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Geojit BNP
Supreme Ind (Accumulate)
CMP: ₹939.55
Target: ₹1,033
Supreme Industries Ltd (SIL) is India’s leading player in plastic products, offering wide range of products, including plastic piping system, packaging products, industrial and consumer products.
Key takeaways: a) Q3FY17 revenue and PAT grew at healthy 12 per cent and 20 per cent y-o-y, despite the demonetisation headwinds.
b) EBITDA margins improved by 110 bps to 16.7 per cent. The demonetisation reform has temporarily impacted the volume growth in plastic piping and packaging segment.
c) In the long term, organised players such as SIL will benefit from GST through market share gains as the economy shift from unorganised to organised sector.
d) We factor earnings to grow at 21 per cent CAGR over FY17E- FY19E.
e) We upgrade our rating to ‘Accumulate’ given stable performance in Q3 and improved earnings outlook.
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