Buy Supreme Industries; target of Rs 2320: ICICI Direct

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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ICICI Direct's research report on Supreme Industries

Supreme Industries (SIL) is India’s leading plastic processing company with a presence in four major segments including piping systems, packaging products, industrial products & consumer product category with revenue contribution of 65%,16%, 13% & 5%, respectively. Market leader in the PVC pipe industry with a value market share of 14% • Robust balance sheet with RoE & RoCE of 24% & 27% (five-year average), respectively, with stringent working capital policy.

Outlook

We maintain our BUY rating on the stock. We value the stock at 25x P/E FY24E EPS and maintain our target price at Rs 2320.

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