SUPREMEIND - Investment Analysis: Buy Signal or Bull Trap?

Last Updated Time : 19 Sept 25, 2:16 pm

Investment Rating: 3.9

📊 Investment Analysis: Supreme Industries Ltd (SUPREMEIND)

Supreme Industries is a market leader in plastic products and piping systems, with a strong brand, wide distribution, and consistent profitability. While its fundamentals are impressive, the current valuation and earnings volatility suggest a cautious approach for fresh long-term entries.

🔍 Key Metrics Breakdown

Metric Value Interpretation

P/E Ratio 67.8 Significantly overvalued vs. industry PE of 23.6

PEG Ratio 31.2 Extremely high; valuation far exceeds earnings growth rate

ROE / ROCE 18.1% / 23.7% Excellent returns; strong capital efficiency

Dividend Yield 0.76% Modest income; adds to total return potential

Debt-to-Equity 0.02 Virtually debt-free; excellent financial health

Quarterly PAT Drop ₹262 Cr → ₹177 Cr ~32% decline; signals earnings pressure

FII/DII Activity FII ↓ / DII ↑ Mixed sentiment; domestic institutions accumulating

MACD / RSI 26.8 / 50.8 Neutral momentum; no strong trend reversal yet

DMA 50 / DMA 200 ₹4,392 / ₹4,256 Price above averages; short-term strength confirmed

🟢 Is SUPREMEIND a Good Long-Term Bet?

Yes—with valuation caution. Supreme Industries offers

Strong fundamentals: ROE and ROCE are top-tier.

Clean balance sheet: Low debt and consistent dividend.

Sectoral strength: Infrastructure and housing demand support long-term growth.

However

Valuation is stretched: P/E and PEG ratios are extremely high.

Earnings volatility: Recent PAT drop needs monitoring.

Momentum is soft: RSI and MACD suggest limited short-term upside.

📌 Conclusion: SUPREMEIND is a strong long-term investment, especially for quality-focused investors. Entry should be timed around valuation comfort and technical support.

🎯 Ideal Entry Price Zone

Entry Zone: ₹3,800 – ₹4,100

This aligns with technical support near DMA 200 and offers a more reasonable valuation (~P/E of 55).

RSI near 50 suggests neutral sentiment; wait for a dip or earnings-led breakout.

🧭 Exit Strategy / Holding Period (If Already Invested)

If you already hold SUPREMEIND

Holding Period: 3–5 years, aligned with infrastructure cycles and product expansion.

Exit Strategy

Partial Exit near ₹5,500–₹5,600 (recent high zone) if valuation remains stretched.

Full Exit if ROE drops below 14% or PEG ratio remains above 25.

Hold if ROE sustains above 18% and earnings growth resumes >15% YoY.

📈 Long-Term Outlook

If Supreme Industries continues to expand its product portfolio and capitalize on India’s infrastructure push, price targets could reach ₹6,200–₹6,500 by 2028. It’s a stock for investors who prioritize quality and are willing to ride short-term volatility for long-term gains.

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