Current Rating and Its Significance
The 'Sell' rating assigned to Supreme Industries Ltd indicates a cautious stance for investors considering this stock at present. This recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. The rating suggests that, given the current data, the stock may underperform relative to the broader market or its sector peers, and investors should carefully weigh the risks before committing capital.
Quality Assessment
As of 23 February 2026, Supreme Industries Ltd maintains a good quality grade. This reflects the company’s operational strengths and business fundamentals, including its market position within the Plastic Products - Industrial sector. Despite this, the company’s long-term growth has been modest, with operating profit growing at an annual rate of just 2.52% over the past five years. This slow growth trajectory limits the stock’s appeal for investors seeking robust expansion prospects.
Valuation Considerations
The stock is currently rated very expensive on valuation metrics. Supreme Industries Ltd trades at a price-to-book value of 8.6, which is significantly higher than the average historical valuations of its peers. This premium valuation is not fully supported by the company’s recent financial performance, as profits have declined by 20.3% over the past year. Such a disparity between price and earnings fundamentals suggests that the stock may be overvalued, increasing downside risk for investors.
Financial Trend Analysis
The financial trend for Supreme Industries Ltd is negative as of today. The company has reported negative results for six consecutive quarters, signalling persistent challenges in profitability. Key indicators include a return on capital employed (ROCE) of 18.37% in the half-year period, which is the lowest recorded recently, and a profit before tax (excluding other income) of ₹202.30 crores, which has fallen by 14.46%. Additionally, the quarterly profit after tax (PAT) stands at ₹153.37 crores, down 18.0%. These figures highlight a deteriorating earnings trend that weighs heavily on the stock’s outlook.
Technical Outlook
Technically, the stock exhibits a mildly bullish grade. Recent price movements show some positive momentum, with the stock gaining 0.37% on the day, 1.13% over the past week, and 12.57% in the last month. Year-to-date returns stand at 17.09%, and the one-year return is 7.16%. However, these gains have not been sufficient to offset the underlying financial weaknesses and valuation concerns, which underpin the cautious rating.
Performance Summary
As of 23 February 2026, Supreme Industries Ltd’s stock performance has been mixed. While short-term price appreciation has been notable, the longer-term six-month return is negative at -14.71%. The company’s return on equity (ROE) is 14.8%, which, combined with the high valuation, suggests that investors are paying a premium for returns that are currently under pressure. This dynamic reinforces the rationale behind the 'Sell' rating, signalling that the stock may not be an attractive buy at current levels.
Implications for Investors
For investors, the 'Sell' rating serves as a cautionary signal. It implies that the stock’s current price does not adequately reflect the risks posed by declining profitability and stretched valuation. Investors should consider these factors carefully and may wish to explore alternative opportunities with stronger financial trends and more reasonable valuations. The mildly bullish technical signals may offer some short-term trading opportunities, but the fundamental challenges suggest a prudent approach is warranted.
Handpicked from 50, scrutinized by experts – Our recent selection, this Mid Cap from Bank - Public, is already delivering results. Don't miss next month's pick!
- - Expert-scrutinized selection
- - Already delivering results
- - Monthly focused approach
Contextualising the Rating Within the Sector
Within the Plastic Products - Industrial sector, Supreme Industries Ltd’s valuation and financial trends stand out as areas of concern. While the sector has seen varied performance, the company’s premium valuation is not matched by commensurate earnings growth or profitability improvements. This divergence is critical for investors who compare stocks within the sector, as it highlights the relative risk of holding Supreme Industries Ltd versus its peers.
Long-Term Growth Prospects
The company’s subdued operating profit growth of 2.52% annually over five years suggests limited expansion potential. This slow growth rate, combined with recent negative quarterly results, indicates that the company faces structural or cyclical challenges that may persist. Investors focused on long-term capital appreciation should weigh these factors carefully against the stock’s current price and valuation.
Summary of Key Financial Metrics as of 23 February 2026
• Market Capitalisation: Midcap segment
• Operating Profit Growth (5-year CAGR): 2.52%
• ROCE (Half Year): 18.37% (lowest recent level)
• Profit Before Tax (excl. Other Income, Quarterly): ₹202.30 crores, down 14.46%
• Profit After Tax (Quarterly): ₹153.37 crores, down 18.0%
• Return on Equity (ROE): 14.8%
• Price to Book Value: 8.6 (very expensive)
• Stock Returns (1 Year): +7.16%
• Stock Returns (6 Months): -14.71%
Conclusion
Supreme Industries Ltd’s current 'Sell' rating by MarketsMOJO reflects a comprehensive assessment of its financial health, valuation, and market performance as of 23 February 2026. While the company retains good quality fundamentals, its expensive valuation and negative financial trends present significant risks. The mildly bullish technical signals offer limited comfort against these headwinds. Investors should approach this stock with caution, considering the potential for further downside and the availability of more compelling investment alternatives.
Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today
