Supreme Industries Upgraded to 'Hold' by MarketsMOJO, Strong Fundamentals and Market Leadership

Supreme Industries, a leading player in the plastic products industry, has recently been upgraded to a 'Hold' by MarketsMOJO. This decision is based on 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 of 0.03 times, indicating a healthy financial position.
Technically, the stock is currently in a mildly bullish range and the trend has improved from sideways to bullish on October 28, 2024. The Relative Strength Index (RSI), a key technical factor, has also been bullish since October 28, 2024.

One of the reasons for this upgrade is the high institutional holdings at 36.54%. These investors have better capability and resources to analyze the fundamentals of companies, making their confidence in Supreme Industries a positive sign for retail investors.

With a market capitalization of Rs 55,384 crore, Supreme Industries is the largest company in the plastic products sector, constituting 26.99% of the entire sector. Its annual sales of Rs 10,366.29 crore account for 17.46% of the industry, further solidifying its position as a market leader.

However, the company has recently declared negative results in September 2024 after four consecutive positive quarters. The Profit After Tax (PAT) for the quarter has fallen by 15.0% at Rs 206.60 crore, while the Net Sales and PBDIT have also decreased to their lowest levels at Rs 2,272.95 crore and Rs 319.23 crore, respectively.

With a ROE of 20.6, the company currently has a very expensive valuation with a Price to Book Value of 10.4. However, the stock is trading at a fair value compared to its average historical valuations. In the past year, while the stock has generated a return of 3.24%, its profits have risen by 6.1%, resulting in a PEG ratio of 8.3.

In the last year, Supreme Industries has underperformed the market, generating a return of only 3.24% compared to the market (BSE 500) returns of 35.31%. This could be a cause for concern for investors, but with its strong fundamentals and market leadership, the company remains a solid hold for now.