Supreme Industries Receives 'Sell' Rating After Negative Q3 Results

Supreme Industries, a leading player in the plastic products industry, has recently received a 'Sell' rating from MarketsMOJO. This downgrade comes after the company reported negative results in the September quarter, breaking its streak of four consecutive positive quarters.
The company's profits have fallen by 15% to Rs 206.60 crore, with its net sales also at a low of Rs 2,272.95 crore. This has led to a decrease in its PBDIT (Profit Before Depreciation, Interest, and Taxes) to Rs 319.23 crore. The stock is currently in a mildly bearish range, with its technical trend deteriorating from mildly bullish on November 22, 2024. The MACD and KST technical factors also indicate a bearish trend.

One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a price to book value of 10.9 and a ROE of 20.6. This is significantly higher than its average historical valuations. Additionally, while the stock has generated a return of 11.85% in the past year, its profits have only risen by 6.1%, resulting in a high PEG ratio of 8.7.

Furthermore, Supreme Industries has underperformed the market in the last year, with a return of 11.85% compared to the market's 25.57% (BSE 500). However, the company does have strong long-term fundamental strength, with an average ROE of 23.02% and a low debt to equity ratio of 0.03 times. It also has high institutional holdings at 36.54%, indicating that these investors have better resources to analyze the company's fundamentals.

With a market cap of Rs 57,723 crore, Supreme Industries is the largest company in the plastic products sector, constituting 28.27% of the entire industry. Its annual sales of Rs 10,366.29 crore also make up 17.15% of the industry. While the company may have received a 'Sell' rating, it still remains a major player in the industry with strong fundamentals.