Supreme Industries delivered broadly an in-line performance in Q3FY26. While revenue (above 1.9% vs. ARe) and EBITDA (above 2.4% vs. ARe) came in-line with ARe, PAT missed ARe by 8.8% due to sharp 57% y/y decline in profit from associates. Notably, pipe volume grew by a strong 16.2% y/y in a tough environment (resin prices fell 13% at the end of Dec-25 over Sep-25). Adjusted EBITDA margin (ex-MTM inventory loss) remained firm at 13.9% in 9MFY26 (vs. 13.7% in 9MFY20) due to rise in the share of value-added products to 40.6% in Q3FY26 (from 37.1% in 9MFY20). After steep correction over the past 3 months, the stock trades at 40.1x on 1-year forward P/E vs. 5-year average of 44.1x, which appears to be reasonable. Thus, we upgrade our rating on the stock to BUY with a lower TP of Rs4,000 (from Rs4,532 earlier), valuing it at 40x FY28e EPS.

Key Highlights: Pipe volume grew by a sharp 16.2% y/y, while segmental EBIT margin fell by 86bps y/y to 7.4%, mainly due to impact of MTM inventory loss (Rs0.5-0.6bn). Non-pipe volume grew by a modest 1.6% y/y, while segmental EBIT margin contracted by 129bps y/y to 9.3% in Q3FY26 due to weak demand for industrial and packaging products. Overall, the company’s revenue/EBITDA grew by 7.1/6.6% y/y, while adj. PAT declined by 15.9% y/y in Q3FY26.

Guidance: The management has guided a positive outlook, as it believes the polymer prices has entered a new upcycle from Jan-26. It has maintained FY26 total volume growth guidance of 12-14% and expects 15-17% growth in pipe volume. While it trimmed FY26 EBITDA margin guidance to 13.5-14% (from 14.5-15% earlier) due to steep fall in polymer prices, it expects to operate at 14.5-15% range on sustainable basis, going ahead. The company plans to maintain a debt-free balance sheet, despite aggressive capex.

Outlook and Valuation: We expect the company’s revenue/EPS to clock 13.1/22.4% CAGR with average RoE of 17.9% over FY26-28. Given steep correction over the past 3 month, we upgrade our rating on the stock to BUY with a revised TP of Rs4,000 (from Rs4,532 earlier), valuing it at 40x of FY28e EPS. Downside Risks: (a) Sharp slowdown in real estate; (b) market share loss in plastic pipe segment; (c) steep decline in polymer prices.