Skip to main content

Supreme Industries - Interesting Play on plastics and Real-Estate

Notes from Annual Report 2010

* The company expects to achieve 20%+ volume growth per year in medium term
* No significant change in product wise share of revenue
* Crisil has upgraded the rating outlook from A+Stable to A+Positive
* 1, 3 and 5 year sales growths are: 20%, 17.76% and 18.45% respectively
* 1, 3 and 5 year PAT growths are: 48.6%, 42.39% and 43.66% respectively
* Last 3 years average RoCE is 33%
* Last 3 years average RoE is 34%
* Long term Debt-Equity ratio has reduced from 1.02 to .49. This should reduce even more with the increased sale of the commercial building space.

PLASTIC PIPING SYSTEMS
* India's capacity for PVC resin is 67% of demand. Rest is imported.
* Kanpur plant's capacity to be expanded from 8000 tons p.a to 15000 tons p.a. Plant is to be commissioned by Dec'10
* Newly launched Lifeline CPVC grew more than 120%
* "Aqua Gold" plumbing system for cold water has grown by over 50%. It is successfully replacing GI pipes.
* Expects the renovation market to drive demand as more buildings undergo renovation
* Polyethylene pipes have grown over 100% by volume
* Exports have reduced by 9.21%

FURNITURE
* Growth of 26% by value and 23% by volume - indication of improved pricing due to better branding
* Planning new factory in Andhra Pradesh - plan to start production by end of 2010
* Plans to increase exclsuive franchise showrooms from 209 to 300 across India in 2010

INDUSTRIAL PRODUCTS
* Bagged all plastic body washing machine project from Whirlpool - production to begin by Sep'10
* Bagged order for manufacturing Tata Swach water purifiers from Tata Chemicals
* Expanding capacity in Noida,Gadegaon and Durgapur to meet Tata Swach requirements
* Volume growth of 25% and value growth of 20% - indicative of pricing pressure

PACKAGING PRODUCTS
* Volume growth of 24%
* New 5 and 7 layer lines are operating at 100% utilization
* Expanding capacity of the 7 layer line by over 50%+ (from 6000 tons to 9500 tons)
* Expecting a growth of 25% and expecting to reach full utilization by June 2010
* The Khopoli plant unit was the first and only multilayer packaging company to receive the BRC (British Retail Consortium) certificate to export to European markets.
* Very good traction seen in the construction and insulation business
* Growth in the insulation division impacted due to unavailability of skilled labour

CONSTRUCTION
* One block of the "Supreme Chambers" at Andheri has already been sold for 20.5 crs and negotiations are on for a few more.
* Commercial property offtake looks weak and it may take some time to sell all the units

Expected EPS (not adjusted for the split) for June 2011 : 70-75
PE range : 8-12
Expected price range : 560 - 900
Building sale : Expected sale price based on executed deal maybe between 270 to 340 crs. EPS from building sale may be around 108 - 136 (assuming the whole building is sold off in FY11).
Payout ratio is about 30% so its possible to see an exceptional dividend of Rs 30-35/per share.
Price of shares may go up significantly based on the property sale to adjust for one time income. That would be the cue to take profits.

Comments

Post a Comment

Popular posts from this blog

Old friends reunite

This weekend was great. Saturday we went to the Alumni Association of our school (AGCS). I met a lot of old friends after over 14 years. I met Irshad, Tabish, Hemant, Debarshi Ganguly, Durjoy Sengupta, Rajni and Kavita after 1995. It felt really nice to see these people. Sandip (Das) is now in Calcutta for a vacation. So, today we met at Tung Fong, Park Street. Sandip and his wife, Sudipta and his wife, Biswajit and me. Sanjoy and Chotu came late, nearly the time when it was time for Bishu and me to leave. It's nice and cold in Calcutta now, so it was good to go to Park Street in the evening. The good thing was I managed to come out without eating a lot, so the new year resolution is on track.
Post a Comment
Read more

Oil, Liquidity and the Sensex @ 12K

The BSE Sensex – the default benchmark for the Indian equity market – touched 12,000 on Friday last week. There is a sense of euphoria, disbelief and caution in people depending on which group they belong to. There are people who have been waiting for a correction from 6000 and are amazed to see the sensex at double that. There are others who are perennial optimists and expect the market to continue giving them the returns in the way it has in the last 3 years. Milestones like 12000 are a nice point to just stand back and access the overall situation. So, what is the reality of the day? Today, the price of oil is hovering around $70 with the political situation in Iran not getting a whole lot better. Don’t think its going to come down in a while. Interest rates are showing signs of hardening. Prices of gold, silver, steel, aluminium, copper, zinc and sugar are in multi year highs. Real estate prices are going through the roof. So, in a way all asset classes are seeing handsome app...
Post a Comment
Read more

Porfolio Structuring (PS) Step 1: Evaluate Current Status

The first step to any long term investment plan is to understand where we are at present. So, to start with you need to list down your existing networth. For example, you can have a list as follows: Provident Fund 100,000 PPF 50,000 Bank FD 50,000 Mutual Funds-Equity 150,000 Mutual Funds-Debt 50,000 Cash In Savings Account 30,000 House 2,000,000 Housing Loan -4,000,000 Others 0 Total -1,570,000 A couple of things to note here. 1. I am not calculating the value of any gold/silver jewellery that you may be having. Indians, typically are not very keen on selling their family gold/silver so it really does not count as investment. You can think of it as an additional bonus if you do have gold/silver. 2. I am including the housing loan you may have as a negative here under the assumption that that is your primary home and not a second home bought for investment purpose. Also, I am ...
Post a Comment
Read more