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Supreme Industries Limited Q1FY22 Result Analysis And Earnings Call Highlights | Invest Yadnya

Supreme Industries Limited Q1FY22 Result Analysis and Earnings Call Highlights

Published on 27 July 2021 Views 94 Comments 0

Supreme Industries- India’s leading plastic manufacturer announced its Quarterly Results for Q1FY22 on 21st July 2021. Here is the detailed analysis of the Quarterly result of the company along with its Earning Call Highlights.

Q1FY22 Result Analysis:

1) Q1FY22 Result (Consolidated):

  • The Revenue of the company has increased by 27.3% YoY from Rs. 1,054 Cr. in Q1FY21 to Rs. 1,342 Cr. in Q1FY22. Quarter-on-Quarter, Supreme Industries balance sheet of the revenue has decreased by 35.6% from Rs. 2,084.6 Cr. in Q4FY21.

  • The EBITDA of Supreme Industries share price has also increased by around 89.6% from Rs. 117 Cr. in Q1FY21 to Rs. 222 Cr. in Q1FY22. Like revenue, EBITDA Supreme Industries fundamental analysis has also fallen by 56.4% QoQ from Rs. 510 Cr. in Q4FY21.

  • The EBITDA Margin of the Supreme Industries Dividend in Q1FY22 stood at 16.5% up by 554 bps YoY from 11% in Q1FY21. EBITDA Margin of Supreme Industries analyst report fell by 791 bps sequentially from 24.45% in Q4FY21.

  • The Profit Before Tax (PBT) of the company also witnessed a jump of 286.3% YoY from Rs. 55 Cr. In the quarter Supreme Industries stock analysis ended 30th June 2020 to Rs. 213 Cr. Supreme Industries annual report  in the quarter ended 30th June 2021. PBT of the company was Rs. 528.5 Cr. Supreme Industries profit and loss in the quarter ended 31st March 2021 reporting a downfall of around 60%.

  • Net Profit or the Profit After Tax (PAT) of the company also grew by 320% YoY from Rs. 40.5 Cr. in the quarter ended 30th June 2020 to Rs. 170 Cr. In the quarter Supreme Industries swot analysis ended 30th June 2021. The same was Rs. 450 Cr, in the quarter ended 31st March 2021.

  • The Net Profit Margin grew from 3.8% in Q1FY21 to 12.7% in Q1FY22. It has gone down by 890 bps from 21.6% in Q4FY21.

Supreme Industries- Q1FY22 Result

Supreme Industries- Q1FY22 Result

2) Segment-wise Performance:

  • The Company operates in 5 segments: Plastic Piping Products, Industrial Products, Packaging Products, Consumer Products, and Others.

  • Revenue from the Plastic Piping Products stood at RS. 831.05 Cr. in the Q1FY22 against Rs. 764.59 Cr. in Q1FY21, up by 8.7%. Sequentially, the revenue was down by -38.3% from Rs. 1,346.75 Cr. in the Q4FY21.

  • Revenue from Industrial Products reported growth of 182.25% YoY from Rs. 70.48 Cr. in Q1FY21 to Rs. 198.92 Cr. in Q1FY22. Quarter-on-Quarter, revenue from this business segment has gone down from Rs. 32.13% from Rs. 293 Cr. in Q4FY21.

  • Packaging Products reported revenue of Rs. 244.13 Cr. in Q1FY22 against Rs. 187.57 Cr. in Q1FY21 which accounted for the growth of 30.15% YoY. Sequentially, this business segment has also gone down by -21.2% from Rs. 309.7 Cr. in Q4FY21.

  • Consumer Products revenue stood at around 48.5 Cr. in Q1FY22 against Rs. 28 Cr. in Q1FY21, reporting a growth of 73% YoY. Quarter-on-Quarter revenue from this business segment has gone down by -60.9% from Rs. 124 Cr. in Q4FY21.

  • The Other business contributed Rs. 19.5 Cr. in Q1FY22.

Supreme Industries- Segment-Wise Revenue

Supreme Industries- Segment-Wise Revenue

3) Revenue & Volume Mix:

i) Revenue Mix:

  • The revenue contribution from the Plastic Piping Products got reduced from 72% in Q1FY21 to 62% in the Q1FY22.

  • In the Q1FY22, the Industrial Products witnessed some growth in its contribution to the revenue mix to 15% against 7% in the Q1FY21.

  • The Contribution of Packaging Products, Consumer Products, and Others in the Revenue Mix as of 30th June 2021 stood at 18%, 4%, and 1% respectively in the Q1FY22 against 18%, 3%, and 0.15% in PAckagin Products, Consumer Products, and Others respectively in the quarter ended 30th June 2020.

Supreme Industries- Revenue Mix

Supreme Industries- Revenue Mix

ii) Volume Mix:

  • The Company sold 71264 MT of Plastic goods and achieved a net product turnover of Rs. 1310 Crores during the 1st quarter of the current year against the sale of 91451 MT and net product turnover of Rs. 1040 crores in the corresponding quarter of the previous year resulting in volume degrowth of about 22 % and value growth of about 26 %.

  • The company reported a 22% YoY sales volume decline at 71,264 MT as statewide lockdown weighed on demand during April and May, particularly in the agri-pipes segment. The company’s PVC Pipe System for agriculture application the piping systems took a big hit resulting in volume loss in piping systems and Agribusiness declined by around 60%.

  • The overall turnover of value-added products increased to Rs. 516 crores during the current quarter as compared to Rs. 3 78 crores in the corresponding period of the previous year achieving growth of 3-7%.

  • The Core business segment of the company- Plastic Piping Products witnessed a degrowth of 36% YoY and 37% QoQ from 74,992 MT in Q1FY21 to 48,111 MT in the Q1FY22. The company sold 75,997 MT plastic piping products in Q4FY21.

  • The Company sold 9,512 MT of Industrial Products in the quarter ended 30th June 2021 against 4,770 MT in the quarter ended 30th June 2020 up by 99% YoY and 13,744 MT in the quarter ended 31st March 2021 down by 26% QoQ.

  • Further, the company sold 11,532 MT of Packaging Products in the Q1FY22 up by 13% YoY from 10,182 MT in the Q1FY21. The sale of the same products was 15,627 MT in the Q4FY21 down by 31% QoQ.

  • The sale of Consumer Products stood at 2,109 MT in Q1FY22 up by 40% YoY from 1,507 MT in Q1FY21. The same is down by 64% QoQ from 5,870 MT in Q4FY21.

  • The Volume Mix for the company as of 30th June 2021 is as follows: Plastic Piping Products (68%), Packaging Products (16%), Industrial Products (13%), and Consumer Products (3%).

Supreme Industries- Volume Mix

Supreme Industries- Volume Mix

4) Growth Trend:

i) Revenue Trend:

Supreme Industries- Revenue Trend

Supreme Industries- Revenue Trend

ii) EBITDA/EBITDA Margins Trend:

Supreme Industries- EBITDA/EBITDA Margin Trend

Supreme Industries- EBITDA/EBITDA Margin Trend

5) Business Outlook:

  • During the first quarter of the current year, the business was severely disrupted due to the second wave of Covid-19. and May is the peak season for PVC Pipe System for Agriculture application.

  • The  Agricultural demand took a big hit resulting in huge volume loss of business in the Piping segment.

  • The demand in the Construction segment has now opened up. The company expects that the First quarter loss in volume in the Piping System will not only be recovered but will show growth in a full year.

  • The upcoming unit to make the Plastic Pipe system at Guwahati will be operational by October 2021. The Company has taken in hand to put the plastic product complex in Orissa with an outlay of Rs. 121 Crores in the current year. The same may be operational in the last quarter of 2021-22.

  • Total CAPEX planned for the year has now increased to Rs. 521 Crores from earlier Rs. 400 Crores including carried forward commitments of the previous year.

  • The production has also taken a hit during the first quarter due to scarcity of labor on account of large infections in rural areas. The silver lining is that the exports have gone up by around 50% in the quarter, compared to the first quarter of last year.

  • The furniture business has shown a volume growth of 40 % in the quarter compared to the previous year's similar quarter. The value-added product sales have gone up to Rs. 23.26 Crores compared to Rs. 13.41 crores in the same quarter of last year.

Earnings Call Highlights:

Q1FY22 Highlights:

  • The company sold 71,264 MT of Plastic goods against the sale of 91451 MT resulting in volume degrowth of about 22 % and value growth of about 26 %.

  • The company’s production is running at full capacity.

  • Q1FY22 was severely disrupted due to the second wave of Covid-19. April and May are the peak season for PVC Pipe System for agriculture application. The piping systems took a big hit resulting in volume loss in piping systems and Agribusiness declined by around 60%.

  • Plastic Piping Systems saw a volume decline of 36% YoY and value growth of 9%, Industrial Products saw volume growth of 99% and value growth of 184%, Packaging Products saw volume growth of 13% and value growth of 30%, Consumer Products saw volume growth of 40% and value growth of 71%

  • Sales of value-added products increased to Rs. 516 Cr. in Q1FY22 as compared to Rs. 378 Cr. in Q1FY21 achieving growth of 37%. Sales of Cross Limited Film products were down by 12.5% YoY in Q1FY22. The furniture business has shown a volume growth of 40 % YoY. Exports are up by 50% overall in piping systems around $5.9mn in Q1FY22 in packaging products, cylinder division.

  • The company has cash surplus funds of Rs. 381 Cr. as of 30th June 2021 as against cash surplus funds of Rs. 759 Cr. as of 31st March 2021. The lower cash surplus is due to CAPEX and majorly due to build-up inventory.

Capex Plan:

  • Total Capex planned for the year has now increased to Rs 521 Cr. from earlier Rs 400 Cr. Of the Rs 521 Cr. CAPEX Rs 200 Cr. is Greenfield CAPEX & Rs 321 Cr. is brownfield CAPEX. Overall Sales which can be added from the CAPEX is ~900 Cr.

  • The upcoming unit to make the Plastic Pipe system at Guwahati will be operational by October 2021.

  • The Company has taken in hand to put the plastic product complex in Orissa with an outlay of Rs. 121 Crores in the current year. The same may be operational in the last quarter of 2021-22.

  • Compression Moulded Olefin fittings have started commercial production at Jadcherla since June to cater to the growing demand in "Nal-se-Jal" Scheme. The company expects to benefit from these schemes in LDP Pipes, MDP Pipes, PVC Pipes, CPVC Pipes, and fittings.

  • Expansion of capacities for material handling at the plant at Lalru (Punjab) and Gadegaon (Maharashtra) is nearing completion and shall be operational by July-August, 2021.

Existing Installed Capacity and Outlook for FY22:

  • Total capacity as of FY21 is 6,97,000MT, comprising of Plastic piping capacity of 5,09,000MT in FY21 which will increase to 5,50,000MT, Industrial Products capacity of 71,000MT in FY21 will increase to 80,000MT, Packaging Products capacity of 86,000MT in FY21 will increase to 88,000, Consumer Products capacity of 31,000MT will increase to 33,000MT post CAPEX. A major expansion is seen in plastic piping and industrial products.

High EBITDA Margin, PVC, and CPVC:

  • Despite low volume in Q1FY22, the company reported a high EBITDA Margin on account of higher sales of Value Added Products and lower sales of Agri items which is a low-margin business.

  • CPVC business volume growth in Q1FY22 stood at 42% YoY.

  • The company expects double-digit growth in CPVC business in the Q1FY22 i.e. around 20%-25%.

  • Not much change in CPVC prices, it remains at higher levels.

  • PVC prices have started going up now at the beginning of the 2nd Quarter. It has gone up by Rs2 per kg, after a drop of Rs19 per kg since April 2021.

New Launches:

  • Material handling products will introduce various new products/applications from the Injection Moulding and Roto Moulding process.

  • The company is also going to launch a pest piping system required for housing systems and bring in more capacities in furniture, material handling systems, industrial products and expects more sales from composite cylinders, protective packaging.

Business Outlook:

  • The Company’s business is much better in Tier-4, Tier-3, and Tier-2 cities, and good in rural areas too.

  • Domestic Oil Marketing Companies IOCL and BPCL have floated inquiries for purchases of composite cylinders which augurs well for the introduction of Composite Cylinders in the Indian market

  • For Packaging products the company remains quite optimistic though there was a decline in margins due to lower production in April June, due to south markets having lockdowns & as the company had consumed high-cost materials.

  • The company is focusing on increasing the share of value-added products year after year, increasing the share of the export market year after year to improve its performance.

  • The company expects that the Q1FY22 loss in volume in the Piping System will not only be recovered but will show a growth in FY22. As demand has started coming up. The company aims to improve its overall volumes.

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