Current Rating and Its Significance
MarketsMOJO's 'Sell' rating for Supreme Industries Ltd indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. This rating is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the stock's potential risk and return profile.
Quality Assessment
As of 28 December 2025, Supreme Industries Ltd maintains an excellent quality grade. This reflects the company's strong operational fundamentals, including its market position and product offerings within the Plastic Products - Industrial sector. Despite recent challenges, the company’s core business remains robust, supported by consistent product demand and a solid management team. However, quality alone does not guarantee positive returns, especially when other factors weigh negatively.
Valuation Considerations
The stock is currently considered expensive, with a Price to Book Value ratio of 7.3. This valuation level suggests that the market prices Supreme Industries Ltd at a premium relative to its book value, which may limit upside potential. While the stock trades near fair value compared to its peers’ historical averages, the premium valuation demands strong financial performance to justify the price. Investors should be cautious as the elevated valuation increases vulnerability to market corrections, especially amid weakening financial trends.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend Analysis
The financial trend for Supreme Industries Ltd is currently negative. As of 28 December 2025, the company has reported negative results for five consecutive quarters, signalling ongoing operational challenges. The latest quarterly figures show a Profit Before Tax (PBT) of ₹202.09 crores, down by 20.59%, and a Profit After Tax (PAT) of ₹164.74 crores, down by 20.3%. Additionally, the Debtors Turnover Ratio for the half-year stands at a low 1.91 times, indicating potential issues with receivables management and cash flow.
Return on Equity (ROE) remains moderate at 14.8%, but this has not been sufficient to offset the declining profitability and negative earnings momentum. Over the past year, the stock has delivered a return of -31.52%, reflecting the impact of deteriorating financial performance on investor sentiment.
Technical Outlook
The technical grade for Supreme Industries Ltd is bearish. The stock has underperformed key benchmarks such as the BSE500 index over the last one year, three years, and three months. Recent price movements show a downward trend, with a 1-day decline of 1.35%, a 1-week drop of 2.55%, and a 3-month fall of 22.62%. This technical weakness suggests limited near-term upside and increased risk of further declines, reinforcing the cautious stance implied by the 'Sell' rating.
Performance Summary
Currently, Supreme Industries Ltd is classified as a midcap stock within the Plastic Products - Industrial sector. Despite its excellent quality grade, the combination of expensive valuation, negative financial trends, and bearish technical signals has led to the current 'Sell' rating. Investors should be aware that the stock’s recent performance has been below par, with significant negative returns and weakening profitability metrics.
For those considering investment decisions, this rating suggests prudence. The stock may not offer attractive risk-adjusted returns in the near term, and investors might prefer to explore alternatives with stronger financial trends and more favourable valuations.
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Investor Takeaway
Supreme Industries Ltd’s current 'Sell' rating reflects a comprehensive assessment of its present fundamentals and market position. While the company retains strong quality attributes, the expensive valuation combined with a negative financial trend and bearish technical outlook suggests limited upside potential. Investors should carefully weigh these factors before considering exposure to the stock.
Monitoring future quarterly results and market developments will be crucial to reassessing the stock’s outlook. For now, the recommendation advises caution and suggests that investors may benefit from reallocating capital to stocks with more favourable risk-return profiles.
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