Shares of Supreme Industries Ltd. gained as much as 3.3% on Friday, September 18, after Investec gave it a double upgrade to 'Buy' from 'Sell' and raised its target price to ₹3,860 from ₹3,500. The revised target implies an upside of around 15% from Thursday's closing price of ₹3,344.40. Along with the target-price increase, Investec raised its FY27 and FY28 profit estimates by 10% and 13% respectively, while EBITDA estimates were increased by 7% and 9% for the same time period.
Investec now expects Supreme Industries' revenue to grow at a 12% Compounded Annual Growth Rate (CAGR) between FY26 and FY29, with EBITDA growing at a 15% CAGR over the same period. Normalised net income is expected to rise from ₹954 crore in FY26 to ₹1,446 crore by FY29. The brokerage raised Supreme Industries' FY27 revenue estimate by 3% to ₹12,576 crore, while FY28 estimates have been increased by 6% to ₹13,773 crore. For FY29, revenue is projected to reach ₹15,563 crore from ₹11,218 crore in FY26, with EBITDA rising from ₹1,553 crore to ₹2,398 crore.
Investec expects the audit cycle around Jal Jeevan Mission (JJM) funding to be largely behind the company, with reports from the Centre and states now under legislative scrutiny. The central government released no JJM funds in FY26, but Investec expects releases to resume, with initial fund flows to some states already visible. A revival in funding and on-ground execution could make Supreme Industries a major beneficiary, given its exposure to the pipes segment. The brokerage forecasts an average EBITDA per kg of ₹23 over FY27-FY29, compared with historical three-year and five-year averages of ₹22 and ₹24 respectively.
Domestic PVC prices have risen from ₹82 per kg on June 25 to ₹103 per kg currently, according to Investec. Based on parity calculations and an assumed 5% local premium, the brokerage sees scope for a further ₹10 per kg increase in PVC prices. Quarter-to-date average PVC prices are around 10% higher than the average during the first quarter of FY27, which Investec expects could result in inventory gains in Q2 FY27 and potentially beyond. Higher realisations could also support revenue growth and fixed-cost absorption.
Investec has shifted its valuation basis to September 2028 and now values Supreme Industries at 36 times price-to-earnings, compared with 40 times on its earlier March 2028 basis. This supports the revised target price of ₹3,860. According to Bloomberg data, 22 of 30 analysts covering Supreme Industries have a 'Buy' rating, while six have a 'Hold' rating and two have a 'Sell' rating. The stock has fallen about 23% in the last 12 months, with shares trading near the day's highs at ₹3,461.30 on Friday, up 3.5% from Thursday's close.
