My Case for bullishness on Supreme Industries

Here is the Intrinsic value calculation of supreme industries – approximately – there is 20-40% margin of safety at current market price the way you look at it. However the FCF calculation shows Rs 400 as the value which is way below current market price. Anyways I have decided to load up on this business after reading past 3 yrs annual report and presentations and company’s new initiatives in building products and automotive segment. Its difficult to predict the future cash precisely flows in light of govt increase spending on infrastructure, economic growth and new products and plants coming up.

Being an Architect by profession I can vouch for it this company has a long way to go.

Invite readers reaction and criticismSupreme Industries Intrinsic value.xlsx (58.4 KB) on the same.

Currently working On Havels India in the same building infrastructure category.

Are they not capitalising the opportunity

They are still a small player and are building up capacity,

Don’t you think acquisitions are small and not very big teams are coming up so integration should not be an issue
The current COO of the company also came while his company was acquired
Any info on promoters from customers

anyone having private transport going to Cupid AGM from Mumbai ?.. we can share the ride & costs offcourse

I don’t expect them to grow 10x but even if they are able to show a growth rate of around 25 percent for another 3 to 4 years, it can be a good case of investment
there customer base is still good and I am sure they would be working on adding more customers
For me the most important point would be the credibility of the promoters
Any update on information on that would be great

Looks very good from all angles..

Branded product available at the price of a commodity with long term growth prospects that too without limited capex. Current plant in Dhuri is still under utilized. No need for much capex for next 5 years.
They have promised to reduce debt levels from 2015 onwards which is again encouraging although I couldnt find that statement in the latest investor ppt. Nonethless it is still highly undervalued, following are some areas of improvement:

• more capex in renewables may be unwarranted, not much value add there, why dont they pay more dividends or repay loans, I am positive this would improve
• not to compromise on margins despite difficult times especially this year and focus more on branding in middle east etc
• need to verify whether its somewhat insulated from paddy prices or can they pass on the prices in the long run