Supreme Petrochem Limited — Credit Ratings, 16-12-2024: Credit Rating- Revision

Supreme Petrochem Limited reported consolidated revenue of ₹3,079 crore for the first half of fiscal 2024, up 23% from ₹2,503 crore YoY. This growth is attributed to a healthy demand from the cold storage, appliance, and packaging sectors, alongside the commissioning of new capacities in the previous fiscal.

Net profit increased significantly to ₹212 crore from ₹147 crore, reflecting robust operating performance despite some margin fluctuations. Earnings Per Share (EPS) stands at ₹6.6, showcasing improved profitability.

Operating costs, while reflective of rising raw material prices, have been managed effectively, contributing to a normalised operating margin of 9% compared to 12.5% in the previous fiscal. This efficiency allows for sustained profitability levels above pre-pandemic numbers, supported by a debt-free balance sheet and substantial liquidity.

The balance sheet remains strong, with a liquidity surplus of ₹907 crore, positioning the company favorably for future capital expenditures, estimated at ₹350-400 crore annually over the next few years. Strategic expansions into specialized products and additional capacities indicate potential for further revenue diversification.

Overall, with a positive outlook and strong market positioning in the polystyrene and expandable polystyrene segments, the company is expected to maintain its upward trajectory. Given this performance and growth potential, consider holding or buying depending on your risk tolerance.