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Robust Pipe Volumes; ADD Tailwinds in H2

Supreme Industries’ (SI) Q2FY26 volume growth was 11.8% above our estimates of 6.8%. SI expects H2FY26 to better than H1FY26, supported by the likely imposition of ADD on PVC resin, improved agriculture demand, and higher government spending. EBITDA margin in Q2FY26 contracted by 160bps YoY to 12.4%, primarily due to higher other expenses arising from the acquisition and consolidation of the Wavin business. The management has revised its FY26 guidance for overall volume growth of 14–15% to 12-14%, while maintaining its P&F volume growth of 15–17% and EBITDA margin guidance at 14.5–15%. In FY26 SI expects its plastic pipe segment capacity to reach 1mn MT. We estimate FY25-28E revenue/EBITDA/PAT CAGR of 14.6%/18.2%/19.6%, with volume CAGR of 13.0% and EBITDA margin expansion of ~130bps. We have revised our earnings estimates for FY27/FY28E by 0.9%/0.6% and maintain TP to Rs4,723 (earlier Rs 4,758) based on 40x Sep’27E earnings. We are upgrading our rating from ‘Accumulate’ to ‘BUY’’, due to recent correction in stock prices.

Revenues grew by 5.3%, PAT declined by 20.3%: Sales grew by 5.3% YoY to Rs 23.9bn (PLe: Rs 23.8bn) with vol. increases by 11.8% YoY to 154kMT and realization decline by 5.8% YoY. Plastic Pipe segment revenue up by 11.4% YoY to Rs 16.0bn, packaging revenue down 1.6% YoY to Rs 3.9bn, industrial revenue down by 13.7% YoY to Rs2.8bn, consumer segment remained flat YoY to Rs1.0bn. EBITDA decline by 6.8% YoY to Rs 3.0bn (PLe: Rs 3.2bn). EBITDA margins contracted by ~160bps YoY to 12.4% (PLe: 13.4%), due to higher other expenses. EBITDA per Kg reached Rs19.0/kg. In Plastic Pipes/Industrial/Consumer, EBIT margins contracted by ~250/440/240bps YoY to 7.9%/4.2%/13.7%, whereas packaging segment EBIT expanded by ~180bps to 12.1. Consolidated PAT incl. income from associates declines by 20.3% YoY to Rs 1.6bn (PLe: Rs2.1bn). The overall turnover of valueadded products remains at Rs 10.7bn in Q2FY26 as compared to Rs 9.1bn in Q2FY25.

Con call highlights: 1) SI has revised its overall volume growth target to 12-14% from 14-15%, while maintaining its plastic pipe volume growth target at 15-17% with EBITDA margins of 14.5–15% for FY26. 2) The company aims to scale its pipe segment capacity to 1mn MT by FY26 with 65–70% utilization. The recently acquired Wavin is expected to contribute around 20k MT to FY26 volumes, with 3k MT already achieved in Aug–Sept 2025. 3) The imposition of Anti-Dumping Duty (ADD) on PVC, expected from Nov’25, still remains uncertain.4) SI has acquired Wavin Industries’ Plastic Pipe Business, with a total installed capacity of 71,000 MTPA This acquisition and technology partnership are expected to strengthen the company’s plastic piping division by expanding capacities, enhancing market reach, and improving water management systems. 5) The protective packaging segment contributed Rs 8.5bn in FY25 and expected to reach Rs 10bn by FY26. 6) The Profile Window project is nearing completion, with production to set by Dec’25. Initial launch will be in U.P. and NCR, followed by pan-India expansion. The plant will have a 5,000-ton PVC profile capacity. 7) The company plans to set up a new unit for material handling products at its recently acquired land in Malanpur (Madhya Pradesh), aiming to strengthen its presence in central India along with greenfield projects in Bihar, Jammu, and Western Maharashtra planned for FY27.8) The Company received an LoA for supplying 2 lakh of 10kg composite LPG cylinders to BPCL and a repeat order of 2.3lakh cylinders from IOCL, supporting better utilization of its expanded composite cylinder capacity. 9) The company has commenced production of PP Silent Pipe Systems in technical collaboration with Poloplast GmbH, Austria 10) SI reported an inventory loss of Rs 500-600mn in H1FY26. 11) The company has invested Rs 8.7bn in H1FY26 and expects to incur a total capex of Rs 13bn for FY26.

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