Supreme Industries Receives 'Hold' Rating After Strong Fundamentals and Market Leadership

Supreme Industries, a leading player in the plastic products industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company's strong long-term fundamental strength, with an average Return on Equity (ROE) of 23.02%. Additionally, the company has a low Debt to Equity ratio (avg) at 0.03 times, indicating a stable financial position.
Technically, the stock is currently in a Mildly Bullish range, with the technical trend improving from Mildly Bearish on 05-Nov-24. This has resulted in a 6.6% return since then. Multiple factors such as RSI, Bollinger Band, and OBV are also showing a bullish trend for the stock.

One of the key factors contributing to the 'Hold' rating is the high institutional holdings at 36.54%. These investors have better capability and resources to analyze the fundamentals of companies, making their investment decisions more reliable.

With a market cap of Rs 57,949 crore, Supreme Industries is the largest company in the plastic products sector, constituting 27.34% of the entire industry. Its annual sales of Rs 10,366.29 crore also make up 17.36% of the industry, further solidifying its position as a market leader.

However, the company has recently declared negative results in Sep'2024 after four consecutive positive quarters. The PAT(Q) at Rs 206.60 crore has fallen by -15.0%, while the NET SALES(Q) and PBDIT(Q) have also hit their lowest at Rs 2,272.95 crore and Rs 319.23 crore, respectively.

With a ROE of 20.6, the stock currently has a very expensive valuation with a 11.1 Price to Book Value. However, it is trading at a fair value compared to its average historical valuations. Over the past year, while the stock has generated a return of 9.54%, its profits have only risen by 6.1%, resulting in a PEG ratio of 8.9.

In the last 1 year, the stock has underperformed the market, generating a return of 9.54% compared to the market (BSE 500) returns of 30.30%. This could be a cause for concern for investors, but with its strong fundamentals and market leadership, Supreme Industries remains a solid player in the plastic products industry.