Monday, December 28, 2009

Supreme old call......

I gave a call on Supreme Petro long time back.
I even discussed it here recently......
Now ET has come out with a buy report which I am pasting here for my readers.....
Reading today also that Goldman Sachs is taking over 10% stake for 500 cr and they will join the board of Max India as well......Max India , has remained my favourite stock as I have been recomending it time and again.
That once again proves that my calls are well ahead of time.....

Supreme Petrochem:

Supreme Petrochem is set gain from a turnaround in the polystyrene industry. Long-term investors should invest in the stock .

SUPREME Petrochemicals is India’s largest producer and exporter of polystyrene (PS) polymer with an installed capacity of 272,000 tonne per annum (TPA). The company acquired Shin Ho Petrochemicals in 2006 with a manufacturing capacity of 6,000 TPA of expandable polystyrene (EPS) at Chennai. The name of the company was later changed to SPL Polymers, before merging it with Supreme Petrochemicals.
In 2006, the company had entered into an MoU with the Maharashtra government to set up a world class styrenics complex and a minor port in the Raigad district at an estimated investment of Rs 1,115 crore. However, the land acquisition for the project is still continuing through MIDC
while the company has obtained environmental clearances. The company has implemented a share buyback last year to acquire and extinguish 15.4 lakh shares. The company’s equity capital now stands reduced to Rs 96.8 crore.


The polystyrene industry globally had been suffering from overcapacity and stagnating demand due to competition from polypropylene. However, the scenario has improved with nearly 1.5 million tonne or 10% of the world’s PS capacity closing down in last three years. At the same time, the demand prospects are improving. The lightweight sheets made from extruded PS are increasingly being used for insulation in construction buildings to reduce energy consumption. In fact several developed countries have made this kind of insulation mandatory, and even in India the concept is gaining currency as part of ‘Green Building’ initiatives. In fact the first half of 2009 witnessed the domestic demand for PS spurt 22% against a year ago.
Supreme Petrochemicals is also shifting its focus from commodity polymer to value added varieties such as coloured, compounded, specialty, expandable, extruded and cup grade polystyrene. It has lined up investments of over Rs 200 crore to expand its capacities in all these value added products within next 18 months. The company has also entered in a tie-up with Italy’s Ultrabatch to manufacture and market high-end additive masterbatches, which are concentrated mixture of pigments and additives. Similarly, it has joined
hands with the US based Nova Chemicals to set up 20,400 TPA cup-grade EPS plant in India, which has recently commenced operations.


The company has been stagnating over last 5 years - both in case of topline as well as bottom line - due to difficult situations in the global polystyrene markets. During these five years, the company improved its debt-equity ratio gradually to 0.7 as on June 30, ’09 as against 1.48 five years ago.
For the year ended in June ’09, the company recorded a net profit of Rs 19.2 crore despite a net loss of Rs 46.7 crore in the December ’08 quarter due to inventory losses. A strong rebound in demand in the first half of 2009 enabled the company to wipe out these losses and end the year in profit.


At the current market price of Rs 26 the company is valued at eight times its profits for the trailing 12 months. The current price is just 1.3 times the book value of the company’s stock price. Going forward, we expect the company to report net profit after tax of Rs 55 crore during the year ending June 2010, which translates in a forward P/E of 4.6. The dividend yield of 3.8% can add to the margin of safety for an investor. Considering the growth prospects as a result of the industry turnaround Supreme Petrochemicals appears attractively priced.


  1. Yes..I was going to tell you that..ET is following You:)!!

  2. Hi Rajeev,
    Any calls in sugar sector?

  3. Dear Rajeev

    kind advice can i purchase
    spice mobile

  4. Dear Rajeev

    As advice by you instead of mangalam
    cement I like go for Heidelberg cement or Prism Cement which one
    is having more potential, kindly
    advice me.

  5. nirash,
    if i would have known that I would have been a billionare....

  6. nirash , I do not track Spice Mobile...

  7. rama,
    Keep a watch on Thiru Arooran Sugar and Shakti Sugar....donot track much this sector as government intervens frequently....I also like Bannari Aman Sugar in this space...

  8. Please mention your call on Pharma sector and specific picks from the sector. Going back to your old picks I got 2 picks from pharma (Neuland lab, Sharon bio…)
    Are they still good or do you have any other pick. What your take on Opto Curcit.


  9. This comment has been removed by the author.

  10. Suven[has 2 IP from candian], Nectare, Natural Capsules, IND Swift Lab, Bal Pharma are good for longterm.

    Rajeev in your free time please let me know your views on Gufic BioSciences.

  11. Hi Rajeev

    If you have to put all your life savings in top 5 stocks which will those be and you will check your portfolio after 5-6 years. I have some funds which I wish to invest and forget for 5-6 years.



  12. Deb,
    Venus Remedies, Surya Pharama, Ind Swift Lab, Ind Swift Ltd,Bal Pharma,Neuland Lab,Jupiter Bio looks good.....

  13. Amit,
    If I have to invest for 5-6 yrs then I will go for A gr stocks like L&T,Areva,Thermax, Max India and likes.....

  14. Rajeev

    Could you explain in short AREVA, what I know is that its french nuclear company which has sold its T&D Div to Alsthom.



  15. Amit,
    If u feel Areva is not worth u can pickup any other stock in A gr which u feel is good....

  16. Rajeev

    In fact Areva s the stock which I have short listed. Is it going to benefit from Nuclear Deal. Just a brief review or f you have done that in past can you provide me with the date, so that I can read on this blog.



  17. Dear Rajeev,

    Can you please list all your recommendation during 2009 including their recommendation prices.


  18. Dear has2008,

    please email me at for list of Rajeev picks . i have been tracking him since 2006.


  19. Hi Rajeev,
    Supreme Petro is in UC
    What is the target price and when to book profits?