The Supreme Industries Ltd: Q2 FY26 Results Review & Investment Verdict
The plastics-processing specialist The Supreme Industries Ltd (hereafter “Supreme”) posted its Q2 (ended Sept 2025) numbers which show a mix of volume growth but margin pressure and a drop in profit. We evaluate the result, compare with peers, explain financial jargon, assess SWOT, and give a clear verdict for investors.
Company & Sector Snapshot
Supreme operates in the Indian plastics manufacturing space — covering piping systems, industrial components, packaging and consumer plastic goods. The sector dynamics are driven by raw-material (polymer, PVC) prices, infrastructure/ construction demand (for piping), packaging demand, and product-mix shifts.
Key Q2 FY26 Performance Highlights
The company reported:
• Revenue of ~ ₹2,393.9 crore, up ~5.3 % year-on-year (YoY).
• Volume (plastic goods) increased ~11.8 % YoY (154 k MT vs ~138 k MT last year).
• EBITDA margin fell — operating profit margin (OPM) dropped to ~12.4 % from ~14.1 % last year.
• Net profit (PAT) declined ~20.3 % YoY to ~₹164.7 crore (vs ~₹206.6 crore a year ago).
• Despite the drop in profit, an interim dividend of ₹11 per share (face value ₹2) was declared; record date 3 Nov 2025.
Understanding the Terms
- Revenue: The total income from sales of goods and services during the quarter. Rising revenue shows growing business activity.
- Volume increase: Here this indicates the tonnage of plastic goods sold (154 k MT) rose ~11.8 % — positive sign of demand growth.
- EBITDA margin: Earnings before interest, taxes, depreciation and amortisation divided by revenue. A declining margin means cost pressures or falling realisations are hurting profitability.
- PAT (Net Profit After Tax): The bottom-line profit after all expenses and taxes. A decline despite revenue growth signals margin compression or higher costs.
- YoY: Year-on-Year comparison — quarter compared with same quarter last year.
- Interim dividend: A dividend declared before final results, showing management’s confidence in cash-flows and rewarding shareholders despite tougher times.
Peer Comparison
To place Supreme in context, sample peers in the plastic piping/industrial-plastics domain include Astral Ltd and Finolex Industries Ltd. While full comparable data is not always harmonised, key ratios from Supreme are:
| Company | Revenue Growth (Q2 YoY) | EBITDA Margin | Net Profit Growth (Q2 YoY) |
|---|---|---|---|
| Supreme Industries | ≈ 5.3 % | ≈ 12.4 % | ≈ -20.3 % |
| Astral Ltd (example)** | (industry source ~ mid-single digits)† | higher margin range ~14-16 %† | (lesser decline or growth)† |
**Note: These peer figures are indicative and less up-to-date than Supreme’s published result. Use for directional comparison only.
What this shows is that while Supreme delivered volume growth, the margin drop is steeper than desirable, and profit decline is sharper. A peer with higher margin resilience would hold comparative advantage.
SWOT Analysis
| Strengths | Weaknesses |
|---|---|
| Strong brand and diversified plastics portfolio (pipes, fittings, packaging, molded goods). | Profit and margin under pressure – margin compressed from ~14 %+ to ~12.4 % this quarter. |
| Volume growth of ~11.8 % indicates underlying demand strength. | Exposure to raw-material inflation (PVC, polymers) and infrastructure demand weakness in piping segment. |
| Healthy balance sheet (low or negative net debt) provides financial flexibility. 11 | Large fixed-asset base and expansion could weigh on returns (ROCE, ROE trending down). 12 |
| Declared interim dividend despite tough quarter — reflects shareholder focus. 13 | Profit decline raises questions on near-term earnings stability — a risk to crowding valuations. |
Opportunities & Threats
| Opportunities | Threats |
|---|---|
| If infrastructure spending picks up (piping, water management) then volume & margin tailwinds may return. | Continued raw-material price volatility (PVC resin) could keep margins under pressure. |
| Shift towards value-added products (premium pipes, fittings, packaging) may improve margin. | Slowdown in construction/infrastructure demand would adversely impact piped systems segment — a large chunk of business. |
| Export or non-domestic growth (packaging) could diversify earnings base. | Competition and pricing pressure from cheaper imports or substitute materials may compress margins further. |
Management Commentary & Outlook
The management acknowledges that while volumes are growing (~11.8 % in Q2), margin erosion is a concern due to polymer price deflation and slower infrastructure demand. 16 They expect volume growth of ~12-14 % for the full year but recognise margin recovery may take time. 17
Investment Verdict
Here’s our summary take: While Supreme delivers solid volume growth which is a positive sign of business health, the margin decline and profit drop raise caution. For an investor seeking long-term value, the key question is whether the company can restore margins and convert volume growth into improved profitability.
Given the current result:
- If you believe infrastructure demand will pick up and raw-material cost pressures will ease, then Supreme may offer a medium-to-long-term investment opportunity.
- If you are focused on near-term returns, the margin risk and profit decline suggest that waiting for clearer margin improvement might be prudent.
Verdict: Hold / Selective Buy for those with a 2-3 year horizon and conviction in the sector recovery. For short-term traders or margin-sensitive investors, it may be wise to **wait** for signs of margin stabilisation before initiating a fresh exposure.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, emphasises that volume growth itself is encouraging, but margin erosion and profit shrinkage signal that the business is under pressure. Investors should monitor raw-material trends and infrastructure demand closely before adding significant exposure. Diversification and patience may be key in such a scenario. Discover more analytical perspectives and fact-based guidance at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Plastic Manufacturing Stocks
- What drives profitability in plastic piping companies?
- How sensitive are plastic-product companies to raw-material-price volatility?
- Which Indian plastics stocks are best poised for infrastructure recovery?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
