SUPREMEIND - Investment Analysis: Buy Signal or Bull Trap?

Last Updated Time : 20 Dec 25, 07:13 am

Investment Rating: 3.4

📊 Analysis: SUPREMEIND demonstrates strong fundamentals with ROCE (23.7%) and ROE (18.1%), supported by very low debt-to-equity (0.06). The company has delivered consistent profitability with EPS of 63.9 ₹. However, valuations are stretched with a P/E of 52.6 compared to industry average of 23.4, and an extremely high PEG ratio of 24.2 indicating expensive growth. Dividend yield of 1.01% provides modest income support. Technical indicators show weakness with RSI at 39.4, MACD negative, and price trading below DMA 50 & 200, suggesting limited near-term upside.

💰 Ideal Entry Zone: 3,100 ₹ – 3,300 ₹ (closer to support levels and valuation comfort zone).

📈 Exit / Holding Strategy: If already holding, maintain a long-term horizon (3–5 years) given strong ROE/ROCE and low debt. Consider partial profit booking if price approaches 4,800–5,000 ₹ resistance zone. Long-term investors can hold for compounding returns, but monitor PEG ratio and quarterly earnings momentum for valuation risks.

Positive

• ✅ Strong ROCE (23.7%) and ROE (18.1%) indicate efficient capital usage.
• ✅ Low debt-to-equity (0.06) ensures financial stability.
• ✅ EPS of 63.9 ₹ reflects solid earnings power.
• ✅ Dividend yield (1.01%) provides modest income support.

Limitation

• ⚠️ High P/E (52.6) vs industry average (23.4).
• ⚠️ PEG ratio (24.2) suggests expensive growth relative to earnings.
• ⚠️ Technical weakness: RSI at 39.4, MACD negative, price below DMA 200.
• ⚠️ Quarterly profit variation (-11.9%) indicates slowing momentum.

Company Negative News

• 📉 FII holdings decreased by 1.28%, showing reduced foreign investor confidence.
• 📉 PAT declined from 177 Cr. to 193 Cr. with negative quarterly variation (-11.9%).

Company Positive News

• 📢 DII holdings increased by 1.37%, indicating strong domestic institutional support.
• 📢 Stable financial structure with negligible debt.

Industry

• 🌐 Plastics & industrial products industry P/E at 23.4, lower than SUPREMEIND’s valuation, suggesting peers may offer better value.
• 🌐 Sector growth driven by infrastructure, packaging, and industrial demand.

Conclusion

🔎 SUPREMEIND is a fundamentally strong company with excellent ROE/ROCE and low debt, but currently trades at expensive valuations. Ideal entry around 3,100–3,300 ₹. Existing holders should maintain positions with a 3–5 year horizon, booking profits near 4,800–5,000 ₹ resistance levels. Long-term compounding potential exists, but valuation premium and technical weakness must be monitored closely.

Would you like me to extend this into a peer benchmarking overlay comparing SUPREMEIND against other industrial peers like Astral, Finolex, and Prince Pipes, or a basket scan to identify undervalued manufacturing sector opportunities for diversification?