SUPREMEIND

Eyes Strong Q4, PVC Volatility Still a Risk

posted a positive Q3FY26 performance, with 13% YoY volume growth and a 7% YoY rise in consolidated EBITDA to ₹3,292 crore, marking a recovery after five quarters of decline. The rebound was led by a 16% volume surge in plastic pipes, supported by the integration of Wavin India’s piping business. However, PVC price volatility remains a key risk to margin normalization and earnings stability. Volume and Segment Growth - Overall volume growth: 13% YoY. - Plastic pipes volume: +16% YoY, aided by Wavin India integration. - Q4 guidance implies 20–24% YoY volume growth, supported by housing, agriculture, and infrastructure demand. - FY26 volume growth targets: 12–14% overall, 15–17% for plastic pipes. Margins and PVC Price Impact - Operating margin in Q3FY26: 12.3%, below normalized range of 14.5–15%. - PVC price erosion led to de-stocking and inventory losses, impacting EBITDA by ₹100–120 crore in 9MFY26. - PVC prices have started recovering: $650/tonne, up from $580/tonne lows. - Margin normalization depends on sustained PVC price recovery. Capex and Strategic Outlook - FY26 capex plan: ₹1,200 crore, focused on capacity expansion and product diversification. - Management expects positive rural sentiment and monsoon tailwinds to support demand. - Revival in housing and infrastructure to aid Q4 performance. Valuation and Analyst Commentary - Elara Securities cut FY26/FY27 earnings estimates by 11.7%/5.5%, citing margin pressures. - Supreme’s stock fell 17% over three months, reflecting PVC-linked concerns. - Analysts remain cautiously optimistic, with Q4 expected to show stronger volume and margin recovery.