SUPREMEIND - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.3
| Stock Code | SUPREMEIND | Market Cap | 47,528 Cr. | Current Price | 3,741 ₹ | High / Low | 4,740 ₹ |
| Stock P/E | 60.1 | Book Value | 398 ₹ | Dividend Yield | 0.91 % | ROCE | 23.7 % |
| ROE | 18.1 % | Face Value | 2.00 ₹ | DMA 50 | 3,539 ₹ | DMA 200 | 3,875 ₹ |
| Chg in FII Hold | -1.43 % | Chg in DII Hold | 1.16 % | PAT Qtr | 158 Cr. | PAT Prev Qtr | 193 Cr. |
| RSI | 68.5 | MACD | 47.1 | Volume | 3,71,971 | Avg Vol 1Wk | 3,32,371 |
| Low price | 3,020 ₹ | High price | 4,740 ₹ | PEG Ratio | 27.7 | Debt to equity | 0.06 |
| 52w Index | 41.9 % | Qtr Profit Var | -11.8 % | EPS | 62.2 ₹ | Industry PE | 21.8 |
📊 Analysis: SUPREMEIND shows strong operational efficiency with ROCE at 23.7% and ROE at 18.1%, making it fundamentally sound. However, the stock trades at a very high P/E of 60.1 compared to the industry average of 21.8, suggesting significant overvaluation. The PEG ratio of 27.7 highlights expensive growth prospects. Dividend yield of 0.91% is modest, offering limited passive returns. Technical support lies around 3,500–3,600 ₹ (DMA 50) and 3,800–3,900 ₹ (DMA 200), with resistance near 4,700 ₹. The ideal entry zone is 3,200–3,500 ₹ for margin of safety. For existing holders, a medium-to-long horizon is viable, but partial profit booking near 4,600–4,700 ₹ resistance is advisable unless earnings growth accelerates.
✅ Positive
- Strong ROCE (23.7%) and ROE (18.1%) support efficient capital allocation.
- Low debt-to-equity ratio (0.06) ensures financial stability.
- DII holdings increased by 1.16%, showing domestic investor confidence.
- EPS of 62.2 ₹ provides valuation support.
- Large market cap of 47,528 Cr. ensures stability and leadership in plastics manufacturing.
⚠️ Limitation
- High P/E (60.1) compared to industry average (21.8).
- PEG ratio of 27.7 highlights expensive growth valuation.
- Dividend yield of 0.91% is modest.
- FII holdings decreased by -1.43%, showing reduced foreign confidence.
📉 Company Negative News
- Sequential decline in quarterly PAT (158 Cr. vs 193 Cr.).
- Quarterly profit variation at -11.8% indicates earnings pressure.
📈 Company Positive News
- Strong fundamentals with double-digit ROE and ROCE.
- Domestic institutional investors increasing stake.
- Stock trading with healthy volumes above average, showing investor interest.
🏭 Industry
- Plastic products and industrial materials sector benefits from infrastructure and consumer demand.
- Industry P/E at 21.8 suggests SUPREMEIND trades at a steep premium.
- Structural drivers: housing, packaging, and industrial applications.
🔎 Conclusion
SUPREMEIND earns a rating of 3.3 due to strong ROE/ROCE but expensive valuations and modest dividend yield. Long-term investors should only consider entry in the 3,200–3,500 ₹ zone for margin of safety. Current holders may adopt a medium-to-long horizon, with partial profit booking near 4,600–4,700 ₹ resistance unless profitability improves. The stock remains a strong industrial play but requires caution due to valuation risks.