Mehabe score: 7 G Factor: 8 Piotski Score: 8 The stock has a rating STRONG BUY. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 8 and Piotski score of 8.
Description
Supreme Petrochem is engaged in the business of Styrenics and manufactures Polystyrene (PS), Expandable Polystyrene (EPS), Masterbatches and Compounds of Styrenics and other Polymers, Extruded Polystyrene Insulation Board (XPS) Styrene Methyl Methacrylate (SMMA) with manufacturing facilities at Amdoshi Dist Raigad, Maharashtra and Manali New Town, Chennai, Tamil Nadu. (Source : 202003 Annual Report Page No:74)
Main Points
The annual installed capacity of PS, expandable PS, specialty polymers and compounds and extruded PS is 2,72,000MT, 72,100MT, 33,500MT and 5,000MT, respectively. #
SPL is likely to incur capex of about INR6,000 million over FY22-FY24 towards PS, EPS and compounds (close to INR2,500 million capex) and ABS (close to INR3,500 million capex) expansion.Site:SUPPETROMain Symbol:SUPPETRO
Stock trades at 753.0, above its 50dma 709.68. It also trades above its 200dma 516.7. The stock remains bullish on techicals
The 52 week high is at 820.00 and the 52week low is at 174.90
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– is expected to give good quarter
– has delivered good profit growth of 52.93% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 28.92%
– has been maintaining a healthy dividend payout of 46.68%
Weakness
– The company has delivered a poor sales growth of 9.02% over past five years.
-Debtor days have increased from 36.57 to 43.93 days.
Competition
– The industry trades at a mean P/E of 9.3x. Supreme Petroch. trades at the industry’s max P/E of 14.91x. SUPPETRO trades at a P/E of 14.9x
– Industry’s mean G-Factor is 6.6 while the mean Piotski score is 9.0. SUPPETRO has a G-Factor of 8 and Piotski scoreof 8.
– Average 1 month return for industry is 9.2%. The max 1- month return was given by Dhunseri Vent.: a return of 34.33 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 1048.0 cr compared to Rs 292.0 cr for period ended Jun 2020, a rise of 258.9%
Company reported operating profit of Rs 197.0 cr for period ended Jun 2021, operating profit margin at 18.8 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Jun 2021 was Rs 15.56 compared to Rs 24.64 for previous quarter ended Mar 2021 and Rs -1.26 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 3941.0 cr for period ended TTM vis-vis sales of Rs 3185.0 cr for the period ended Mar 2021, a healthy growth of 19.2%. The 3 year sales cagr stood at 7.3%.
Operating margins expanded to 22.0% for period ended TTM vis-vis 21.0% for period ended Mar 2021, expansion of 100.0 bps.
Net Profit reported at Rs 636.0 cr for period ended TTM vis-vis sales of Rs 477.0 cr for the period ended Mar 2021, rising 25.0%.
Company recorded a healthy Net Profit CAGR of 135.0% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 435.0 cr for period ended Mar 2021 vis-vis Rs 119.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 55.0% compared to 29.0% over the last 3 Years. – The stock has given a return of 286% on a 1 Year basis vis-vis a return of 41% over the last 3 Years. – The compounded sales growth on a TTM bassis is 17% vis-vis a compounded sales growth of 2% over the last 3 Years. – The compounded profit growth on a TTM basis is 367% vis-vis a compounded profit growth of 60% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 1.24% vis-vis 0.91% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 32.7% vis-vis 33.11% for Dec 2020
Conclusion
– is almost debt free.
– is expected to give good quarter
– has delivered good profit growth of 52.93% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 28.92%
– has been maintaining a healthy dividend payout of 46.68% – The company has delivered a poor sales growth of 9.02% over past five years.
-Debtor days have increased from 36.57 to 43.93 days.
Fundamentally, the stock remains a Strong ‘BUY’ in our long term portoflio.
Technically too, the stock is a Strong ‘BUY’ in our long term portoflio.The stock remains above its 50 DMA 709.68 and is trading at 753.0
Thus, overall, we retain a STRONG BUY on the stock. Any dips can be used to build positions.
