Supreme Petrochem - Rs.37.00

Supreme Petrochem Ltd (SPL) was promoted in 1989 by Supreme Industries and R Raheja Investments in technical collaboration with ABB Lumus Crest, USA, to manufacture polystyrene (PS). Today it produces the entire spectrum of PS like high impact PS, general purpose PS, speciality PS, compounded PS, toughened PS etc under its brand name ‘SUPREME’. PS is used in consumer electronics comprising audio & video cassettes, refrigerators, packaging materials automotive parts in household articles, novelties, stationery, toys, ball pens, toothbrushes and sanitary ware. SPL is the leader in the polystyrene business with over 60 per cent market share and the largest exporter to over 45 countries.

SPL owns and operates a state-of-the art PS facility with an installed capacity of 2,72,000 TPA at Raigad District in Maharashtra. The facility also includes a world-class colouring and compounding facility with an installed capacity of 17,000 TPA. It is expanding its PS capacity to 3,00,000 TPA in stages and has commenced the implementation of 60,000 TPA, which is expected to be completed by mid-2006. To strengthen its competitive position further, it is also working on its minor port project in district Raigad, Maharastra to handle the import of its raw materials.

Due to the uptrend in the petrochemical cycle, a strong demand and better price realization, SPL is witnessing the best of times and is all set to report record high Sales and NP figure in its history. It posted quite impressive numbers for the three quarters of FY05. For the full year ending 30 June 2005, it may post Net Sales of Rs.1350 cr. and NP of Rs.65 cr. This works out to an EPS of Rs.6.50 on its current equity of Rs.97.50 cr. It has already declared 12% dividend. Though input cost is a concern due to the rising crude oil price, but still it can report an EPS of more than Rs.8 for FY06. Investors are advised to buy SPL at declines, as the share price can appreciate by 50% in 12 months.