Current Rating and Its Significance
The 'Sell' rating assigned to Supreme Industries Ltd indicates a cautious stance for investors considering this stock. This recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. The rating suggests that, given the present data, the stock may underperform relative to the broader market or its sector peers, and investors should carefully assess their exposure.
Quality Assessment
As of 23 February 2026, Supreme Industries Ltd’s quality grade is below average. The company has demonstrated poor long-term growth, with operating profit increasing at a modest annual rate of just 2.52% over the past five years. This sluggish growth rate signals challenges in expanding profitability and operational efficiency. Additionally, the firm has reported negative results for six consecutive quarters, reflecting ongoing difficulties in maintaining consistent earnings momentum.
The return on capital employed (ROCE) for the half-year period stands at a relatively low 18.37%, while profit before tax excluding other income (PBT less OI) has declined by 14.46% to ₹202.30 crores. Net profit after tax (PAT) has also fallen by 18.0%, reaching ₹153.37 crores. These figures underscore the company's struggle to generate robust returns on invested capital and maintain profitability, which weighs heavily on its quality rating.
Valuation Considerations
Currently, the valuation grade for Supreme Industries Ltd is fair, but with notable concerns. The stock trades at a price-to-book (P/B) ratio of 8.6, which is considered very expensive relative to its peers and historical averages. This premium valuation is not fully supported by the company’s financial performance, especially given the declining profits and subdued growth prospects.
Despite the stock generating a modest return of 4.04% over the past year as of 23 February 2026, this return is tempered by a 20.3% decline in profits during the same period. Such a disparity between price appreciation and earnings contraction suggests that the market may be pricing in expectations that have yet to materialise, increasing the risk for investors at current levels.
Financial Trend Analysis
The financial trend for Supreme Industries Ltd is negative, reflecting deteriorating earnings and profitability metrics. The consistent quarterly losses and declining profit margins highlight operational challenges and potential headwinds in the plastic products industrial sector. The company’s return on equity (ROE) stands at 14.8%, which, while not poor in isolation, does not justify the elevated valuation multiples it commands.
Moreover, the stock’s performance over various time frames shows mixed signals. While it has delivered short-term gains—such as a 15.94% increase year-to-date and a 15.37% rise over the past month—longer-term returns are less encouraging. The six-month return is negative at -14.13%, indicating volatility and uncertainty in the stock’s trajectory.
Technical Outlook
The technical grade for Supreme Industries Ltd is mildly bullish, suggesting some positive momentum in price action. The stock has recorded gains of 0.40% on the most recent trading day and 2.93% over the past week, signalling short-term investor interest. However, this technical optimism is tempered by the fundamental challenges outlined above, which may limit sustained upward movement.
Investors should interpret the mildly bullish technical signals with caution, recognising that technical strength alone does not offset the underlying financial and valuation concerns. A balanced approach that weighs both technical and fundamental factors is advisable when considering this stock.
Summary for Investors
In summary, Supreme Industries Ltd’s current 'Sell' rating reflects a combination of below-average quality, expensive valuation, negative financial trends, and only mild technical support. The company’s struggles with profitability and growth, coupled with a high price-to-book ratio, suggest that investors should exercise prudence. While short-term price momentum exists, the fundamental backdrop advises caution.
For investors, this rating implies that holding or accumulating the stock may carry elevated risk, and alternative opportunities with stronger fundamentals and more attractive valuations might be preferable. Monitoring future quarterly results and sector developments will be crucial to reassessing the stock’s outlook.
Rising fast and still accelerating! This Small Cap from FMCG sector is riding pure momentum right now. Jump in before the rally reaches its peak!
- - Accelerating price action
- - Pure momentum play
- - Pre-peak entry opportunity
Company Profile and Market Context
Supreme Industries Ltd is a midcap company operating in the Plastic Products - Industrial sector. The company’s market capitalisation places it among mid-sized firms, which often face greater volatility and sector-specific challenges compared to large-cap counterparts. The plastic products sector itself is subject to raw material price fluctuations, regulatory changes, and demand variability, all of which can impact financial performance.
Given these sector dynamics, the current 'Sell' rating also reflects broader industry headwinds that may constrain Supreme Industries Ltd’s ability to rebound swiftly. Investors should consider these external factors alongside company-specific fundamentals when making investment decisions.
Stock Performance Overview
As of 23 February 2026, the stock has exhibited mixed performance across different time horizons. The one-day gain of 0.40% and one-week increase of 2.93% indicate some short-term buying interest. Over the past month, the stock has surged by 15.37%, and year-to-date returns stand at 15.94%, reflecting recent positive momentum.
However, the six-month return is negative at -14.13%, and the one-year return is a modest 4.04%. This volatility underscores the uncertain outlook and the need for investors to carefully weigh short-term gains against longer-term risks.
Conclusion
Supreme Industries Ltd’s 'Sell' rating by MarketsMOJO, last updated on 23 October 2025, is grounded in a thorough analysis of current data as of 23 February 2026. The company’s below-average quality, expensive valuation, negative financial trends, and only mildly bullish technical signals collectively suggest caution for investors. While short-term price movements show some promise, the fundamental challenges and sector pressures warrant a conservative approach.
Investors should monitor upcoming quarterly results and sector developments closely, and consider diversifying into stocks with stronger growth prospects and more attractive valuations. This rating serves as a guide to help investors align their portfolios with prevailing market realities and risk profiles.
Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today
