Supreme Industries trying to emulate the model from Astral. Connecting with the plumber community and conducting workshops to make them ambassadors of the product. To watch this space if this can increase the retail share of Supreme Industries.
Excerpts from 2020-21 annual report (page# 46)
With the help of specialists the Company has embarked upon a new activity with nomenclature as “Plumbing Workshop” which is a full day session with Plumbers. Here the sharing is of latest Plumbing techniques along with applications of new products introduced by the Company in the recent past in the range. The markets have well appreciated it and there is
pressure on Company to increase the Plumbing Workshop numbers substantially. The Company could organize only 61 Plumbing workshops in the year 2020-21 owing to corona
pandemic. Company plans to continue organizing the Plumbing Workshops based on situation during the year 2021-22. There are now more than 90,000 Plumbers connected with the Company.
This is a peaceful company to own. With well diversified manufacturing facilities, distributors & products. The company has a leadership position in all the segments it operates & running more than 20 manufacturing facilities across Country.
Below are the segments its operates & revenue contribution -
Plastic Piping (66%)
Consumer Products (5%)
Packaging Products (14%)
Industrial Products (15%)
Others (1%)
This company is a typical example of how great companies remain great. (81 years in business).
However, the most concerning things abouts this company are 1) no clarity on Management Succession plan 2) volatility of raw materials.
Financial Analysis Summary -
Balance Sheet looks good at high level - Funds are generated using profits & used for Net Block, debt reduction, Cash balance, Investments.
Outflow to Inventory and Receivables is in-line with the sales growth
Other liabilities increased due to increase in trades receivables
Dividend issued is always ~35% of PAT
Continuous sales growth with range bounded OPM% (14-16) (check 2016/17/20)
High Other income in the recent years
Volatile NPM% (7 to 15%), check 2021/22/23
Good FCF/CFO ratio
Improved SSGR & higher than sales growth
Net Cash Generated / CFO is 20%
Depreciation 12-13 (in range)
Stable operations ratios
Controlled/Low debt
High return ratios (check for 2016)
Costs under control - Fluctuation raw material costs
In addition, an investor notices that until FY2015, the company used to follow a financial year from July to June. In FY2016, the company changed its financial year to end in March. As a result, in FY2016, the company covered only 9 months i.e. from July 2015 to March 2016. Therefore, all the financial data for FY2016 comprises the performance of only 9 months. In the years before FY2016 and FY2017 onwards, the reported performance is for 12 months.
Prices have bottomed out.
Volume growth is expected 20% in FY24
Demand for Agri and Residentials is favorable.
Growth in plastic pipes is around 20-25%
Rev guidance 11,000 cr with 14% OPM…seems like the street has already priced it in for FY24. In past its given very less no. of chances to enter, looking at prices closely to enter.
