Supreme Petrochem Ltd

Concall: Q2FY24 (18th Dec 2023)

• Current Styrene monomer prices: ~1050$
• There used to be 3 players in this space and now with LG polymers shut there are only two key players.
  • The demand for LG Polymers is being substituted by Supreme, Styrenix and imports.
• Capex Plan:
  • Making mass ABS plant
    • Currently ABS is imported in the range of 130-140,000 tons with total mkt being of 275,000 tons
    • Have further land for brownfield expansion if needed
    • this is a different way to make ABS than the emulsion ABS; the former is a continouous process while the latter is a batch process. The energy costs are roughly 2x higher for the latter
      • This imlies that Supreme will become a cost efficient player in ABS once ready
  • 1200 Cr: Completion by March 2026
  • 500cr: Already incurred
  • Balance 700 cr will be spent between now and march 26
  • Once complete this capex at capacity utlisation of 70-80% should lead to additional revenues of 3000cr
• On XPS:
  • <2% of revenue at present
  • No competition as only player
  • Highly climate friendly as helps in thermal insulation of buildings hence reduces energy requirements (both hot and cold) and thereby decreases emissions
  • Govt and corporates are using it but individuals arent
    • Eg in CPWD, possibly this was used in the new parliament building too.
  • If you wish to understand this product: InsuBOARD
• On competition expanding
  • No worries as enough demand as we still import.
  • It ll eventually be import substitute
• PS:
  • Expect muted growth as appliance mkt has beem slow
  • Expect mas 4-5%
• EPS:
  • Expect 8% growth
• XPS:
  • Again 8-10%
• Capacity
  • PS: 300000 tons (Styrenix ~ 75000 tons); total market is around 315thousand tons
  • EPS: 1,10,000 tons
    • Use: packaging, insulation food packaging, cold storage, construction

[Disclosure: Invested]