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In-line operating performance; FY26 vol. guidance trimmed

Supreme Industries reported an in-line operating performance for 2QFY26, with consolidated EBITDA declining ~7% YoY/QoQ to ~INR 3bn. Adjusted PAT stood at INR 1.6bn (JMFe: INR 1.9bn), down ~20% YoY / 19% QoQ, primarily due to higher-than-expected depreciation and lower share of profits from associates (Supreme Petrochem). Consolidated volume grew ~12% YoY but declined 16% QoQ to ~154kt, while in the key plastic piping segment growth was a healthy ~17% YoY but dipped ~19% QoQ to 120kt. The management has cut its total volume growth guidance for FY26 to 12–14% (earlier 14–15%), while retaining its plastic piping volume growth outlook at 15–17% YoY. Factoring in the 2Q performance and revised guidance, we trim our FY26E–28E EBITDA estimates by ~4–5%, and EPS estimates by ~8–11%, reflecting higher depreciation and lower contributions from associate. We maintain our BUY rating with a revised target price of INR 5,180, based on 45x Dec’27E EPS (post quarterly roll-over) back by strong operating cashflow (~INR 45bn over FY25-28E), net cash balance sheet and sector-leading capex (~INR 28bn over FY25-28E) without financial strain.

* Result summary: Supreme Industries’ consolidated volume grew ~12% YoY/ declined 16% QoQ to ~154kt in 2Q, while the plastic piping volume rose ~17% YoY/ declined 19% QoQ to 120kt. Piping realisation declined 5% YoY/ grew ~11% QoQ to INR 134/kg in 2Q. Consolidated revenue increased 5% YoY/ declined ~8% QoQ to ~INR 24bn, in line with our estimates. EBITDA declined ~7% YoY/ QoQ to ~INR 3bn (in line with our estimates), while blended EBITDA/kg declined ~17% YoY/ grew 11% QoQ to INR 19.3/kg. Adj. PAT declined ~20% YoY/ 19% QoQ to INR 1.6bn (JMFe: INR 1.9bn) mainly due to higher-than-expected depreciation and lower-thanexpected share of profits in associates. Net cash declined INR 6.3bn YoY/ INR 8.1bn QoQ to INR 490mn led by working capital blockage and Wavin acquisition.

* What we liked: Higher-than-estimated plastic piping realisation

* What we did not like: Downward revision in volume guidance for FY26; decline in net cash

* Earnings call KTAs: 1) Guidance: i) The management has lowered its total volume guidance to 12-14% for FY26 (implied asking run rate of 15-19% YoY growth in 2H) from 14-15% earlier. However, it maintained plastic piping volume growth of ~15-17%; it remains confident on achieving >17% YoY growth in 2HFY26. ii) For the protective packaging segment, the company maintained its guidance on double-digit volume growth along with revenue of INR 10bn in FY26. iii) It targets consolidated revenue of ~INR 110bn-115bn along with EBITDA margin of 14.5-15.5% (maintained guidance) for FY26. iv) On the capacity front, it targets to reach piping capacity of ~1mt and total capacity of ~1.2mt in FY26. 2) Expansions: i) The company highlighted that capacity expansion at various locations for plastic piping and protective packaging segments is progressing smoothly. It plans to set up a new unit for material handling products at its newly acquired land at Malanpur, MP, in FY27. Additionally, it will simultaneously plan for its other greenfield units at Bihar and Jammu (plastic piping) and in Western Maharashtra (protective packaging) in FY27 for which land is already in possession. ii) On the profile window project, construction work is near completion. Initial production line equipment has been installed and production trials have commenced. The company expects to launch commercial production in Dec’25. 3) For FY26, it expects capex of INR 13bn (vs. earlier ~INR 13.5bn) including organic and Wavin acquisition; this includes INR 2bn for window project and INR 800mn for the silent pipes system.

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