Ladies and gentlemen, good day and welcome to The Supreme Industries Q2 FY 2027 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch tone phone. Please note this conference is being recorded.
I now hand the conference over to Mr. Aasim . Thank you and over to you, sir.
Thank you. Good evening and welcome everyone on The Supreme Industries Q2 2027 earnings call. We have the senior management of the company who will take us through the quarter performance, post which we will open the floor for questions. Thank you, and over to Mr. Taparia for his opening remarks.
Thank you, Mr. [Aasim] , and thank you all very much. I am M.P. Taparia, Chairman and Managing Director of The Supreme Industries Limited. I, along with my colleague, Shri P.C. Somani, CFO, and Shri R.J. Saboo, Vice President, Corporate Affairs, and Company Secretary, welcome all participants who are participating in the discussion of the unaudited stand-alone and consolidated finance results for the quarter and half year ended 30th September 2026. The stand-alone results and the consolidated results are already with you. I will give brief on company product operating performance and other highlights.
The company sold 341,991 tons of plastic goods and achieved revenue from operation of INR 6,079 crores during the first half year of the current year, against sales of 338,224 tons and net product turnover of INR 5,003 crores in the corresponding half year of the previous year, achieving volume and product value growth of about 1% and 22% respectively. The stand-alone operating profit and profit after tax for the half year of the current year amounted to INR 829 crores and INR 487 crores as compared to INR 617 crores and INR 371 crores respectively for the corresponding period of the previous year, achieving an increase of 34% and 31% respectively.
The business scenario of all the product segments of the company for the second quarter ended 30th September 2026 as compared to the corresponding quarter of the previous year is as under. Plastic piping system business grew by 24% in volume and 42% in value term. Packaging product segment grew by 3% in volume and 22% in value term. Industrial 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 overall turnover of value-added products increased to INR 1,476 crores during the current second quarter as compared to INR 1,072 crores in the corresponding quarter of the previous year, achieving a growth of 38%. The operating environment stabilized in the second quarter after the unusual polymer price volatility of the first quarter.
Geopolitical development in West Asia remains a source of uncertainty, while the minimum import price on suspension grade PVC resin and withdrawal of the custom duty exemption have reduced volatility. In plastic piping system, volume grew by 24% in the second quarter, bringing first half volume growth of about 2% year-on-year. We continue to strengthen the business through value-added products like PERT piping system, gas piping system, electrofusion fitting, premium range of valve fitting, industrial valve, and silent pipe system made from polypropylene and wider market reach and integration of the former Wavin business. Our uPVC window and door business is seeing encouraging market acceptance and expanding the dealer network. Capacity utilization in composite cylinder is improving gradually as procurement has begun at all three oil marketing companies. Our industrial material handling and packaging business continue to perform satisfactorily.
Although consumer products segment remains under pressure due to polymer price upward march. Work on new unit at Bihar, Jammu, Erode, Puducherry, and Malanpur, along with brownfield expansion at various sites is progressing as planned. We continue to fund the investment through healthy cash flows and internal accrual while maintaining financial discipline. Looking ahead, the geopolitical environment, making a precise forecast is quite difficult. Nevertheless, encouraged by the second quarter performance, we expect company-wide volume growth of around 10% for fiscal year 2027, despite the big growth during the first quarter. We remain focused on sustainable through diversified product portfolio, strong brand, extensive distribution network, and continuous focus on operational excellence. A brief and overall summary for the quarter and half year ended under reference. Thank you for your presence.
Now, I and my colleague, Shri P.C. Somani and Shri R.J. Saboo, are available to reply to various queries which may be raised by all of you. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. 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 Shravan Shah from Dolat Capital. Please go ahead.
Hi, sir. Just a couple of things to understand. Sir, now, particularly in the plastic piping, where we are saying that we have reduced the guidance from 15%-17% to now 13%, but considering the muted growth in the 1H, 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 412,500 metric ton versus in H1 we have done 274 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 base volume growth 13% to maybe a lower number going forward?
As the present situation, we do not expect any lower number to be announced again. Because in the month of October, in the first 25 days, we have maintained 23% volume growth. This lower growth of forecast from 15% to 13% is a 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. We do not see any such reason today, because fortunately, our major sales coming from PVC and CPVC, and they are not that much linked to the price volatility which are caused by the crude price.
We are quite comfortable and fortunately we have got capacity available and we have got properly covered in raw material also. We don't see any constraint either from capacity or from availability of raw material.
Got it, sir. In this quarter Q2, have we seen any kind of inventory loss? Related to that, currently in terms of the channel level, the inventories are at a normal level. At the same time, in terms of another thing is on the pricing front, have we seen the price hike in the CPVC also in the month of October?
No, PVC price has gone up, accordingly CPVC price has gone up, but gone up to a reasonable level which can be easily affordable to our customers, so we have no problem. Inventory level, we cannot say, but we think the customers are all now remaining very cautious. They are keeping the inventory to a minimum level, and we are making sure that whatever order we receive, because of our huge capacity at so many sites, we are able to deliver most of their order within 48 hours.
Okay. There is no inventory gain or loss in the Q2?
The inventory gain is going to be in the first half also. But overall inventory gain, we can tell precisely when we close the year in the month of March next year. As of today, there will be inventory gain.
Okay. Whatever the PVC price hike has happened till now, everything has been passed on to the system. Why I am asking is that because there is a significant growth for us in terms of the realization in the PVC segment, particularly for last three quarters. If I look at kind of a 7.5%, kind of every quarter QoQ, there is an increase. Obviously, the PVC prices has went up. Do we still see if the current prices stay where it is, and let's assume there is no hike, can we see some increase in a QoQ in the realization in the third quarter?
I do not follow. You have so many points you raised. We only know that whatever price increases, you can increase, we increase the price. But we are increasing price after time lag, but we have passed on the increased price to our customers.
Okay. Margin, we have already said.
Sorry to interrupt, sir. If. Do you have a follow-up question, please rejoin the queue.
Last question, we can take it.
The next question is from the line of Keshav from HDFC Securities. Please go ahead.
Hello. Hi. Thank you for the opportunity. One thing I want to understand, as you alleviate the fact that October demand is healthy, but it might be due to, this time, Diwali is pushed by a month, so normally that possibly might be leading to higher demand in October. What are the calls for the second?
Dear friend, normally October is the off time. This off time, business remains very slow because most of the workers who are working in various housing projects go to their village. So already, this hour is now over. It started from 11th of October and over by 21st of October. So 11, 12 days, the business was slow, but overall, considering last year also. I am giving you the volume growth up to yesterday's date.
Okay. I am talking about Diwali. Last year, Diwali was in October. This time it is in November. So that is leading to a stronger volume growth in October. But I am trying to understand.
Diwali will be having lower growth. No, Diwali will not be affected much growth. Diwali, only some country only growth between Dhanteras to Labh Panchami, which is going to be the 6th and 13th of November. But only certain states are affected. These affect many parts of the country. We have factored all the festivals that happened last year, also the festivals not coming through this year.
Important. This is helpful. We can see the employee costs have increased by 25% year-on-year. Why is there a sharp increase?
Increased by November, increased by 9%, and also increased the number of people also joining the company.
Plus, the new units which were created last year, second half, which were not there in the concept.
Understood. One last question from my side. We can see one product segment, Packaging product segment margin, have taken a hit in this quarter. What is the reason for the same? Earlier you used to give us some sense about inventory gain or particular gains. At least you can give some sense of having the H1 inventory gain or broader gains.
There will be some inventory gain, but final correct inventory gain, we will tell you in the month of April. Overall, we anticipate as on today, there will be inventory gain in this year.
The reason why I am again asking you this question is because we see Q2 margin is still sub 13% in spite of inventory gains. Why is the margin low in this quarter?
Yet the raw material prices are on higher side, so prices become higher for purpose of margin.
Apart from that, whenever price increase is taking place, we want to help our distributor to repair their balance sheet. We increase the price only after 10-12 days gap.
Understood. Got it. Thank you so much, sir. Perfect.
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 the opportunity. Sir, on the Packaging product segment, there is a margin contraction. Is that the elevated RM prices which has not yet passed on? What is the reason for that?
Elevated prices are difficult to pass on. The increase were too steep in the polythene price, because it is directly linked to crude price, then they were very cheap and supply was not able to come from Middle East. Middle East is a big supplier of polythene in the country, and many prices in Middle East remain closed. From Middle East to India or anywhere in the world, it become very difficult. That is why the margin in Packaging product segment has gone down. Because in packaging film, we were not able to get the price increase so easily acceptable because they are interested in lower. It was not possible to increase the price immediately, properly.
Okay.
It is not segment of business, but which has definitely reduced our margin.
Okay. Second thing, sir, you also explained that help the distributor in the elevated RM prices. Can you quantify that and elaborate more on that, which affected our gross margin?
What is it I can quantify when the price increase took place? We increase the price. We increase the effect in the market after 10- 15 days.
Okay. Thank you.
Thank you. Next question is from the line of Sneha from Nuvama. Please go ahead.
Hi, good evening, sir, and thanks a lot for the opportunity. I just want to deep dive more on the margin front. While your volume guidance is understood, your margins have been missing estimate this particular quarter as well as last quarter. What is the first reason for margin miss? We understand that product mix-wise, it should not have deteriorated because Agri was barely missing. What is the reason for margins falling on a quarter-on-quarter basis that much, and what will lead to improvement?
We have seen, given the margin guidance for the full year is 14%-14.5%, we are very comfortable at 14%, 14.5%, we will 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. Could you understand the reason for the margin miss this particular quarter? How much price increase is happening in PVC and how much did you pass on?
We are increasing the price after 10- 15 days gap to help my distributor repair their balance sheet. But overall, we are giving guidance of increasing operating margin between 14%- 14.5% for the full year.
Understood. Then, sir, CPVC, how much of the price increases have already happened on ground?
CPVC also are to increase at second place. We have announced increase we have announced from tomorrow.
So from tomorrow you're taking price hike in the system is what you're alluding?
We to inform the customer some 3%, 5%, 7% product to product. We are announcing increase in price from tomorrow.
Got that, sir. Thanks. All the best.
Thank you. Next question is from the line of Anu from Anand Rathi Shares and Stock Brokers. Please go ahead.
Yeah. Hi, sir. Sir, what would be your guidance for the pipes volume growth and EBIT margin for H2 FY 2027?
We have given the margin growth of 13% in the piping business, and if the piping business has to grow at 14% and 14.5%, otherwise, we can't achieve the company margin. So pipe margin has to be 14%, 14.5% or maybe slightly better.
Okay. Sir, what would be the expected CapEx for FY 2027 in terms of cash outflow?
Cash outflow should not be more than INR 700 crore-INR 750 crore. INR 700 crore-INR 750 crore.
Any more question?
Ms. Anu, you are not audible.
Yeah, that is it from my side.
Okay. Thank you.
Thank you. A reminder to all the participants, you may press star and one to ask a question. Next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, my question is on PVC piping volume growth. That is very encouraging. I just wanted to understand where this growth is coming from.
They are coming mostly from housing because demand period. July, September is rainy season.
Sir, any other avenues besides housing which is contributing to the volume growth?
Sorry?
Sir, any other avenues besides housing which is helping us on the volume growth on the piping side?
Majority second quarter was housing, otherwise for the full year, housing, agricultural.
Sir, do you think there are any tailwinds with respect to Nal Se Jal orders coming through in a few states?
Which one?
Nal Se Jal.
Understand the structure of Nal Se Jal business. Nal Se Jal business can come only from that state, which is also spending a certain percentage of money, then only they are entitled to get contribution from center. Nal Se Jal business is becoming very difficult now to manage state. Even if they require, they cannot start because if they do not spend money, there will be no money coming from center. Nal Se Jal has really lost two years, and this year as on today, I can say it is going to be much lower than what was the budget. Central budget more than INR 200 crore. When the state government is not matching fund, the central government will not be money coming.
We are not very optimistic of any big volume business in Nal Se Jal this year also. The business is coming from irrigation system, business is coming from solar system, but that is not a big business in our company because many people are playing with the quality, we do not play with the quality. We will be working with a low margin, but business is not. We do not consider very significant business this year in our company.
Sure. Sir, would it be possible for you to give some color on OPVC doors and windows and gas fitting business as well?
My three thing together, I can say OPVC business picking up now. We anticipate good growth for the full year in OPVC. We are introducing several new varieties also in OPVC going forward in the remaining six months. Our window, we have started only aluminum window, and every month our business in window is increasing. Every month we are servicing with distributors in the major cities, and we are quite optimistic in the growth of window business. We are also very encouraged in our bath fitting business. We have entered a new range of MOHO bath fitting, which apart from offline, we started selling online and we started getting orders online also of our MOHO bath fitting.
And sir, gas fittings?
Gas fittings, we are very well accepted and now we are in a position to supply gas from five locations. We have a great advantage of gas pipe coming in the coil. The filler content is very high. We are the only company in the country which can supply from five locations. East, west, south, north, and northeast. All the five locations.
Sure sir. Thank you so much for the answers. Thank you.
Thank you. Next question is on the line of R. Gabli, an individual investor. Please go ahead.
Hello.
Yeah, Pritesh.
Yeah. Hello, sir. Sir, can you repeat in the beginning you gave some revenue guidance for FY 2027? I could not catch that number. Can you please repeat that number, revenue growth guidance?
FY 2027, we expect our business to grow between INR 13,500 crore to INR 14,000 crore. Our operating margin between 14%-14.5%.
This is overall total consolidated revenue growth, right?
Yes, sir.[audio distortion] Consolidated.
Okay. Thank you very much, sir.
Thank you.
Thank you. Next question is on the line of Sneha from Nuvama. Please go ahead.
Thank you, sir, and thanks for the follow-up opportunity. I just wanted to understand your Others business has increased from roughly about INR 20 crores- odd to about INR 80 crores- odd . Is that the MOHO division that is getting factored in or is that the window and door business that you got into that is getting factored in here?
No, MOHO is part of Plastic piping system.
Okay.
It is the window and door, which is forming part of Others as of now.
Okay.
Secondly, some other things in ancillary or accidental business of the raw material trading. We have some surplus raw material which normally sell.
Right. That gets into the Others business part, is what you are saying?
Right. Yeah.
Understood. Thanks for the clarity, sir. That was about it.
Thank you.
Thank you. Anyone who wishes to ask a question may press star and one on their touchtone telephone. 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 you repeat it?
Up to yesterday, for this month, the growth is 23% in Plastic piping system.
Okay. So 25 days of October, 23% is the YoY growth in plastic pipes.
Sure.
For raw materials, 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 important raw material we are keeping more inventory also, because there is some uncertainty about when the ship will leave and when the ship will arrive. We are keeping adequate inventory so that we do not deprive our customer that we cannot make supply because no raw material available. We have adequate raw material of so many grade of material we are using, and many of them are from imports, and we are keeping adequate raw material as per the supply situation so that we are responsible supplier to all our customers throughout the country.
Understood. Lastly, if I just calculate the realizations in the Plastic piping system, in terms of per kg, and if I just look at it on a YoY basis for the first half, the increase that I see is slightly higher than the increase in the PVC domestic prices. Is it just a function of mix or any change in policy?
We are not only using PVC, now we are making silent pipe system, which is most expensive raw material, which is made from polypropylene special formula material. We are also supplying for plumbing system, PERT pipe system, which is very expensive raw material, made outside the country only. Polypropylene, which we are using for silent pipe system, also made outside the country, where the cost of raw material CIF basis also quite high, and the rupee going down also increase the cost. Only PVC, basically, we will not be able to arrive any average cost of raw material price. CPVC also very expensive.
Okay. Understood.
All material we are using in the piping system are quite expensive material.
Right. Understood. The share of these newer products and CPVC, how much would it have increased on a YoY basis, any sense?
Every segment we are going strong increase only. Every segment business is growing.
Understood. Okay, thanks.
Thank you. Next question is from the line of Bhavin Rupani from Investec. Please go ahead.
Yeah. Hi. Thank you, sir, for the opportunity. I have just one question on Nal Se Jal. So sir, what we understand is central government has released somewhat INR 7,700 crores post CAG audits in August 2026. Do you think as funds starts to get released by central government, we could see incremental volume growth coming in from FY 2028 onwards?
We are not getting any much inquiry for Nal Se Jal from any state as on today. But we are aware that Nal Se Jal, state government has to match the fund distributed by central government. We are aware that many state has still not cleared the bill of the last year also. So until they clear last year's bill, the contractor will not come back to again take the order. So Nal Se Jal, to our mind, is not going to expand big way 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.
Yeah. Hi, sir. Good evening. Sir, three questions. Firstly, what was the CPVC volume growth for first half?
13.5%.
Okay. And sir, for the Packaging and the Industrial product segment, what is the volume growth guidance for full year?
Industrial product segment, we do not give volume guidance because it depends on the customer, what item they want to order. It may be less raw material or volume by less raw material, but quite expensive raw material. So very difficult to give any volume segment on that. Because they are industrial customers, we are doing custom molding only.
Right. But is it fair to say that this business will start recovering in terms of sales volume growth in second half? Is that directionally correct?
Industrial product segment business grew by 13% in volumes, which was quite comfortable. Only Packaging product segment business had a very small growth. But the price had gone too high, so the demand was not matching their capacity. Polypropylene price has gone too high this year. The country has shown 10% de-growth this year up till now.
Would we expect recovery in second half, or it will remain weaker in second half and then we will?
As on today, crude price remains quite high.
Got it, sir.
Can't recover.
Got it. For consumer product business, sir, furniture, what is the issue exactly? Why is this de-growing so much?
Price has gone too high. The material was not available also because government had put restriction on the local producer. They diverted quite a good capacity to make LPG. From polypropylene, you were asked to do even 50% LPG and 50% only to make raw material. The local supply also was affected of polypropylene. Our furniture are all made from polypropylene raw material. Anyway, it is a very small segment of volume in our company. There is a big diversion of furniture requirement of chairs from the repurposed material. We do not make chairs from repurposed material. We are supplying prime material product.
Got it, sir. Thank you so much, sir, for answering my question.
Thank you. A reminder to all the participants, anyone who wishes to ask a question may press star and one on their touchtone telephone.
No question?
Next question is from the line of Sushant Soni 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?
PVC growth, industry growth.[crosstalk].
Industry growth.
Of PVC.
Industry growth, the number what we got from the raw material producer is -10%.
This year, 1 inch?
This year, first half, as per the raw material producer, it is 10% de-growth. They know, and they also told us, exact number they cannot know because what is the inventory adjustment among all the distributors and all the retailers, they cannot get to the number. Their basis is what raw imports come in the country and what raw supply they supply in the country. Based on that, their number is that there is a 10% de-growth in first half.
Got it, sir. This is very helpful. Basically, we are gaining market share at the expense of the unorganized sector? Is that the conclusion?
Our market is growing, 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 touchtone telephone. Next question is from the line of Akash Shah from UTI MF. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. Sir, just wanted to check, how much would be employee cost for the full year. In the first quarter, it is up 25% and absolute number is INR 168 crore. How much would be the employee cost for full year?
For the first half, it is INR 330 crore. As compared to INR 580 crore last year.
Yes.
Since no new greenfield is coming this year, our first half number is the benchmark for the second half also, except the c ommission to directors, which is based on the profits of the company.
Okay. Understood. Right. Sure, sir. Okay. Thank you.
Thank you. Anyone who wishes to ask a question may press star and one on their touchtone telephone. As there are no further questions, I now hand the conference over to the management for closing comments.
We are very thankful for all the intelligent questions asked by our so many investors. We thank you 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.