Nuvama said Supreme Industries is witnessing a strong recovery in volume growth while maintaining healthy margins despite rising PVC prices, with downside protection supported by minimum import price (MIP) measures.
The brokerage expects plumbing demand to improve in the second half of FY27 following the monsoon. It highlighted the company’s aggressive capex programme, pricing discipline, expanding distribution network and focus on value-added products as key growth drivers.
Nuvama expects Supreme Industries to deliver a strong Q2 and H2FY27 following a challenging period marked by PVC price volatility. Improving channel sentiment and firm PVC price hikes have led the brokerage to raise its FY27E/FY28E/FY29E EPS estimates by 11%/10%/7%, respectively.
The company has committed ₹500 crore in capex for FY27 and aspires to spend up to ₹1,000 crore. The planned investment will go towards new plants at Gadegaon, Patna and Jammu, a new material-handling facility at Malanpur, brownfield expansions, new SKUs, replacement of old equipment and land acquisitions in Pondicherry and Erode.
Nuvama expects Supreme Industries to improve its RoCE from around 20% in FY26 to about 24% by FY28E, driven by higher operating leverage and greater contribution from value-added products, despite the elevated capex.
The brokerage also expects operating cash flow to steadily improve as the company ramps up its recently added capacity.
