Supreme Inds. Q1 FY27 Results (NSE: SUPREMEIND)
Signal: Revenue declined
The read
Q1FY27 marks the fifth consecutive quarter (since Q2FY25) of contracting or flat OPM, with OPM at 12% — a 3-year low — driven by raw material inflation and employee cost creep that revenue growth failed to offset. Consolidated PAT fell 26% YoY; standalone PAT was even weaker (-45%), meaning the associate Supreme Petrochem (₹73 Cr PAT) is masking the parent's operational deterioration. Revenue flat YoY is a disappointment after Q4FY26's 16.6% surge, suggesting demand softness.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹2,609 Cr | -1.0% | 5.7% |
| EBIT | ₹375 Cr | -25.1% | |
| Net profit | ₹202 Cr | -26.0% | |
| EPS | ₹15.93 | -26.0% | |
| EBIT margin | 12% |
P&L walk
Revenue flat YoY despite strong prior-year base effect; gross margin compressed ~230bps on raw material cost inflation (polymer prices), and employee cost +15% YoY (350bps added to cost) drove OPM down 300bps — fifth consecutive quarter of margin contraction/neutrality. PAT fell 26% YoY, slightly helped by lower tax and finance cost. The associate Supreme Petrochem contributed ~₹73 Cr PAT, masking a sharper standalone decline.
Key positives
- Very low debt (D/E 0.01) provides balance sheet resilience — finance cost dropped 11% YoY to ₹8 Cr.
- Associate Supreme Petrochem contributed ₹73 Cr PAT (36% of consolidated PAT), diversifying earnings away from the core plastic products business.
- Sequential revenue growth of +5.7% QoQ suggests some demand recovery from Q4FY26's low base.
- Depreciation grew only 2% despite capex — no sign of over-capitalisation.
Key concerns
- OPM contracted 300bps YoY to 12% — fifth consecutive quarter of margin contraction/neutrality, indicating a structural earnings quality issue.
- Revenue flat YoY (-1%) after a strong Q4 — demand for plastic products appears stagnant even before accounting for inflation.
- Employee cost grew 15% YoY despite flat revenue — fixed cost creep is compressing margins.
- Standalone OPM fell deeper (-400bps YoY to 10%) than consolidated, meaning the parent's core business is under more pressure.
- Other income turned negative (₹-60 Cr vs nil in Q1FY26) — likely a derivative/forex loss or investment write-down, inflating the PAT decline.
- Aggregate YoY PAT decline of 26% — third consecutive year-on-year decline in quarterly PAT (Q3FY26 -18%, Q4FY26 -17%, now -26%).
Research and educational content only. Not investment advice.