CD Equisearch
Supreme Ind (Buy)
CMP: ₹1,201.30
Target: ₹1,416
Higher polymer prices emanating from higher crude oil prices to shut down of several Chinese polluting polymer plants is expected to keep global polymer prices high for some time.
Afflicted by demonetisation and RERA, Indian home loan growth during April-October period fell 32.7 per cent from the same period a year before — the highest decline in five years. Yet astonishing sundry of products ranging from furniture to PVC pipes to bathroom fittings to automobile components to plastic films to material handling products does have counterbalancing impact, a must for any business redux. Buttressed by higher capacities of packaging products and margin revival in hardly belittling plastic piping business, earnings would vigorously resurrect next fiscal.
On balance, we maintain our accumulate rating on the stock with revised target of ₹1,416 based on 38x FY19e earnings over a period of 6-9 months (forward peg ratio cut to 1.4; four year historical P/E (FY18 included): 33x).