Supreme Industries (NSE:SUPREMEIND) Q2 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the Supreme Industries Q2 FY 'twenty seven Earnings Conference Call hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Note this conference is being recorded. I now hand the conference over to Mr. Asi. Thank you, and over to you, sir. Thank you. So good evening, and welcome, everyone, on Supreme Industries Q2 'twenty seven earnings call. We have the senior management of the company who will take us through the quarter performance, post which we will open it all for questions.

0:50 Thank you, and over to Mr. Taparia for his opening remarks. Thank you, Mr. Kashim, and thank you all very much. I'm MP Taparia, Chairman and Managing Director of the Supreme Industries Limited. I, along with my colleague, CPJ Somani, CFO and she, Ajay Sabu, Vice President, Corporate Affairs and Company Secretary. Welcome all participants who are participating in the discussion of the Energy Exchange alone and consolidated financial results for the quarter and half year ended 09/30/2026. The exchange alone results and the consolidated results are already with you. I'll give brief on company's product, operating performance and other highlights.

1:39 The company sold 341,991 ton of plastic goods and achieved revenue from operation of rupees 6,079 crore during first half of the year against sales of $38,002.24 ton and net product turnover of INR 5,003 crores in the corresponding half year of previous year, achieving volume and product value growth of about 122%, respectively. The stand alone operating profit and profit after tax for the half year of the current year amounted to rupee $8.29 crore and rupee $4.87 crore as compared to rupee $6.17 crores and rupee $3.71 crores, respectively, for the corresponding period of the previous year, achieving an increase of 3431%, respectively.

2:42 The business scenario of the product segment of the company for the second quarter ended September 2026, as compared to the corresponding quarter of previous year as with age under. Plastic packaging system business grew by 24 in volume and 42% in value term. Packaging product segment grew by 3% in volume and 22% in volume term. Industry product segment business grew 13% in volume and 49% in value term. Consumer product segment business decreased by 14 in volume and grew by 2% in value term. The order turnover of value added products increased to INR $14.76 crore during the current second quarter as compared to INR $10.72 crore in the corresponding quarter of previous year, achieving a growth of 38.

3:45 The operating environment stabilized in the second quarter after the unusual polymer price volatility of first quarter. Geopolitical development in West Asia remains a source of uncertainty, while the minimum import price of suspension and withdrawal of the customs duty exemption have reduced volatility. In plastic piping system, volume grew by 24% in second quarter, bringing first half volume growth of about 2% year on year. We continue to strengthen the business through radiated product like piping system, gas piping system, electrofusion fitting, premium range of bar fitting, industrial valve, and cyan pipe system made for polypropylene, and wider market reach and integration of the former valve in business.

4:46 Our UPC window and door business is increasing increasing market acceptance and expanding user network. Capacity visualization company is improving gradually and procurement at begin or HRT or marketing companies. Our industrial, material handling and packaging business continue to perform satisfactorily all the consumer products segment even represent due to polymer price upward March. Work on New Age at BR, Jammu, Eero, Guru Pobucherry, and Marangpur, along with Brownfield, expanding the various sites in publishing its plant. We'll continue to fund the investment through healthy cash flows and intellectual by maintaining financial discipline.

5:38 Looking ahead the geopolitical environment, making a precise forecast is quite difficult. Newlydays, encouraged by the second quarter performance, we expect company wide volume growth of around 2010% for fiscal year 'twenty seven despite the big growth during big degrowth during first quarter. We remain focused on sustainable long term growth through diversified product portfolio, strong brand, extensive distribution network, and continuous focus on operational excellence. You have been for the overall survey for the quarter and a half year under under reference. Thank you for your patience. Now I and my colleague, CPC Somani and CJ Abou, are available to reply to various queries which will be raised by all of you. Thank you very much.

6:37 Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of from DOLLET Capital. Please go ahead. Hi, sir. Just a couple of things to understand.

7:24 So now particularly in the plastic piping where we are saying that... And we have reduced the guidance from 15 to 17% to now 13%. But considering the muted growth in the one edge, even though to achieve this 13%, we need to do a kind of a 22% kind of a growth in the second half, which is kind of a four lakh 12,500 unit metric ton versus in one lakh, we have done two seventy three... Two seventy four lakh. Sir, do we think that it is doable currently till in October? Are we seeing such kind of a growth that are we confident or there is a possibility that we can further downward revise our this volume growth 13% to maybe a lower number going forward?

8:20 Going at the present situation, we do not expect any lower number to be announced again. Because in the month of October, in the first twenty five days, we have maintained 23% volume growth. This is this is lower growth forecast from 15% to 13%. It is result of the first quarter working, where we had a degrowth of around 13.5% in plastic piping system due to deep reduction in the price in the month of April, which was unprecedented. So we do not see any such reason today because, fortunately, our major sales premium from PVC and CPVC, and they are not just well linked to the price volatility which are caused by the crude price.

9:13 So we are quite comfortable, and, fortunately, we have good capacity available, and we have good properly coverage of raw materials. So we don't see any question either from capacity or from available raw material. Got it, sir. And sir, in this quarter q two, have you seen any kind of inventory loss? And related to that, currently, in terms of the channel level, the inventories are at a normal level. And at the same time, in terms of the another thing is on the pricing front, have you seen the price hike in the CPVC also in the month of October? No. PVC price has gone up. According to CPE price has gone up, but it's gone up to a reasonable level which can be easily affordable to our customers, so we have no problem.

10:04 And inventory level, we cannot share, but we think the customers are are now remaining very cautious. They are keeping the inventory to minimum level, and we are making sure that whatever order we receive, because our huge capacity has so many sites, we are able to deliver most of their order within forty eight hours. Okay. And there is no inventory gain or loss in the q two? No. Inventory gain is there going to be in the first half overall. First half also. But the overall inventory gain, we will get up precisely when we close the year in the month of March next year. There will... As of today, there will be event again. Okay. And and whatever the PVC price hike has happened till the...

10:50 So everything has been passed on to the system. So so why I'm asking is that because there is a significant growth for us in terms of the realization in in the PVC segment, particularly for last three quarters. If I look at kind of a seven and a half percent kind of every quarter q o q, There is an increase, obviously, the PC prices has went up. But do we still see if the oil prices stay where it is, and let's assume there is no hike, can we see some increase in Q o Q in the realization in the third quarter? I don't follow your so many important. We already know the virtual price increase. You can increase the price. We are increasing price every time, like, we will pass on the increased price to increase cost to our customers.

11:39 Okay. Okay. And, Martin, we have already said So to interrupt her, if... Should you have a follow-up question, please rejoin the queue. The next question is from the line of Kesha from HDFC Securities. Please go ahead. Hello. Hi. Thank you for the opportunity. So one thing I want to understand, as you allocate the fact that October demand is healthy, but it might be due to, you know, this time, Diwali is pushed by a month. Normally, that possibly might be leading to higher demand in October. What are your thoughts on your thing? We should know. Dear friend, you you normally, October is a set of time. This is a time business remains very slow because most of the workers who are working in a business house and project go to their village.

12:29 So I really... This is right now over. It started from October 11 and over by October 21. So even twelve days of business are slow, but overall, considering the last year also, so I've given you the volume good up to yesterday's end. Okay. Okay. Thank you. I'm talking about Diwali. Last year, Diwali was in October. This time, it is in November. So that is heading to a, you know, a stronger volume growth in October. But it's not not sure. Diwali will be having a lower growth. Diwali will not be affected much growth. The value only the... Some country only growth between the and the issue left... Panchami, which is you're going to be in sixth and thirteenth of November, but only certain shares are affected. This is affected many part of the country.

13:21 So we have affected all the first shift. For last year, also, the first shift are not coming through this year. Got it. This is helpful. We can see the employee cost have increased by 25% year on year. Why is there a sharp increase? Increased by number, by 9%, and also increased in number of people also joining the company. Plus the new units which will be added last year second half, which are not there in the first half. Understood. One last question from my side. We can see that one, your protective segment, packaging segment margin have taken a hit in this quarter. What is the reason for the same? And earlier, you used to give us some sense about, you know, inventory gain particular range. At least you can give some sense how I mean the h one inventory gain or broader range.

14:11 There will be some inventory gain, but final credit inventory gain will tell you in the month of April. Overall, and today, there will be inventory gain in this year. So the reason why I'm again asking you this question is because we see, you know, Q2 margin is still sub 13% in spite of inventory gains. So why is the margin low in this quarter? Fifty years, the rheumatoid price are on higher side. So your base has become higher for purpose of margin. Apart from that apart from that, whenever pricing is taking place, we want to help our distributor to repair their balance sheet. So we increase the price only for ten, twelve days. Understood. But thank you so much, sir. That's it.

14:59 Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, Please limit your questions to two per participant. Next question is from the line of Praveen from PL Capital. Please go ahead. Yeah. Hi. Thank you for opportunity. Sir, on the packaging segment, there is a, you know, margin contraction. So is that elevated RM prices, which has not yet passed on? What is the reason for that? Elevated air price are difficult to pass on. But they are cheap in the price. When you die, you're linked to crude price, and then you have very cheap and supply was not able to come from Middle East.

15:44 Middle East, big supplier of policy in the... In in country, and many branch in Middle East remain close. The shipment from British to India or anywhere in the world has become very difficult. And that's why the margin in packaging business has gone down because because if if packaging film, we were not able to get the price increase. So we accept the price because of the initial result. So it was not possible to increase the price immediately properly. But it's not a business, but we should definitely reduce our margin. Okay. Okay. And the second thing, sir, you also explained that helped the distributor in the elevated RM prices. Can you quantify that and elaborate more on that, which affected your gross margin? Quantify when the price took place, we increase the price...

16:39 We increase the effect in the market after ten to fifteen days. Okay. Thank you. Thank you. Next question is from the line of Neha from Nuwama. Please go ahead. Hi. Good evening, sir, and thanks a lot for the opportunity. So I just want to, you know, deep dive more on the margin front while, you know, your volume guidance is understood. Your margins have been missing estimate this particular quarter as well as last quarter. What is the firstly reason for margin miss? We that product mix wise, it should not have deteriorated because Agree was barely missing. So what is the reason of margins falling on a quarter on quarter basis? That's one. And what will lead to improvement?

17:25 We've still given the margin guidance for the full year at 14 to 14 and a half percent. We are very comfortable at 14, 14 and a half percent. We'll get a very good return on our investment. Understood. But if I exclude the inventory gains in the first quarter, margins would have been even more lower. So could we understand the reason for the margin, miss, this particular quarter? How much price increases happened in PVC? And let's say, how much did you pass on? We're increasing the price up to ten to fifteen days gap to help my distributor repair their balance sheet. But overall, we are giving guidance of increasing operating margin between 14% to 14 and a half percent for the full year. Understood. And then, sir, CPVC, how much of the price increases have already happened on account?

18:15 CPVC also are two increase at second place. We have announced a seven increase. We announced from tomorrow. So from tomorrow, you're taking price hike in the system is what you're alluding? Which is the... Inform the customer 70%, 5%, 7% product to product. We are announcing increasing price from tomorrow. Next question is from the line of Anu from Anandrati Shares and Stockbrokers. Sir, what would be your guidance for the pipes volume growth and EBIT margin for H2 FY 'twenty seven? We have given the margin growth of 13% of the piping business.

19:04 And if the piping business has to grow at 1414.5%, otherwise, we can't achieve the company margin. So five b... Margin has to be 14, 14 and a half percent or maybe slightly better. Okay. And, sir, what what this business. Understood. So what would be the expected CapEx for FY twenty seven in terms of cash outflow? Cash outflow should not be more than 7 to $7.50 crore. 700 to $7.50 crore. And one question? Miss, you're not audible.

19:53 Sorry? Yeah. That's it for me, please. Okay. Thank you. Thank you. Next question is from the line of Ritesh Shah from Investec. Sir, my question is on PVC piping volume growth that is very encouraging. I just wanted to understand where this growth is coming from? Sir, any other revenues besides housing which is contributing to the volume growth?

20:41 Sorry? Sir, any other avenues besides housing which is helping us on the volume growth on the piping side? Majority, second quarter was housing. Anyway, for the full year, housing, agriculture. Sir, do you think there are any tailwinds with respect to Nalsajal orders coming through in a few states? Which one? Nalsajal. Nalsajal... See, understand the... Under your structure of Nalsajal business. Residential business can come only from their state, which is also spending certain percentage of money, then only they are entitled to get contribution center. So residential business is becoming very difficult out of our ministry to...

21:27 Even if they require, they cannot start because if they don't spend money, there will no money coming from center. So nurse HR has said in last two years, and this year, as of today, I can say it is going to be much lower than what was the budget. Central budget was in two years old. But when the state government is not making fun, the central government will not have money money coming. So we are not very optimistic or any big... Or your business in North Central this year also. But the business is coming from irrigation system. We are coming from SUPREMEIND system, But it is not a big business in our company because many people are playing with the quality. We don't play with the quality.

22:13 So we will be working with a low margin, but business is not... We don't consider very significant business this year in our company. Sure. And, sir, would it be possible for you to give some color on OPVC, doors and windows, and gas fittings business as well? So when changing together, I can say OPVC business picking up now. We anticipate good growth for the full year in OPBC. We are introducing several new vendors also in OPBC going forward in the remaining six months. And our window... We are charging only ready made window. And every month, our business in window is increasing. Every month, we are servicing with the... With distributors in the major cities, and we are going to the growth of window business. We are also very encouraged in our bath fitting business.

23:07 We have entered a new range of Moho bath fitting, which apart from offline, we started selling online, and we started getting order online also of our Moho bath fitting. And, sir, gas fittings? Gas fittings, we are very very shifted, and now we are in a position to supply gas from higher location. We get advantage of gas pipe coming in the oil. The fuel content is very high. So we are the only company in the country which can supply from five location. It's... We're south, north, and Northeast, all the five location. Next question is from the line of Al Ghabriv, an individual investor.

24:05 Hello? Yeah. Yeah. Yeah. Yes. Hello, sir. Sir, can you repeat? In the beginning, you gave some revenue guidance for FY '27. I could not catch that number. Can you please repeat that number, revenue growth guidance? FY seventeen, we entered '27, we expect our business to grow between 13,500 crore to 14,000 crore. Operating margin between 14% to 14 and a half percent. And this is this is overall total consolidated revenue growth. Right? Revenue of Supreme Industries Limited. Okay. Thank you very much. Thank you. Thank you. Next question is from the line of Neha from Nuwama. Please go ahead.

24:57 Thank you, sir, and thanks for the following follow-up opportunity. Just wanted to understand your other business has, you know, increased from roughly about 20 odd crores to about 80 odd crores. So is that the Mohi division that's getting factored in, or is that the windows doors business that you got into that getting factored in here? No. Mohe part is part of plastic piping system. So it is Okay. The window and doors, which is probably part of others as of now. Okay. Secondly, some other things in, actually, your accidental business of the raw material trading. We have some surplus of material to which normally sell. Right. So that gets into the other part is what you're saying. Correct. Yeah.

25:46 Understood. Thanks thanks for the clarity, sir. That was about it. Thank you. Thank you. Next question is from the line of Tejas from Citigroup. Please go ahead. Thanks, sir. I just missed the volume growth for the month of October so far that you mentioned at the start of the call. Can can you repeat it? No. Up to up to yesterday, for this month, the growth is 23% in plastic pipe system. Okay. Okay. So twenty three day... Twenty five days of October, 23% is the Y o Y growth in plastic pipes. For...

26:35 Yeah, for raw materials, how many how many days of inventory do you typically carry and any change in that over the recent period or currently? We are keeping adequate raw material requirement because there are some imported raw material. We are keeping more inventory also because there is so many uncertainty about the... When the ship will leave and when the ship will arrive. So we are giving adequate inventory so that we don't deploy our customer that we can't make supply because no revenue available. We have adequate amount of so many grade of material we are using, and many of them are from imports. And we are giving adequate diameter, adequate to supply situation so that we are responsible supply to all our customers throughout the country.

27:26 Understood. And lastly, if I just calculate the realizations in the plastic piping segment in terms of per kg, and if I just look at it on a Y o Y basis for the first half, the increase that I see is slightly higher than the increase in the PVC price, domestic prices. So is it just a function of mix or any any change in policy? Using PVC. Now we are making cyanide pipe, which is most expensive raw material, which is made from polypropylene special formula material. We are also supplying for plumbing system, PERC pipe system, which is very expensive raw material made outside of country only.

28:11 And polypropylene, which we are using for silent pipe, also made outside the country, where the cost of raw materials, CI, basically, are so quite high, and the rupee going down also increase the cost. So only PVC, basically, will not be able to arrive any... Every cost of raw material, please. And CPs are also very expensive. So buying Understood. Our material... Our materials are used in the piping system, other quite expensive material. Right. Understood. And the share of these newer products and CPVC, how much would it have increased on a Y o Y basis, any sense? Every segment, we are going to sign increase only. Every segment, we just see growing.

29:07 Next question is from the line of Bhavan Rupani from Investec. Please go ahead. Hi. Thank you, sir, for the opportunity. I have just one question on Nalsajjal. So sir, what we understand is central government has released somewhat 7,700 crores post CAG audits in August 26. Do you think as funds starts to get released by central government, we could see incremental volume growth coming in from FY twenty eight onwards? We are not getting any much inquiry for from any state as of today. But we are aware that the state government that you missed the fund distributed by central government. We are aware that many state is still not clear the bill of the last year also.

29:57 So unless they clear last year bill, the contractor will not come back to again take the order. So necessary to our mind, we're not going to spend anywhere from central government also this year. As it happened last two years, same thing may happen this year also. Got it, sir. Thank you so much. Thank you. Next question is from the line of Rahul Agarwal from Ikigai Asset. Please go ahead. Hi, sir. Good evening. Sir, three questions. Firstly, what was the CPVC volume growth for first half? 30 and a half percent.

30:44 Okay. And sir, for the packaging and the industrial segment, what is the volume growth guidance for full year? Industry product segment, we we know value volume guidance because it depend on the customer, what item they want to order. It's maybe less raw material or volume by... Less sample, but quite expensive raw material. So very difficult to give any volume segment on the with industrial customer, we are doing custom molding only. Right. But it's fair to say that this business will start recovering in terms of sales volume growth in second half. Is that directionally correct? India product segment, we grew by 13% in volumes. It was quite comfortable.

31:30 Only packaging product segment, we just had a very small growth With the price, it gone too high. So the demand was not matching their capacity. The pricing has gone too high this year. The country has shown the 10% decrease this year up till now. Okay. Okay. So would you expect recovery in second half, or it will remain weaker in second half and then maybe As on today, crude price remains quite high. Got it, sir. Got it. We can see. And, sir... Got it. And for consumer product business or furniture, what is the issue exactly? Why is this degrading so much? Price has gone too high. Because the procedure was not available also because government had put restriction on the local producer.

32:21 They divert quite a good capacity to make LPG. From propylene, you... They were asked to do even 50% LPG and 15... 50% only to make. The local supply also was affected of polypropylene, and our producers are also made from polypropylene and. And anyway, see very small segment of volume in our company. And there's a big diversion of furniture requirement of chairs from the reprocessed material. We don't make chairs from reprocessed material. We are also playing prime material product. Got it, sir. Got it. Thank you so much, sir, for answering my question. Thank you.

33:27 No question? Next question is from the line of from Dhrishya Capital. Please go ahead. Okay. Thank you. Hi, sir. Thanks for taking my question. I just have one question on the industry growth rate with respect to PVC. Is there any insight that you can provide on that? Industry growth. Industry growth for PVC. Industry growth is the number what we got from the raw material producer is minus 10%. This year, one inch? This year, first half, 8% growth, but they they know... Also told us the credit number they cannot know because what is the unit adjustment among other distributor and other retailer, they don't... They cannot capture the number.

34:23 The basis is what your imports come in the country and what your supply... They supply in the country. They're showing their their number is that is it 10% degrowth in first half. Got it, sir. This is very helpful. So, basically, we are gaining market share at the expense of the unorganized sector. Market assumption? Our market is growing, so it means that our market share has grown this year compared to the last year. Yes, sir. Thank you so much. Thank you. Thank you. Anyone who wishes to ask a question may press star and one on their touch tone telephone.

35:17 Next question is from the line of Akash Shah from UTI MF. Please go ahead. Yeah. Hi. Hi, sir. Thank you for the opportunity. Sir, just wanted to check how much would be employee cost for the full year. I mean, in the first quarter, it is up 25% and absolute number is INR 168 crore. So how much would be the employee cost for full year? For the the first half, is INR 30 crore. It's compared to INR $5.80 crore last year. Yes. So and since no new greenfield is coming this year, because our first half number is the benchmark for the second half also, except the Okay.

36:13 Commission to directors, which is based on the profits of the company. Okay. Okay. Understood. Understood. Right. Right. Sure. Sure, sir. Okay. Thank you. Thank you. Anyone who wishes to ask a question may press star and one on your touch tone telephone. As there are no further questions, I now hand the consent over to the management for closing comments. We are very thankful for all the intelligent person raised by our German investor.

37:02 We thank them very much. Thank you all. Thank you. Thank you, sir. On behalf of Dam Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. I can see. Thank you.