Supreme Industries meets investor expectations

The plastic goods maker Supreme Industries gained over 4.2% in last two days on reporting over 38% net profit growth for the Jan-Mar'13 quarter. The scrip has outperformed the BSE Small cap and BSE Mid Cap indices in 2013 by staying firm regardless of the carnage in the small and mid caps.

For the Mar'13 quarter the company reported 12.9% volume growth to 74,526 metric tonne. The piping division witnessed 18% y-o-y volume growth to 47500 tonne during the quarter, as against 16% volume growth in the packaging products business. Packaging products remained the most profitable business with 19% margins, while the piping division's operating profit margins were at 14.7%.

The company is on the verge of completing its Rs 435 crore expansion for year July - June 2013. In April it commissioned 50,000 tonne per annum piping products plant at Malanpur, which will assist it in meeting its 15% volume growth target for the year..

The company has been trying to improve the growth in its value added products, which stood at 31.7% in the 9-month period July - Mar'13 quarter as against 31.5% in the year ago period.

The management expects some weakness in its Apr - June '13 quarter leading from inventory losses due to the fall in global crude oil prices. However, volumes growth would make up for the that. Similarly, it remains confident of maintaining the 15% volumes growth target for July - June 2014 as well.