Supreme Industries – Not The Right Time To Invest Now

Iranian Crisis Will Affect The Company

Iranian Crisis Will Affect The Company
Iranian Crisis Will Affect The Company
Iranian Crisis Will Affect The Company
Iranian Crisis Will Affect The Company
Iranian Crisis Will Affect The Company
Iranian Crisis Will Affect The Company

Supreme Industries - Latest Financial Results

(in Cr.)
Dec-11
Sep-11
FY10-11
Revenue
769.63
501.17
2,468.98
Net Profit
61.44
35.98
174.97
EPS
4.84
2.83
13.77
Cash EPS
6.18
4.18
18.65
OPM %
15.78
16
14.87
NPM %
7.98
7.18
7.09
Supreme Industries - Latest Financial Results

Supreme Industries - share price movement

 
 
 
Weekly H/L
209
202
Monthly H/L
210
199
52 Weeks H/L
235
146
 
( 24 Aug 11 )
( 9 May 11 )
Delivery / Var+ELM %
98.85
12.5
Supreme Industries - share price movement

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Crude Oil Price Increase Will Affect The Company’s Operations


Good Results

Supreme Industries has produced good quarterly results for the quarter ended 31.12.11 compared to the previous quarter ended 30.09.11. Revenue increased from Rs.501 crore to Rs.769 crore. Revenue for the whole year 2010-11 was at Rs.2468 crore. Net profit increased from Rs.35 crore to Rs.61 crore. Net profit for the year 2010-11 was at Rs.174 crore. Operating profit margin slightly declined and net profit margin slightly increased. The shares of Supreme Industries are traded in the Indian stock markets at Rs.205 now (BSE 16.04.12).The shares of Supreme Industries are traded in both BSE and NSE. The face value of the company’s shares is Rs.2. It is engaged in the business of plastic products. The Registered Office of the company is located at 612, Raheja Chambers, Nariman Point, Mumbai 400 021.

Managerial Skills

Supreme Industries is riding on a success because of its managerial skills. It is able to produce a strong execution track record, robust order book, geographical diversification and timely acquisition strategies. All these factors have contributed to the company’s success.

Crude Oil Price Increase Will Affect The Company’s Operations

But there are also difficulties the company experiences. In the wake of increase in crude oil prices, the performance of Supreme Industries is affected because it depends on crude oil as a raw material for the production of plastic products. If crude oil prices remain below $105 per barrel, then the company may be able to pass on the hike to its customers. But beyond this level, it is difficult for the company to hike the prices of its products. In that case, it will have to absorb the crude oil price hike and its margins may be affected as a result. Right now, USA and Israel are not precipitating the Iran crisis as that may increase the crude oil prices which in turn may affect Obama’s re-election prospects in USA. But after the election is over, Iran crisis may once again take the front stage. Till about six months, the company is safe unless Israel acts unilaterally against Iran.

Sale Of Commercial Complex

Last year, the company was affected by a rise in crude oil prices and Japanese disaster. But at the same time, a strong demand for its products and healthy volume growth has enabled it to survive these difficulties. Supreme Industries has built a ten storey commercial complex with a saleable area of 275000 sq ft in Andheri in Mumbai. Already it has sold around 40000 sq ft area for a price of Rs.60 crore. The average price works out to Rs.15000 per sq ft. The remaining property may fetch the company Rs.350 crore.

Not The Right Time To Invest

The highest and lowest prices recorded by the shares of Supreme Industries in the last one year are Rs.235 and Rs.146 respectively. At the current price level, one should not enter into the company’s shares as the Iranian crisis is looming large. Investors should note that the Iranian crisis has only been postponed and not solved. Once elections in USA are over, it will resurface.

Comments 2 comments

punchme profile image

punchme 4 years ago

nice stuff:)


ramkimeena profile image

ramkimeena 4 years ago from India Author

Dear punchme,

I thank you for your valuable comments.

Best wishes to you,

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