Supreme Industries: Can Supreme Industries regain momentum after cutting FY26 growth guidance? – News Air Insight

ET Intelligence Group: Shares of Supreme Industries, the country’s largest manufacturer of plastic products, have declined 9% over the past month and 4% since October 27, following the company’s September quarter results. The company has lowered FY26 volume growth guidance to 12-14%, from 14-15% after volumes in the first half of the fiscal grew by a tepid 8% to 1.5 lakh metric tonnes. The guidance reflects the company’s expectation of a double-digit volume growth in the remainder of the year. Its plastic piping business, a key growth driver, faced temporary headwinds due to the prolonged monsoon, which disrupted construction and installation activities. Slower government spending on infrastructure-related segments also affected overall demand.

Despite the near-term challenges, the company’s management expects stronger demand in plumbing and agriculture segments and a gradual revival in infrastructure activity in the second half of FY26. It expects annual turnover to range between ₹11,000 crore and ₹11,500 crore and operating margin for the year to be between 14.5% and 15%.

By March 2026, the company’s plastic piping capacity is projected to exceed 1 million tonnes, taking the total production capacity to around 1.2 million tonnes.

During the first half of the year, it incurred a capital expenditure of ₹869 crore, which includes Rs 250 crore acquisition cost of Orbia Wavin’s plastic pipe business in India. The deal became effective on August 1, 2025. Total expected cash outflow for ongoing and new capital commitments is estimated at around ₹1,300 crore, which will be fully funded through internal accruals.

The company plans to establish a new material handling products unit at Malanpur in Madhya Pradesh in addition to greenfield projects in Bihar and Jammu for the plastic piping division, and in western Maharashtra for the protective packaging division.

Supreme’s revenue rose 5% year-on-year to ₹2,394 crore in the second quarter. The plastic piping segment recorded an 11% growth in revenue to ₹1,602 crore during the quarter. IDBI Capital, which has a ‘hold’ call on the stock with a target price of ₹4,146, said that the company is poised to do well given its robust capacity, extensive distribution network, and healthy balance sheet. The stock ended Wednesday’s session at ₹3,848.5 on BSE.