CRISIL said that the ratings continue to reflect the company's strong business risk profile, healthy market position across segments, and robust financial risk profile. These strengths are partially offset by exposure to intense competition and to volatility in raw material prices in-line with the industry, though Supreme has the ability to pass on price fluctuations to its customers.

Revenue grew 27% on-year to Rs 6,603 crore during the first nine months of fiscal 2023 with improving volumes while operating margin moderated to 10.9%, owing to declining realisations and inventory losses. In fiscal 2022, revenue growth of 23% to Rs 7,723 crore was mainly driven by improving realisation even as aggregate volumes fell while operating margin stood at 15.9%.

CRISIL Ratings expects Supreme to register revenue growth of 18-20% on-year this fiscal and 10-12% thereafter mainly driven by healthy volumes from end-user demand across agriculture and real estate sectors along with operating margin remaining healthy above 15%, leading to strong annual cash generation. Financial risk profile is also robust, supported by strong capital structure with high net worth, healthy cash position and strong debt protection metrics.

Supreme Industries is India's leading processor of plastic. The company has a diverse product portfolio, comprising piping systems, cross laminated films and products, protective packaging products, industrial moulded components, moulded furniture, storage and material handling products, performance packaging films and composite, and liquefied petroleum gas cylinders. It has 28 facilities across India.

For the first nine months of fiscal 2023, revenue grew 27% to Rs 6,603 crore driven by improved volumes while profit after tax grew to Rs 506 crore during the same period from Rs 645 crore during the same period last year.

The scrip added 0.30% to currently trade at Rs 2591.55 on the BSE.