Release Date: October 22, 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 9% volume growth and a 5% product value growth in the first half of the current year compared to the previous year.
- The company reported an increase in consolidated operating profit and profit after tax for the half year by 7% and 5%, respectively.
- The packaging segment business grew by 11% in volume and 14% in value terms during the second quarter.
- The company is expanding its capacity with ongoing brownfield expansions and a new greenfield unit, which will enhance production capabilities.
- The CPVC segment showed strong performance with a 33% growth in volume over six months, indicating robust demand in the plumbing sector.
Negative Points
- The plastic piping system business experienced a 1% volume and 5% value decline due to volatility in PVC prices and lower government infrastructure spending.
- The company's cash surplus decreased significantly from INR1,178 crores as of March 2024 to INR674 crores by September 2024.
- There was a reported inventory loss of around INR35 crores to INR40 crores during the quarter.
- The company had to lower its volume growth guidance for the plastic pipe system from 25% to between 16% and 18% for the year.
- The overall turnover of value-added products decreased to INR907 crores during the current quarter compared to INR942 crores in the corresponding quarter of the previous year.
Q & A Highlights
Q: Would you like to share the inventory loss for the quarter?
A: Maybe around INR35 crores to INR40 crores. - V. Taparia, Executive Director
Q: Could you share some progress on the polyethylene gas piping systems launch?
A: We anticipate that we will get orders in this quarter. - V. Taparia, Executive Director
Q: How does the bidding pipeline look like for the gas pipeline industry?
A: The market is around 100,000 tonnes annually. Our product is now approved by many inspecting agencies, and we anticipate getting orders this quarter. - V. Taparia, Executive Director
Q: What is the CPVC resin local production and import status?
A: We get CPVC resin from both local and imported sources. The overall market is around 220,000 tonnes annually. - V. Taparia, Executive Director
Q: Do you think India can be self-sufficient in PVC resin production in the next 3-5 years?
A: Even with new capacities announced for 2026-2027, India will still need to import a minimum of 2 million tonnes. - V. Taparia, Executive Director
Q: What is the peak capacity utilization for your pipe facility during strong demand seasons?
A: It is around 80% to 85%. - V. Taparia, Executive Director
Q: What would be the sustainable pipe volume growth rate over the next 2-3 years?
A: The country growth should remain between 10% to 12% going forward. - V. Taparia, Executive Director
Q: What is the sustainable margin guidance for the pipe and packaging segments?
A: Pipe segment margins will be between 14% to 16%, and packaging segment margins between 16% to 18%. - Mahavir Taparia, MD & Director
Q: Any updates on the antidumping duty expected on PVC?
A: The antidumping duty is primarily a concern for Reliance Industries Limited. As for BIS certification, it may need to be extended beyond December 24, 2024, to avoid a crisis. - Mahavir Taparia, MD & Director
Q: How is the CPVC market performing in the current demand environment?
A: CPVC prices are stable, and the market is growing at 10% to 12%. Our company has grown by 33% in CPVC volumes. - Mahavir Taparia, MD & Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
