Supreme Petrochem break out and pull back1. Buy or Sell at your own risk
2. Don't risk more than 1%-2% of your capital as stop loss
3. Position Size formula:- Stop Loss/(Buy Price-Initial Stop Loss Price)
4. Sell on initial stop loss hit or close below daily supertrend (for short term traders) or close below weekly supertrend (for long term investors)
5. Some other ways to sell stocks can be
a. 25% or 50% up in three weeks or less
b. Largest weekly price spread
c. Exhaustion gaps
d. Heavy daily volume without further upside
e. Largest one day price drop
With TTM sales growth 86% and TTM profit growth 148%, NSE:SUPPETRO gave a volume breakout after a consolidation since may'21 and pulled back towards the buy zone. Buy if it crosses Rs.864 with a stop loss at Rs.800.
Other fundamentals: -
1. SPL has over 50% market share in the polystyrene segment. It is the only domestic manufacturer of extruded PS foam board and styrene methyl methacrylate giving it a strong market position.
2. The Co incurred a total expenditure of 26 crores on ongoing projects related to PS and EPS at Amdoshi and Manali plants during FY21. In FY22, the Co has planned capital expenditure of 260 crores for Speciality Polymers & Compound and hardware replacement at both its plant locations. These projects will add 90,000 MTA of PS and 30,000 MTA of EPS capacity.
3. During FY21, LG Polymers India Ltd's, second largest polystyrene (PS) manufacturer in India Had to shut down its facility post a styrene vapour leakage incident at its Vizag plant. This resulted in more than 30% volume growth for SPL on account of the diversion of the incremental volumes catered by LG Polymers.
4. SPL plans to enter the mass acrylonitrile butadiene styrene (ABS) market, with an initial capacity of around 60,000 tpa to 80,000 tpa by setting up a new line at the existing plant over FY22-FY24.
5. Current Ratio at 2.26 (greater than 1.5 is good), Debt to Equity at 0.03 (less than 0.5 is good) and Interest Coverage at 147 (greater than 3 is good)
6. FCF to CFO at 78.2% (company won't need to borrow for capex in future)
7. Dividend yield at 1.82% (consistent dividend payer since 2010)
8. FII stack increased from 0.74 in September 2020 to 2.07 in December 2021
