- Net Product Turnover (Q3 FY24): INR2,429 crores
- Net Product Turnover (Q3 FY23): INR2,284 crores
- Volume Growth (Q3 FY24): 14%
- Product Value Growth (Q3 FY24): 6%
- Net Product Turnover (9M FY24): INR7,043 crores
- Net Product Turnover (9M FY23): INR6,500 crores
- Volume Growth (9M FY24): 24%
- Product Value Growth (9M FY24): 8%
- Consolidated Operating Profit (Q3 FY24): INR400 crores
- Consolidated Operating Profit (Q3 FY23): INR331 crores
- Profit After Tax (Q3 FY24): INR256 crores
- Profit After Tax (Q3 FY23): INR210 crores
- Consolidated Operating Profit (9M FY24): INR1,123 crores
- Consolidated Operating Profit (9M FY23): INR824 crores
- Profit After Tax (9M FY24): INR715 crores
- Profit After Tax (9M FY23): INR506 crores
- Plastic Piping System Business Growth (Q3 FY24): 17% by volume, 9% by value
- Packaging Products Segment Growth (Q3 FY24): 3% by volume, 4% by value
- Industrial Product Segment Growth (Q3 FY24): 10% by volume, -1% by value
- Consumer Products Segment Growth (Q3 FY24): -3% by volume and value
- Value-Added Product Turnover (Q3 FY24): INR853 crores
- Value-Added Product Turnover (Q3 FY23): INR826 crores
- Cash Surplus (Dec 31, 2023): INR586 crores
- Cash Surplus (Mar 31, 2023): INR738 crores
- Number of Showrooms (Dec 31, 2023): 298
- Number of Showrooms (Jan 1, 2023): 244
Release Date: January 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Supreme Industries Ltd (BOM:509930, Financial) achieved a 14% volume growth and 6% product value growth in Q3 FY24 compared to the same quarter last year.
- The company reported a 21% increase in consolidated operating profit and a 22% increase in profit after tax for Q3 FY24 compared to Q3 FY23.
- The plastic piping system business grew by 17% in volume and 9% in value terms in Q3 FY24.
- Supreme Industries Ltd (BOM:509930) has a total cash surplus of INR586 crores as of December 31, 2023.
- The company is expanding its product range and entering new markets, including the introduction of CPVC pipe systems for industrial applications and HDPE pipes for carrying natural gas.
Negative Points
- The consumer products segment experienced a 3% decline in both volume and value terms in Q3 FY24.
- The industrial product segment saw a 1% decline in value terms despite a 10% increase in volume.
- The company faced an inventory loss in the piping division, with a valuation decrease of INR51 crores over nine months.
- The business scenario in the industrial component division remains weak due to low demand from appliances and white goods sectors.
- The company’s cash surplus decreased from INR738 crores as of March 31, 2023, to INR586 crores as of December 31, 2023.
Q & A Highlights
Q: Sir, first question is on volume growth. I can see packaging, industrial and consumer products obviously are going through lower growth versus what we are seeing in pipe, when does this go to double digits? Because nine months, largely all these three segments have grown in single digits. So could you help us understand what do you see growth in fourth quarter or for the full year, if you want to talk about fiscal '24 or the next year, fiscal '25?
A: In packaging segment, we are moving towards value added items. Value added items, our operating margin will improve, volume may not be in double digits but it will give a better profit growth to the company.
Q: Sir, what about industrial and consumer next year, volume growth?
A: Consumer segment as we stated we are moving more and more to premium items, so volume growth will be insignificant, but will be much better than previous year. Industrial product segment will depend on how our customer business improves, so we cannot talk about the volume growth or whatever it is. On Industrial segment we cannot talk. We cannot give any promise on how much will be volume growth and value growth.
Q: Got it, sir. Sir, next question was any inventory gains or loss in third quarter?
A: Inventory loss only.
Q: Sir, any rough estimate of inventory loss?
A: For nine months we can only declare today that whatever was the valuation of our -- in piping division on April 1, it has gone down by value of INR51 crores in nine months. The same quantum of inventory valued at INR51 crores lower on December 2023 compared to April 1, 2023.
Q: Got it, sir. And your comment on CPVC for industrial piping, how much annual volumes can we do on an ideal basis?
A: I can't share, Rahul. Product has been very well accepted.
Q: Sir, any idea of the market size?
A: We have entered now on the market side so -- not only CPVC we are supplying, PPR also for industrial application. We supply polyethylene pipe also for industrial application. It's a market overall for industrial piping. The material -- whatever material used is as per the requirement of the customer and requirement of the application.
Q: Got it, sir. And last question on O-PVC, you said your capacity expansion is 40,000 tonnes, this is over and above Parvati's 36,000 tonnes.
A: 30,000 tonnes. We have planned 30,000 tonnes capacity expansion but that will take two-year time.
Q: Got it, sir. Is it over and above Parvati's 36,000 tonnes?
A: Including -- No, Sangli is 3,000 tonnes in only O-PVC. 33,000 tonnes is PVC and polyethylene. Total capacity of Parvati 36,000 tonnes, out of which O-PVC 3,000 tonnes.
Q: Okay. Got it, sir. Got it. Anybody else in India who does O-PVC right now?
A: There are six more customers -- 6 more suppliers.
Q: And what would be roughly the Indian capacity for O-PVC?
A: I have no idea.
Q: Congratulations on strong volume growth, especially in the plastic pipe side. Wanted to understand, you've done 17% this quarter, and you had earlier guided for 28% volume growth, which you further decided to upgrade it to 30%. So what's the confidence coming -- where is the confidence coming from? What are the new avenues which are driving this volume growth of 30% after a strong year already?
A: In the first nine months, we have grown by 30.4% and the polymer price has become further affordable and there is good demand from infrastructure and housing. And last year in the month of January and February the demand was low. So when we say that we will grow 30% for the year, nine months we have grown by 30.4% and the remaining three months business conditions are looking better compared to last year. So we are able to commit that we will grow 30% for the full year in plastic piping.
Q: Understood. And rest of the segment, sir, where do you see potential, you mentioned about packaging that you are focusing more on value add and margins would come in, but you would say you won't go to actually double-digit volume growth. When do you see this segment going back to double digit? Would it be single digits for next year as well?
A: In packaging segment, there are three divisions. Like, cross laminate film, we are going more and more into value-added product other than tarpaulin, where we are able to capture more value than what we are getting in tarpaulin. And protective packaging film, we are growing into more and more multi-structural and more and more into export markets where we get better margin, so our capacity is restricted. We don't have capacity producing 10,000 to 11,000 tonnes per year with the space constraint we can't grow more capacity there. So whatever capacity we have got, we want to earn more money in that capacity by going into specialized product. And protective packaging product, we are now selling more and more laminates to [reinvent] with the fire substrate and we laminate and in that laminate product we are getting more value addition and where it's more profitable.
Q: Understood, sir. Understood. Sir, also on your new product line, just wanted some clarity, you mentioned that revenues will start flowing in from FY26 with the PVC window profile system. Could you speak more on it that how will be the distribution network, have you started creating the same, what is the potential of this product line for you?
A: In the window line, our plan is not to sell the profile, we will make customized window as per the requirement and we will do window fabrication initially at five locations, three of the company and two we have identified franchisee who will make on our specification and customize. We will offer the window to the customer based on our profile and our accessories. And initially, we hope to sell 5,000 tonnes and later on we will increase that capacity to 10,000 tonnes in the same site, that is in Kanpur.
Q: Sir, just we've seen very
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
