Weak Q2 fails to shake analysts' faith in Supreme Industries; here's why

Analysts at Motilal Oswal Financial Services (MOFSL), Nuvama, and JM Financial have retained their Buy ratings, despite the company posting a 20 per cent decline in consolidated net profit in Q2FY26

Brokerages continue to maintain a bullish stance on plastic products manufacturer Supreme Industries, even as the company reported a disappointing performance in the second quarter of FY26 (Q2FY26). Analysts at Motilal Oswal Financial Services (MOFSL), Nuvama, and JM Financial have retained their Buy ratings on the Supreme Industries stock, despite the company posting a 20 per cent decline in consolidated net profit to ₹164.74 crore, weighed down by higher expenses.  During the quarter, the comapny's revenue for the quarter rose 5 per cent year-on-year (YoY) to ₹2,273 crore, while earnings before interest, tax, depreciation, and amortisation (Ebitda) fell 7 per cent YoY to ₹297 crore.

 

Brokerages on Supreme Industries post Q2FY26 results 

Citing the margin miss and higher-than-expected earnings expectations, analysts at Nuvama have cut FY26E/FY27E/FY28E EPS estimates by 14 per cent/8 per cent/7 per cent, respectively. Nevertheless, they continue to maintain a Buy rating on Supreme Industries, with a revised target price of ₹4,356 (down from ₹4,614), rolling forward the valuation to Q2FY28E EPS.

 

“Q2 was impacted by a prolonged monsoon, lower agri and infrastructure pipe sales, and operating deleverage. Management maintained pipe volume growth guidance at 15–17 per cent, but revised overall volume growth guidance to 12–14 per cent (from 14–15 per cent), while margin guidance was adjusted to 14.5–15 per cent (from 14.5–15.5 per cent),” Nuvama analysts wrote in a research note.  ALSO READ | What should investors do with Jubilant Ingrevia shares post Q2 results? 

MOFSL, meanwhile, has set a target price of ₹4,850 per share, valuing the stock at 45x FY27 EPS. The brokerage noted that macro headwinds have affected the industry, including Supreme Industries, over the past few quarters. With PVC prices stabilising and demand expected to pick up from the housing and agriculture sectors, MOFSL anticipates growth momentum to resume in the second half of FY26.

 

“With guidance of 12–14 per cent volume growth and a healthy Ebitda margin of 14.5–15 per cent in FY26, supported by capacity additions, improved utilisation, a higher VAP mix, and no inventory losses, we expect Supreme Industries to clock 12 per cent/20 per cent/20 per cent CAGR in revenue/Ebitda/PAT over FY25–28,” MOFSL analysts added. They also highlighted management’s expectation of a demand recovery from Q3FY26 onwards, with no inventory loss in the second half, and guided for revenue of ₹11,000–11,500 crore with an Ebitda margin of 14.5–15 per cent for FY26.

 

JM Financial has also maintained its Buy rating, with a revised target price of ₹5,180, based on 45x Dec’27E EPS (post quarterly roll-over). The brokerage highlighted Supreme Industries’ strong operating cash flow (₹4,500 crore over FY25–28E), net cash balance sheet, and sector-leading capex of ₹2,800 crore over FY25–28E, all without financial strain.

 

“Factoring in the Q2 performance and revised guidance, we trim our FY26E–28E Ebitda estimates by 4–5 per cent and EPS estimates by 8–11 per cent, reflecting higher depreciation and lower contributions from associates,” JM Financial analysts noted.