Supreme has also managed to maintain its supplier days within a range through constant vendor management. CRISIL RESEARCH | 14 . CRISIL Equities Source: Company. EPS is expected to increase from Rs 12.8 in FY13.890 mn in FY13. lowering the likelihood of a major raw material price disruption on profitability. A lean working capital ensures that the operating cash flows of the company are high resulting in its ability to fund the capacity expansion through internal accruals without resorting to too much of debt. despite adding new clients and new products.8 in FY13 Supreme’s consolidated PAT is expected to grow from Rs 1. EPS to increase from Rs 12.

1% 7.2 39.4 36.6 33.000 1.7% 7.126 5.7 22.855 2. CRISIL Equities Source: Company.500 3.2 Higher returns and better utilisation of existing assets is expected to maintain the RoE and RoCE Source: Company. we expect RoE and RoCE to remain at healthy levels.7% 7.2 14.4 39.8 50% 40% 30% 20% 10% 0% 2.4 40.000 2. CRISIL RESEARCH | 15 .0 36% 10. All Rights Reserved.0 FY09 FY10 EPS FY11E FY12E FY13E 12.500 2.000 1.500 1.0 36.6% 8. CRISIL Equities RoE and RoCE to remain strong Supreme had a strong RoE of 43% and RoCE of 38% in FY10.6% 10% 9% 8% 7% 6% 5% 25.890 4% 3% 2% 1% 0% FY13E PAT Margin (RHS) EPS Growth (RHS) Source: Company.0 19% 15% 5.0 83% 90% 80% 20.The Supreme Industries Ltd Fig 16: PAT and PAT margins to improve (Rs mn) Fig 17: EPS to rise (Rs mn) 3.3 41.555 500 0 FY09 FY10 PAT FY11E FY12E 852 1. CRISIL Equities © CRISIL Limited.0 76% 70% 60% 15. Given its strong operational performance.7 0.6 16.0 6.2 43.2 38. Fig 18: RoCE and RoE to remain strong (%) 45 43 41 39 37 35 33 31 29 27 25 FY09 FY10 ROE FY11E FY12E ROCE FY13E 29.

P. the promoters do not have any other group company. Since the company was taken over in 1966.Taparia (Executive Director.The Supreme Industries Ltd Management Overview CRISIL's fundamental grading methodology includes a broad assessment of management quality. The company has profited from their vast experience and keen understanding of their technical as well as marketing expertise. while maintaining the pace of growth. M. Current management at the helm for 45 years Supreme has a strong management team with excellent domain expertise. Mr. S. Shareholder – friendly management Supreme has consistently rewarded shareholders. The management has also proceeded cautiously on new ventures and competitive new segments such as drip irrigation. largely driven by growth in core operations. M.L. B. CRISIL RESEARCH | 16 .P. Although the company has not disclosed the plan for succession. for instance Futuristic Packaging was taken over for access to its 5-layer extrusion packaging technology). 74). apart from other key factors such as industry and business prospects. 56) are from the promoter family actively engaged in the business currently. Most of the business growth has been organic (the acquisitions the company had made were largely extensions of their foam and films businesses. a 5-for-1 stock split in October 2010 and seven instances of bonus since the Taparia family took over the business in 1966. all of whom have over 25 years of experience and most of whom have been with the company for over 20 years. and financial performance. The Taparia family has largely focussed on the business they know best . All Rights Reserved. with an average dividend payout of 35-40% of distributable profits.P. with steady and well-timed diversification Over the past 10 years. Mr. Mr. the returns to shareholders have been extremely rewarding. the company’s PAT has grown at a 28% CAGR. some as long as 40 years.Taparia (Managing Director. He currently works in a non-executive capacity.Taparia’s brother and Mr. M. The Chairman. we believe that adequate thought is being given to the same. Also the management’s focus has been the Indian market. is Mr. 77.K. where dependence on tendering process and government subsidy is high.K.plastics Strong second line of management The second line comprises seasoned professionals. the Taparia family has been at the helm of affairs. with very little export exposure and this appears to be the strategy going forward. with an equal shareholding (~16% each).Taparia (Executive Director.Taparia. 66) and Mr. Taparia’s father. Accompanied by a consistently improving RoE. Taparia is also the Chairman of Supreme Petrochem Ltd. V. © CRISIL Limited. Strong focus on core competency. Apart from The Supreme Industries Ltd.J. V. Apart from Supreme Petrochem Ltd. while the operations are managed by professionals. Mr. but more in an advisory role.

© CRISIL Limited. Mr H. Mr. The company has all the necessary committees – place to support corporate governance practices. Corporate governance practices are good Board composition Supreme’s board comprises nine members. apart from other key factors such as industry and business prospects. Four directors are from the promoter family – Mr. board composition. Overall. typical board processes.L. and financial performance. CRISIL RESEARCH | 17 . remuneration and investor grievance . In this context. B.Taparia. websites and other publicly available data. Board’s processes The company’s quality of disclosure can be considered quite good judged by the level of information and details furnished in the annual report. corporate governance at Supreme is good and is supported by good board practices and an independent board.Taparia (MD).J. The independent directors have strong industry experience and are highly qualified.P.S. CRISIL Equities analyses the shareholding structure. All Rights Reserved. Taparia and Mr. Mr. V. S. which is more than the requirement under Clause 49 of SEBI’s listing guidelines. of whom five are independent directors.The Supreme Industries Ltd Corporate Governance CRISIL’s fundamental grading methodology includes a broad assessment of corporate governance and management quality. disclosure standards and related-party transactions. We believe they have a fairly good understanding of the company’s business and its processes and their participation in Board meetings is good. Any qualifications by regulators or auditors also serve as useful inputs while assessing a company’s corporate governance. M. who is a practicing Chartered Accountant.Taparia (Chairman – Non-executive).Parikh.K. The audit committee is chaired by an independent director.

• We have included capital expenditure of ~Rs 2.0% 352 294 252 221 196 6.00% Sensitivity analysis to terminal WACC and terminal growth rate Terminal growth rate Terminal WACC 2.7% 248 219 196 177 162 3.0% 417 337 283 243 213 The fair value implies P/E multiple 10x FY13 EPS of Rs 22. indicating that the current market price has strong upside. WACC computation FY12-16 Cost of equity Cost of debt (post tax) WACC Terminal growth rate 15. including maintenance capex.2% 12.0% 307 263 229 203 183 5. we initiate coverage on Supreme with a valuation grade of 4/5.The Supreme Industries Ltd Valuation Grade: 4/5 We assign a fair value of Rs 239 per share to Supreme and initiate coverage with a valuation grade of “4/5” We have used the discounted cash flow (DCF) method to value Supreme and arrived at a fair value of Rs 239 per share (this includes Rs 9. This. gives a fair value of Rs 239 per share.8 Source: CRISIL Equities estimates Valuation of profits from Supreme Petrochem We have valued Supreme’s 30% stake in Supreme Petrochem based on its current market cap of Rs 5.2% 12.3% 8. CRISIL RESEARCH | 18 . • We have assumed a terminal growth rate of 4% beyond the explicit forecast period until FY18. © CRISIL Limited.7% 4. All Rights Reserved. along with Supreme’s DCF value of Rs 229 per share. Key DCF assumptions • We have considered the discounted value of the firm’s estimated free cash flow from FY12 to FY18.0% 10.7 as share in profits of Supreme Petrochem Ltd).7% 14.7 per share for Supreme Petrochem.0% 273 238 211 189 172 4.7% 12. Consequently. Supreme is currently trading at Rs 192 per share.500 mn annually from FY1218.3% 8.7% 13.7% Terminal value 15.7% 11. We have further applied a holding company discount of 30% to arrive at a value of Rs 9.800 mn.

3 na 5.9 1.6 2.1 1.2 21.189 45. Company.4 na 17. All Rights Reserved.000 25.4 na 22.0 na 12.4 1.3 22.2 na na 20.3 21. Company.9 2.0 20.3 9.0 11.5 2. CRISIL Equities Note: PE has been adjusted for bonus.9 1.1 6.849 9.1 25.3 24.7 1.1 na 20. Industry sources M.9 3.2 10.2 17.3 2. BSE.3 40.8 12.2 na 7.4 na 0.5 1.1 15.The Supreme Industries Ltd One-year forward P/E band (Rs) 250 One-year forward EV/EBITDA band (Rs mn) 30.cap P/E RoE P/BV (Rs mn) FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E 21.5 1.8 4.772 14.1 2.1 20.3 7.7 25.1 6.000 100 10. stock split and buy back Source: NSE.303 8.7 na 1. BSE.000 50 5.6 9.2 19.7 na na 1.4 23. CRISIL RESEARCH | 19 Apr-11 Jul-11 -90% Apr-11 Jul-11 .8 12.501 3.0 13. Company.2 na 1.9 9. CRISIL Equities Source: NSE.1 14.6 36.000 20.000 200 150 15.6 na na 7. BSE.6 8.1 2. BSE.2 na 19.4 15.8 1.4 21. CRISIL Equities Peer comparison Company Supreme Industries Finolex Industries Nilkamal Time Technoplast Sintex Industries Kemrock Industries Median Average Note: Data is as of July 2011 Source: CRISIL Equities.698 14.9 © CRISIL Limited.5 na 1.000 0 0 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-07 Jul-08 Jul-09 Jul-10 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-07 Apr-08 Apr-09 Apr-10 Supreme Industries 1x 4x 7x 10x EV 2x 4x 6x Source: NSE.4 3.1 23.1 1.2 8.4 na 9.5 2.9 7.3 2.2 43.8 14.3 39.6 17. Company.4 16.8 2.4 12. CRISIL Equities P/E – premium / discount to NIFTY 0% -10% -20% -30% -40% -50% -60% -70% -80% P/E movement (x) 14 12 10 8 6 4 2 0 -1 std dev +1 std dev Jul-07 Jul-08 Jul-09 Jul-10 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Apr-07 Apr-08 Apr-09 Apr-10 Jan-08 Jan-09 Jan-10 Jan-11 Jul-07 Jul-08 Jul-09 Jul-10 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Jul-11 Premium/Discount to NIFTY Median premium/discount to NIFTY 1yr Fwd PE (x) Median PE Source: NSE.1 18.7 8.0 28.

500 1.500 36. CRISIL RESEARCH | 20 .500 22. West Bengal and Rajasthan Andhra and North Zone Halol (Gujarat) Technical collaborations Company Rasmussen polymer development Sapac packaging solution Foam Partner Sanwa Kako PE Tech Wavin Overseas Industrie Polieco MPB SRL Source – Company Country Switzerland Belgium Switzerland Japan Korea Holland Italy Product Line Cross-Laminated Films Instant Packaging Solution Reticulated PU Foam 2 Stage Foam Cross Linked Foam Plastic piping system Sewerage system © CRISIL Limited.500 22.500 33.000 27. Company’s segment-wise expenditure plan Division Industrial Moulded Products Plastic Piping System Cross laminated Film Protective Packaging Products Furniture Material Handling System Packaging Film capacities (mtpa) and capital FY13E 40.595 FY14E 46.557 FY11E 34.000 33.000 48.000 15.500 372.700 190.650 2.500 509.500 40.000 28. All Rights Reserved.000 2. South Zone Gujarat Hosur.500 328. The company has an overseas subsidiary in the UAE.002 FY15E 50.500 595. The company operates in the injection moulding and extrusion segments.600 29.The Supreme Industries Ltd Company Overview The Supreme Industries Ltd is India’s leading plastic products manufacturer.000 21.000 360.500 436.500 40. with 19 manufacturing facilities and a pan-India distribution network. Supreme has the largest capacity in India.000 54.320 23.000 36. which makes little contribution to revenues.000 42.500 27.000 27.000 300.000 45. Jamshedpur and Puduchery East Zone.500 2.000 1.046 Total Estimated Production Capacities Total Capex Budgeted (Rs mn) Source – Company Proposed expansion of manufacturing facilities Division Industrial Moulded Products Plastic Piping System Cross Laminated Film Protective Packaging Products Furniture Composite cylinders Total Source – Company No of new locations 3 2 1 4 2 1 13 Proposed locations Ahmedabad. Gujarat.000 15.030 9.734 FY12E 37.000 17.500 24.500 207.000 9.000 247.

145 1.114 11.560 5 1.9 Q2FY11 5.5 39.8 6.9 3. Financials have been adjusted for a 5-for-1 stock split in October 2010.130 254 5.9% 412 412 11% 7.314 (1.6 19.012 2.6 0.008 36% 15.2 3.787 3.141 2.9 0.326 496 5.4% 525 2.119 8.2 16.3 19.7% 4.855 1.884 330 2.858 138 9.6 2.1 3.393 3.173 1.999 3.9 2.2 35.431 895 6.5 8.906 1.364 254 2.816 1.5 3.0 37.7 2.4 71.153 535 870 4.310 793 187 5.0 40.4% 563 2.488 5.0 41.339 415 2.555 214 2.924 249 3.782 3.745 7.0 43 95 24 (10) 2.4 3.5 8.8 3.782 254 7.625 13% 837 3% 12.587 2.2 31.5 9.555 FY11E 24.4 39.9 Q4FY10 6.4 9.7 10.4 36.890 Balance Sheet (Rs mn) Liabilities Equity share capital Reserves Minorities Net worth C onvertible debt Other debt Total debt Deferred tax liability (net) Total liabilities Assets Net fixed assets C apital WIP Total fixed assets Investments Current assets Inventory Sundry debtors Loans and advances C ash & bank balance Marketable securities Total current assets Total current liabilities Net current assets Intangibles/Misc.852 24% 816 0% 13.3 3.9 1.757 693 7.342 584 7.0 3.121 14.1 16.791 698 12.105 199 5 2.768 (914) 563 686 3.0% 3.4 32. expenditure Total assets 1. Financial year for the company ends in June.7 43.823) (3.0 FY12E 16.010 1.5 7.6 0.091 3.0 1.974 14.128 112 6.2 3.4 5.734 -29% 814 -19% 17.285 3.8 7.250 643 6.2 21.3% 953 4.074 254 6.814 231 8.4 19.691 3.8 82.8 1.130 3.414) (683) 187 800 (607) (103) 90 144 331 600 (870) (148) (418) (120) 211 100 (1.3 6.1 32.592 6.3 1.047) 781 213 3.6 127.0 FY11E 14. tax) Others (incl extraordinaries) Net cash from financing C hange in cash position C losing cash (268) 74 (357) 109 (441) 410 870 (959) (534) 78 (1.396 487 908 57 852 FY10 20.1 0.1 7.547 15.0 36.091 698 9.185) 374 584 (1.424) 953 1.2 41.1 76.0 4.291 698 7.181 1.064 4.041 3.8 127.4 7.048 266 4.6 4.8 1.488 FY09 FY10 FY11E FY12E FY13E Note – Share of profits in Supreme Petrochem for Fy11E (included in “Other Income”) is for 9M ended March 2011.6 4.8 127.2% 403 371 -29% 7.4 40.The Supreme Industries Ltd Annexure: Financials Income statement (Rs mn) Operating income EBITDA EBITDA margin Depreciation EBIT Interest Operating PBT Other income Exceptional inc/(exp) PBT Tax provision Minority interest PAT (Reported) Less: Exceptionals Adjusted PAT Ratios FY09 Growth Operating income (%) EBITDA (%) Adj PAT (%) Adj EPS (%) Profitability EBITDA margin (%) Adj PAT Margin (%) RoE (%) RoC E (%) RoIC (%) Valuations Price-earnings (x) Price-book (x) EV/EBITDA (x) EV/Sales (x) Dividend payout ratio (%) Dividend yield (%) B/S ratios Inventory days C reditors days Debtor days Working capital days Gross asset turnover (x) Net asset turnover (x) Sales/operating assets (x) C urrent ratio (x) Debt-equity (x) Net debt/equity (x) Interest coverage Per share FY09 Adj EPS (Rs) C EPS Book value Dividend (Rs) Actual o/s shares (mn) 6.4% 371 371 3% 7.447 14.787 (195) 10.126 FY13E 33.691 698 10.100) (249) (3.8 127.9 Cash flow (Rs mn) Pre-tax profit Total tax paid Depreciation Working capital changes Net cash from operations Cash from investments C apital expenditure Investments and others Net cash from investments Cash from financing Equity raised/(repaid) Debt raised/(repaid) Dividend (incl.6 3.2 Q3FY11 6.448 1.683 1.1 1.6 0.7 58 95 24 (4) 2.0 14.3 2.0 0. Source: CRISIL Equities © CRISIL Limited.2% 2.0 FY10 12.0 FY13E 22.1 5.6 40.850) (199) (3.197 4.933 4.5 16.045 892 9.444 339 2.6 36.8% 781 3.791 3.339 (367) 525 839 2.6 0.7 39.6 14.855 FY12E 27.768 914 1.8% 529 2.5 15.560 960 331 5.3 8.5 62.1 29.7 13.005 (886) 12.6 7.6% 395 395 -4% 6.0 68 87 24 (2) 2.251) 889 FY11E 2.0 49 98 25 (7) 1.600) (223) (2.486) 39 (197) (158) (2.887 4.1 32.349) FY09 1.532 331 9.7 14.8 38.1 Q1FY11 4.2 38.6 3.5 1.117 211 6.341 (2) 57 1.8 34.934 2.2 4.2 3.309 749 1.047 2.9 50.074 3.336 FY10 2.021 681 1.5 36.304 (693) 529 (1.7 22.155 2.908 26.2 3.0% 3.0% 520 520 40% 7.3 5.0 FY10 FY11E FY12E FY13E FY09 16.1 0.6 82.5 0.2 0.6 14.173 (1. CRISIL RESEARCH | 21 .3 16.890 2.031 5.2 62 95 24 2 2.0 8.934 254 3.996 5.9 3.424 2.0 0.863 1.8% 2.314 1.049) (2.120 5% 739 2% 14.126 2.543 5.6 33.6 19.579 431 12.291 2.1 15.000 3.506 458 4. All Rights Reserved.2 3.240 4.525) 40 (1.2 127.8 Quarterly financials (Rs mn) Net Sales C hange (q-o-q) EBITDA C hange (q-o-q) EBITDA margin PAT Adj PAT C hange (q-o-q) Adj PAT margin Adj EPS Q3FY10 5.5 0.6 20.712 31% 1.517 680 7.8 7.1 0.8 23.5 11.2 14.0 3.3 38.098) (187) (1.459 16.121 FY13E 4.3 63.626 131 5.139 6.6 8.250 3.5 5.8 30.9 19.103 FY12E 3.

CRISIL Equities Source: Company.7% 7.8% 45.8% 46.000 5.5% 4. CRISIL Equities Source: Company.000 36.000 21.4% 3.933 33.447 FY11E 4.855 4% 3% 2% 1% 0% 8.8% 3.4 40.4% 30% 25% 10% growth % (RHS) Source: Company.547 2.000 20.1% 42.000 5.2 39.126 5.000 14% 2.8% 15% 400 300 200 100 0 Jan-10 Nov-07 Nov-08 Jan-11 May-07 Feb-08 May-08 Feb-09 May-09 Mar-07 Jul-09 Jul-10 Apr-10 Aug-07 Aug-08 Apr-11 Oct-09 Oct-10 Jul-11 0 Supreme NIFTY EBITDA Margin (RHS) -indexed to 100 Source: Company. All Rights Reserved.2 38.4 39.6% 10% 9% Shareholding pattern over the quarters 100% 90% 80% 70% 60% 50% 40% 30% 49.6% 49.3 41.6% 8% 7% 6% 5% 2.4% 15% 2.543 0% 5% 33.000 14.121 FY12E 5.7% 7.155 24.4 30.500 3.0% 45. CRISIL Equities Source: Company.1% 1.555 500 0 FY09 FY10 PAT FY11E FY12E FY13E 852 2.000 15.3% 17% 16% 15.6% 20% 10% 0% Jun-10 Promoter Sep-10 FII Dec-10 DII Mar-11 Others 49.500 2.000 14% 1.1% 7.The Supreme Industries Ltd Focus Charts RoE and RoCE to remain strong (%) 45 43 41 39 37 35 33 31 29 27 25 FY09 FY10 ROE FY11E FY12E ROCE FY13E 29.1% 16.9% 0. CRISIL Equities PAT and PAT margins to improve (Rs mn) 3.500 1.4% 16% 4.000 1.000 35.3% 6.000 2.2 25.890 1.3% PAT Margin (RHS) Source: Company.6 10.5% 19.459 13% FY09 FY13E 14.587 0 FY09 FY10 Revenues FY11E FY12E FY13E 20.1% 4.4% 20. CRISIL Equities Share Price Movement 600 500 EBITDA and EBITDA margin trend (Rs mn) 6.6% 49.000 14.974 FY10 EBITDA 3.000 1.000 43.000 16.2 Revenue and growth trend (Rs mn) 40.000 16.1% 20% 15% 26.000 27.6% 0. CRISIL Equities © CRISIL Limited.0 36. CRISIL RESEARCH | 22 .2% 1.

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