Supreme Industries downgraded to 'Sell' by MarketsMOJO due to negative results and expensive valuation.

Supreme Industries, a largecap company in the plastic products industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 24, 2024. This decision was based on the company's negative results in the September quarter, after four consecutive positive quarters. The company's profits have fallen by 15% to Rs 206.60 crore, while its net sales and PBDIT have also hit their lowest at Rs 2,272.95 crore and Rs 319.23 crore respectively.
One of the main reasons for the downgrade is the company's expensive valuation, with a price to book value of 11 and a ROE of 20.6. This is considered to be a fair value compared to its historical valuations. In the past year, while the stock has only generated a return of 1.82%, its profits have only increased by 6.1%, resulting in a high PEG ratio of 8.7.

Furthermore, the stock has underperformed the market in the last year, with a return of only 1.82% compared to the BSE 500 index's return of 34.29%. On a positive note, the company has strong long-term fundamental strength, with an average ROE of 23.02% and a low debt to equity ratio of 0.03 times.

Technically, the stock's trend is currently sideways, indicating no clear price momentum. It has also deteriorated from a mildly bullish trend on October 23, 2024, resulting in a negative return of -4.46% since then. Additionally, the company has a high institutional holding of 36.54%, indicating that these investors have better resources to analyze the company's fundamentals.

With a market cap of Rs 58,166 crore, Supreme Industries is the largest company in the plastic products sector, constituting 27.67% of the entire industry. Its annual sales of Rs 10,366.29 crore also make up 17.48% of the industry. While the company may have strong fundamentals, its recent negative results and expensive valuation have led to its downgrade to a 'Sell' by MarketsMOJO.