JM Financial has upgraded Supreme Industries to 'Buy' from 'Add' with a target price of ₹4,000, implying an 18% upside potential. The upgrade was driven by several factors including likely demand recovery, normalisation of channel inventories, and a strong FY27 outlook. As per JM Financial, the stock's nearly 20% price correction over the past year made the valuation more attractive, with the brokerage maintaining its target price despite mixed Q1FY27 performance.
Following a period of softer demand, management reported healthy recovery in July 2026 with expectations of positive year-on-year volume growth for the first half of FY27. According to JM Financial, the company expects agricultural demand to pick up starting in mid-September 2026. The brokerage highlighted that inventories have now largely normalised after the sharp destocking in Q1FY27 due to steep PVC price correction in April 2026, paving the way for renewed ordering. Higher PVC prices drove blended realisations up 22% YoY and 13% QoQ to ₹173 per kilogram, while piping realisations increased 18% YoY and 7% QoQ to ₹141 per kilogram.
The brokerage's confidence is supported by management's decision to reiterate its FY27 guidance including 15-17% volume growth in plastic piping, 12-13% overall volume growth, and EBITDA margins of 14-14.5%. JM Financial noted that the company maintains its consolidated OPM guidance of 14-14.5% for FY27. The regulatory support via Minimum Import Price (MIP) on PVC is viewed as a significant positive factor, as it effectively provides a floor to PVC prices and offers regulatory stability to the industry.
The company remains focused on scaling up exports, targeting an increase from $26 million currently to $150 million over the next six-seven years, driven primarily by industrial products and supported by India's FTAs. As reported by JM Financial, this represents a significant expansion in the company's international business operations and diversification strategy. The brokerage emphasised that the company's focus on scaling up exports is a significant growth catalyst for the company's future performance.
Consolidated revenue rose 4% YoY, down 23% QoQ, to ₹2,720 crore according to JM Financial's analysis. The company experienced a 14.3% year-on-year decline in Q1FY27 volumes, with the plastic piping segment witnessing a 15.4% YoY decline primarily attributed to sharp correction in PVC resin prices. However, blended EBIT/kg rose 45.5% YoY to ₹18.6/kg despite a 16.2% quarter-on-quarter decline, while pipes EBIT/kg accelerated 53.9% YoY to ₹16.3/kg. Supreme Industries' share price has risen 1.2% in the last five trading sessions and surged 9.4% in the last one month, though it has declined 19.3% over the last 12 months.
