Looks interesting.

• Supreme is in the process of expanding its capacity of 180,000MT to 330,000MT. This is being carried out at Gadegaon, near Jalgaon, on a plot of 134 acres. For FY09, they have planned a capex of Rs 125 cr . Its expected to be completed by Dec 09.
• They have done a share buy-back this year to reduce equity capital.
• They are constructing a commercial complex at their land at Andheri. Expected per share valuation is Rs. 80-100 (depending on the prevailing commercial real estate rates at the time of completion).
  

I have just been looking at Supreme industries.. seems like an interesting scrip with some undervaluation..

- Market cap at 750 Cr , Debt of 250 cr - EV of 1000 cr as of now

- They are completing a complex of 0.25 million sqft in Andheri which probably can fetch them 150-175 crore at 6-7000/sqft (need to invest another 25-30 cr in the development) - Once they sell it the Balance sheet will be significantly strengthened (Mgmt has already talked about selling the same and using the proceeds for reducing the debt)
- EBITDA of 250 cr for 2008-09 - primarily due to sharp reduction in RM prices and Excise duty reduction from 14% to 8%..
- The Q1FY10(sept ending) performance was also good due to above reasons - EBIDTA of 50 cr with PBT of 29 cr , PAT of 19 cr
- Management is guiding for sales growth of around 2000-2100 cr with operating margin of 13% - 260-270 cr EBITDA margin - It seem achievable atleast for this year as the government stimulus package is still continuing.
- The Net assets (Fixed asset + Current asset - current liability) is around 600+ cr which should roughly be the replacement cost of current plant/machinery etc.
- The company has posted much better financial results in the last 3 financial years with ROCE moving up from 13%in 2005-06 to 37% in 08-09. Similarly RONW has increased from 20% to 36%. Assuming that the last 3 year performance is not fluke the company can deliver  20% average ROCE and RONW.
- Since plastics have a direct correlation with crude prices and that is the biggest variable for the performance, assuming that they would be able to do EBITDA of 175 cr over next couple of years, we get the EV/EBITDA close to 6. The cash flows have also been fairly strong with good control on inventory/debtors etc. The company has been able to finance lot of expansion (400 cr+ in last 3 years) mostly from internal accruals with almost no increase in absolute debt levels.
- The 2nd biggest problem for company is government changes in tax - There profits increased substantially because of more than 6% reduction in excise duty. once it goes back to the same level, they may find some contraction in margins as local/unorganised producers will become more competitive .
- The company is a good dividend payer - current yield at 4% and there is high possibility that dividend will be maintained for atleast this level. 

At the height of property boom they were venturing into property development but right now seem focused on completing the Andheri complex in partnership with R Raheja group. This sale of the property can be the short term trigger.

Any comments !!!!

Originally posted by nikhil090 They are completing a complex of 0.25 million sqft in Andheri which probably can fetch them 150-175 crore at 6-7000/sqft (need to invest another 25-30 cr in the development) -

The going rate for residential space in Andheri is around 15-16k/sqft.