Review of Supreme Industries second quarter results

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Supreme Industries Ltd. delivered decent volume growth of 9% YoY and 3% QoQ (two-year compound annual growth rate in volume of 9%), with the Pipes division (71% of volumes) growing 9% year-over-year and remained stable compared to the first quarter of the financial year 23 .

During the quarter, plastic pipe margins contracted sharply from 15%/11% in Q2 FY22/Q1 FY23 to 2% in Q2 FY23 due to the sharp decline in polyvinyl chloride prices, which decreased by 55 rupees/kg in Q2 FY23 (PVC contributes about 80% of pipe sector).

The other segments recorded stable performances in terms of turnover and margins.

Supreme Industries expects strong demand from the plumbing and agriculture segment in H2 FY23 and as a result, the company has guided 20% YoY volume growth in FY23, in which the pipe division is expected to grow by 25%.

Additionally, with polymer prices likely to bottom, management expects margins to reach 12-12.5% ​​in FY23.

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