Current Rating and Its Significance
MarketsMOJO's 'Sell' rating on 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. The rating was revised on 23 October 2025, when the Mojo Score dropped from 57 to 41, reflecting a shift in the company's outlook. It is important to note that while the rating change date is in late 2025, all financial data and returns referenced here are current as of 20 January 2026.
Quality Assessment
Supreme Industries Ltd continues to maintain an excellent quality grade, reflecting strong operational fundamentals and a robust business model. The company’s return on equity (ROE) stands at 14.8%, which is a respectable figure indicating efficient utilisation of shareholder capital. Despite recent challenges, the company’s core business remains fundamentally sound, supported by its established market presence in the plastic products industrial sector. This quality grade suggests that the company has a solid foundation, but other factors weigh heavily on the overall rating.
Valuation Considerations
Valuation is a significant factor behind the current 'Sell' rating. As of 20 January 2026, Supreme Industries Ltd is considered very expensive, trading at a price-to-book (P/B) ratio of 7.7. This premium valuation is notably higher than its peers’ historical averages, indicating that the stock price may not adequately reflect the risks and recent performance issues. Investors should be cautious as the elevated valuation leaves limited margin of safety, especially given the company’s recent financial trends.
Financial Trend Analysis
The financial trend for Supreme Industries Ltd is currently negative. The company has reported negative results for five consecutive quarters, signalling ongoing operational pressures. The latest quarterly profit after tax (PAT) stood at ₹164.74 crores, down by 20.3% compared to previous periods. Additionally, the PBDIT (profit before depreciation, interest, and taxes) for the quarter was ₹297.40 crores, marking one of the lowest levels in recent times. The debtors turnover ratio for the half-year is also at a low 1.91 times, indicating potential inefficiencies in receivables management. Over the past year, the stock has delivered a negative return of 14.09%, while profits have declined by 22.3%. These trends highlight the financial headwinds the company is currently facing.
Technical Outlook
From a technical perspective, the stock is rated as mildly bearish. Recent price movements show a 0.56% decline on the latest trading day, with a one-month gain of 2.60% offset by sharper declines over three and six months (-17.78% and -18.16%, respectively). The stock’s performance has lagged behind the broader BSE500 index over the last three years, one year, and three months, indicating weak momentum and investor sentiment. This technical backdrop supports the cautious stance reflected in the 'Sell' rating.
Performance Summary
As of 20 January 2026, Supreme Industries Ltd’s stock performance has been underwhelming. The one-year return of -14.09% contrasts with the company’s midcap status and the broader market trends. The persistent negative quarterly results and declining profitability have contributed to this underperformance. While the company’s quality remains excellent, the combination of expensive valuation, deteriorating financials, and bearish technical signals justify the current recommendation for investors to consider selling or avoiding the stock.
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What This Means for Investors
Investors should interpret the 'Sell' rating as a signal to exercise caution with Supreme Industries Ltd. The rating reflects a combination of strong underlying business quality but significant near-term challenges, including stretched valuation and weakening financial performance. For existing shareholders, this may be a time to reassess portfolio exposure and consider risk management strategies. Prospective investors might prefer to wait for clearer signs of financial recovery and valuation correction before initiating positions.
Sector and Market Context
Operating within the plastic products industrial sector, Supreme Industries Ltd faces competitive pressures and cyclical demand fluctuations. The midcap company’s current valuation premium relative to peers suggests that market expectations remain high despite recent earnings disappointments. The broader market environment, including macroeconomic factors and raw material cost volatility, also plays a role in shaping the company’s outlook. Investors should monitor sector trends alongside company-specific developments to make informed decisions.
Conclusion
In summary, Supreme Industries Ltd’s 'Sell' rating by MarketsMOJO, last updated on 23 October 2025, is grounded in a thorough analysis of quality, valuation, financial trends, and technical indicators. As of 20 January 2026, the stock exhibits excellent quality but is hampered by very expensive valuation, negative financial trends, and bearish technical signals. This comprehensive assessment advises investors to approach the stock with caution and consider alternative opportunities until the company demonstrates a sustained turnaround in its financial and market performance.
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