Supreme Industries shares surge the most in 15 years to a record high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of industrial and engineering products manufacturer Supreme Industries Ltd., surged as much as 14% on Monday. This is the biggest single-day gain for the stock since December 2, 2009, during which it had gained nearly 20%.

The company had reported its March quarter results on Friday, post which, the management had guided for a 20% volume growth in financial year 2025. The plastic pipes volume growth is expected at 25% in the new financial year.

Managing Director MP Taparia told CNBC-TV18 that he sees strong demand tailwinds going forward and hence the company is putting up new plants in Patna, Vijayawada and near the Jawaharlal Nehru Port Trust. The company has also announced capex worth ₹1,500 crore, which it plans to fund completely through internal accruals.

However, despite the positive management commentary, the street is divided on Supreme Industries’ prospects.

For Jefferies, Supreme Industries remains its top small and midcap pick. It anticipates the new capex plan to bolster Supreme Industries’ volume growth and market share.

The brokerage has maintained its “buy” recommendation on the stock with a price target of ₹5,390. This is the second-highest price target for Supreme Industries after Haitong’s ₹5,555.

On the flip side, CLSA has retained its “sell” rating on Supreme Industries, citing expensive valuations. It said that the higher growth for the plastic piping business is indicating a softening profitability mix.

Out of the 27 analysts that have coverage on Supreme Industries, 14 of them have a “Buy” rating, while seven of them have a “hold” rating. Six of those analysts have a “sell” recommendation on the stock.

On the charts, Supreme Industries trades with a Relative Strength Index of 73. An RSI reading above 70 indicates that the stock is “overbought.”

Shares of Supreme Industries are trading 12.4% higher at ₹4,876. The stock has surged 78% in the last 12 months.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow