SUPREMEIND - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.5

📊 Core Financials: Supreme Industries demonstrates strong ROCE (23.7%) and ROE (18.1%), reflecting efficient capital usage. Debt-to-equity is very low at 0.06, ensuring financial stability. Quarterly PAT declined (-11.9%), showing margin pressure despite overall profitability. EPS of 63.9 ₹ indicates consistent earnings power.

💹 Valuation Indicators: Current P/E of 52.6 is significantly higher than industry average (23.4), suggesting overvaluation. Book value of 398 ₹ implies a P/B ratio of ~8.44, which is expensive relative to fundamentals. PEG ratio of 24.2 highlights weak growth relative to valuation. Intrinsic value appears lower than CMP, limiting margin of safety.

🏭 Business Model & Competitive Advantage: Supreme Industries is a leader in plastic products, including pipes, packaging, and consumer goods. Its competitive advantage lies in scale, diversified product portfolio, and strong distribution network. Low leverage and consistent dividend yield (1.01%) add investor appeal.

📈 Entry Zone Recommendation: Current price (3,360 ₹) is below DMA 50 (3,649 ₹) and DMA 200 (4,025 ₹), signaling weak momentum. RSI at 39.4 suggests nearing oversold levels. Entry zone recommended between 3,100–3,300 ₹ for accumulation. Long-term holding is favorable for investors seeking exposure to industrial growth, but valuations require cautious allocation.

Positive

• ✅ Strong ROCE (23.7%) and ROE (18.1%) reflect efficient capital use.
• ✅ Low debt-to-equity (0.06) ensures financial stability.
• ✅ DII holdings increased (+1.37%), showing domestic institutional confidence.

Limitation

• ⚠️ High P/E (52.6) compared to industry average (23.4).
• ⚠️ P/B ratio ~8.44 suggests expensive relative pricing.
• ⚠️ PEG ratio of 24.2 highlights weak growth relative to valuation.

Company Negative News

• 📉 Quarterly PAT dropped from 177 Cr. to 193 Cr. (-11.9%).
• 📉 FII holdings decreased (-1.28%), showing reduced foreign investor confidence.

Company Positive News

• 📢 DII holdings increased (+1.37%), reflecting domestic institutional support.
• 📢 Strong brand leadership in plastics and industrial products.

Industry

• 🏭 Plastics and industrial products sector benefits from infrastructure and consumer demand growth.
• 🏭 Industry P/E at 23.4 suggests moderate valuations, making Supreme Industries relatively expensive.

Conclusion

🔎 Supreme Industries demonstrates strong fundamentals with efficient returns, low debt, and diversified business strength. However, premium valuations and declining quarterly profits limit margin of safety. Best suited for long-term investors seeking exposure to industrial growth, with entry near 3,100–3,300 ₹. Allocation should be cautious given valuation risks and growth constraints.

Would you like me to extend this into a peer benchmarking overlay comparing Supreme Industries with other industrial product companies (like Astral, Finolex, or Prince Pipes), or a sector rotation basket scan to identify diversified opportunities in manufacturing and infrastructure?