JM Financial upgraded Supreme Industries to a ‘Buy’ rating from ‘Add’ based on several factors, such as likely demand recovery, normalisation of channel inventories, and others, indicating a positive outlook despite a mixed first quarter.
The upgrade was partly driven by the stock’s performance, which saw a nearly 20% price correction over the past year. This decline made the valuation more attractive, with JM Financial maintaining its target price of Rs 4,000, implying an upside of 18%.
Likely demand recovery
Following a period of softer demand, the company’s management reported a healthy recovery in July 2026. They expect positive year-on-year volume growth for the first half of FY27, specifically anticipating agricultural demand to pick up starting in mid-September 2026.
“The company highlighted that inventories have now largely normalised and July 2026 saw healthy growth, and it expects YoY volume growth in H1FY27 despite the weak Q1FY27, with agricultural demand recovering from mid-September 2026,” said JM Financial.
Normalisation of channel inventories
The company faced sharp destocking in Q1FY27 due to a steep PVC price correction in April 2026. However, management has highlighted that these channel inventories have now largely normalised, paving the way for renewed ordering.
“However, higher PVC prices drove blended realisations up 22% YoY and 13% QoQ to Rs 173 per kilogram, while piping realisations increased 18% YoY and 7% QoQ to Rs 141 per kilogram. Consequently, consolidated revenue rose 4% YoY, down 23% QoQ, to Rs 2,720 crore,” said JM Financial.
Regulatory support via Minimum Import Price (MIP)
The recently announced 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.
“They recently announced MIP has effectively provided a floor to PVC prices,” said the brokerage house.
Reiteration of strong FY27 guidance
The brokerage’s confidence in the upgrade is supported by management’s decision to maintain its FY27 growth guidance, which includes 15–17% volume growth in plastic piping, 12–13% overall volume growth, and EBITDA margins of 14–14.5%.
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,” said the brokerage house.
Supreme Industries share price performance
The share price of Supreme Industries has risen 1.2% in the last five trading sessions. The stock has surged 9.4% in the last one month and changed a little over 1% in the past six months. Supreme Industries’s share has declined by 19.3% over the last 12 months.