Supreme Petrochem Q1 FY27 Earnings Call Transcript: Key Highlights and Management Commentary

Supreme Petrochem Limited reported a strong improvement in profitability during the first quarter of FY27, even though sales volumes declined. According to the management, higher international prices for styrene monomer and improved product spreads helped the company deliver better margins during the quarter.

Revenue Grows 22%, Profit Jumps

For Q1 FY27, Supreme Petrochem reported:

• Revenue from operations: ₹1,693 crore, up 22% year-on-year.
• Operating EBITDA: ₹331 crore, with an EBITDA margin of 19.5%.
• Profit After Tax (PAT): ₹236 crore, with a PAT margin of 14%.

Management said the strong profit growth was mainly due to wider price spreads between styrene monomer and finished products rather than higher sales volumes.

Sales Volumes Declined

The company sold 70,842 metric tonnes during the quarter, compared with 93,853 metric tonnes in the same period last year, a decline of 24.5%.

According to the management, the decline was caused by:

• Weak demand from the non-OEM segment.
• Minimal exports due to the West Asia crisis.
• Supply chain disruptions and higher freight costs.
• Limited availability of styrene monomer from the Middle East.

West Asia Crisis Impact

Management explained that geopolitical tensions in West Asia disrupted cargo movement through the Strait of Hormuz and forced several major styrene producers to suspend operations.

Although exports were affected, Supreme Petrochem arranged alternative sources of raw materials and continued supplying all domestic customers without interruption.

Expansion Plans Continue

Despite the challenging environment, the company is moving ahead with its expansion projects.

Key announcements include:

• Completion of Phase 2 EPS capacity expansion.
• New wide-width EPS board line with capacity of 150,000 cubic metres.
• Expansion of compounding capacity from 50,000 tonnes to 80,000 tonnes per year.
• Approval for a new 80,000 tonnes per annum polystyrene production line at the Amdoshi plant in Maharashtra.

These projects are expected to increase the company’s total polystyrene capacity from 300,000 tonnes to 380,000 tonnes per year by December 2028.

The initial investment announced for these projects is ₹450 crore, funded entirely through internal accruals. During the Q&A, management indicated that the broader expansion roadmap over the next few years could involve total capital expenditure of around ₹900 crore, also to be funded internally.

Management Outlook

Management believes the current situation is unusual because of prolonged disruptions in the Middle East. As supply chains normalize, exports are expected to recover, and non-OEM demand has already started improving.

The company remains optimistic about long-term demand, supported by:

• Growth in exports from Indian appliance manufacturers.
• Rising demand for energy-efficient buildings.
• Expansion of cold storage and cold-chain infrastructure.
• Continued demand from packaging applications.

However, the management did not provide volume or margin guidance due to ongoing uncertainty in global markets.