Supreme Industries Receives Buy Recommendation with Target Price of Rs 4626: Prabhudas Lilladher

Prabhudas Lilladher Maintains 'BUY' Rating on Supreme Industries

Supreme Industries, a leading player in the Indian pipes industry, has reported strong growth in its Q4FY26 volume, which grew by 16.0% compared to the same period last year. The company's CPVC pipe volumes delivered impressive year-over-year growth of approximately 38% in FY26. Looking ahead, management has guided for FY27 overall volume growth of around 12-13% and pipe segment growth of 15-17%, including the integration of Wavin.

The company's EBITDA margin stood at 14.1% in FY26, reflecting its resilience despite raw material volatility. Management has guided for FY27 EBITDA margin in the range of 14-14.5%. This indicates the company's ability to maintain its profitability despite external pressures. The new product segment, Windows & Doors division, commenced production from March 2026 and is expected to generate additional revenue of INR 2.0-2.5 billion upon full capacity ramp-up.

In Q4FY26, the company recorded inventory gains of approximately INR 700-800 million. However, on an overall basis for FY26, there were no net inventory gains. For FY27, the company plans to invest approximately INR 10 billion in capital expenditure across the Pipe (Patna, Jammu, Gadegaon) and Industrial (Malanpur) segments. The company has maintained a strict threshold of 25%+ Return on Capital Employed (RoCE) for all projects.

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Estimate Revisions and Recommendation

We have revised our earnings estimates for FY27 and FY28E downward by 2.0% and 1.5%, respectively. Based on these revised estimates, we maintain a target price of INR 4,626, which is lower than our previous target price of INR 4,698. This target price is based on 40x March 2028 earnings. We maintain our 'BUY' rating on Supreme Industries.