Supreme Industries Share Price Tumbles 10% After It Cuts Volume Guidance For FY25
After a 15% YOY decline in net profit to Rs 219 crore and a 1.6% drop in revenue, Supreme Industries Ltd. has adjusted its volume growth guidance for FY25 due to ongoing volatility in PVC resin prices
Supreme Industries Ltd.'s share price tumbled nearly 13% on Tuesday after its management cut their fiscal 2025 guidance for plastic pipe systems after announcing a 15% decline in second-quarter profit.
The company's net profit fell 15% year-on-year to Rs 219 crore in the quarter ended September 2024, according to an exchange filing. Revenues during the same period, too, fell 1.6% to Rs 2,273 crore.
Supreme Industries Q2 Results: Key Highlights (Consolidated, YoY)
Revenue down 1.6% at Rs 2,273 crore.
Ebitda down 10% at Rs 320 crore.
Ebitda margin down 130 basis point to 14.05%.
Net profit down 15% at Rs 219 crore.
Guidance Cut
The company has revised its volume growth guideline to 16-18% from 25% in the plastic pipe system for fiscal 2025 due to extreme volatility in its key raw materials and PVC resin prices. This segment is their main revenue generator and accounts for more than 60% of their total revenue contribution.
Due to the blockage of shipment movement in the Red Sea, the container productivity went down extremely, as the management highlighted in the press release. This caused a steep rise in freight costs from Asian countries to India. India meets roughly 66% demand of PVC resin from imports. Out of that volume, more than 80% of imports are coming from Asian countries. This has led to an increase in the cost of PVC resin by 19% between mid-April and June 30.
However, as freight rates moved lower, the prices of PVC resin took a deep cut between July 1 and Aug. 16. The prices then went down by 17.5%.
This type of price volatility in a very short period led to deep de-stocking in the entire trade channel. As the rainy season got extended, the demand revival for agricultural pipe also remained subdued in September.
Segmental Split
The plastic pipe business contributes more than 60% to consolidated revenues. The management has been steadily adding other business avenues like packaging and industrial division.
However, for the second quarter, the packaging segment was the only business showing strong revenue growth but margins continued to remain under pressure.
Going Forward
The second half of the financial year is generally strong for the company, as such, Managing Director MP Taparia told NDTV Profit that he anticipates a 41% volume growth during the period this fiscal, which should help the company meet its volume guidance.
