Mumbai-based Supreme Industries Limited, one of India’s leading manufacturers of plastic products, has reported robust growth in the second quarter of fiscal 2023-24.
According to the company’s press release, Supreme Industries registered a 23% increase in plastic goods sold during Q2 FY24 to 137,763 MT, compared to 111,803 MT in Q2 FY23. Total income grew 11% to Rs 2,361.88 crore from Rs 2,132.61 crore in the same period last year.
The company delivered an exceptional operating performance with operating profit surging 142% to Rs 356.52 crore in Q2 FY24, compared to Rs 147.25 crore in Q2 FY23. Operating profit margin expanded significantly to 15.09% in Q2 FY24 from 6.90% in Q2 FY23. Profit before tax jumped 164% to Rs 336.26 crore from Rs 127.23 crore in the corresponding quarter last fiscal. Similarly, net profit zoomed 150% to Rs 259.97 crore in Q2 FY24 from Rs 104.09 crore in Q2 FY23.
For the first half of FY2024, Supreme Industries recorded a 30% increase in plastic goods sold to 286,307 MT. Total income grew 9% to Rs 4,744.62 crore and operating profit rose 63% to Rs 678.25 crore. Net profit jumped 75% to Rs 454.33 crore in H1 FY24.
The robust growth in profits was driven by higher capacity utilization, better product mix and cost optimization efforts undertaken by the company.
The board of directors has declared an interim dividend of Rs 8 per share for FY2024.
Commenting on the results, Mr. M.P. Taparia, Managing Director of Supreme Industries, said polymer prices have corrected sharply in October but are now stabilizing. He said business activities have started picking up as prices stabilize.
Acquisition and Expansion
Supreme Industries has acquired a pipe manufacturing facility in Sangli, Maharashtra from Parvati Agro Plast for Rs 151.38 crore. This unit has installed capacity of 36,000 MT per annum for PVC, HDPE and CPVC pipes.
The company plans to expand the CPVC pipe capacity at this facility to 15,000 MT per annum. It has also purchased additional land to undertake expansion at the site.
Various capacity expansion projects underway in the piping division are progressing well. New capacities in Kanpur, Erode, Malanpur and Gadegaon are expected to commence production in Q4 FY24. The recently launched PE/AL/PE piping system and electrical conduit system have received good response.
The bath fittings capacity expansion at Puducherry is also completed and fully operational now.
Focus on Value Added Products
The share of value added products in Supreme Industries’ revenue has been consistently increasing. It rose to Rs 942 crore in Q2 FY24, a growth of 18% over Q2 FY23.
The company is focusing on made-up products which are yielding better realizations. It will commence production of newly developed cross plastic films with capacity of 2,500 MT per annum in Q4 FY2024.
In the molded furniture segment, new variants of cabinets have been introduced. The company continues to expand its chain of exclusive showrooms which stand at 283 currently.
For the packaging division, capacities are being expanded to meet customized demand. The company has also made inroads into export markets.
Investments and Outlook
With strong growth opportunities, Supreme Industries has lined up significant investments for expansion. The total capex plan for FY2024 is around Rs 900 crore, to be funded through internal accruals.
For the second half of FY2024, the company is optimistic of pick up in demand across sectors, besides the boost from the festive season. The Piping division will benefit from its large capacity expansion. Focus on new product development and entering new segments will also support growth.
