Mayur Uniquoters Ltd - Good Set of Numbers; Result Update Q2FY15:: Edelweiss

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Mayur Uniquoters Ltd. (MUL) reported good set of numbers for Q2FY15. Revenues and EBITDA grew by 10.6% YoY and 8.6% YoY, respectively, and PAT jumped by 24.3% YoY to INR 16 cr, lending credence to its growth story. MUL has demonstrated revenue growth across its business segments. The company has also forayed into a new segment of Furnishings. MUL’s capacity constraints are expected to ease in FY15, as the company has recently commissioned its sixth production line. The enhanced capacity would positively impact the top line going forward. MUL’s foray into new business segments, establishment of its presence in the PU industry (which commands better realisation), besides higher global demand would lead to strong revenue visibility going forward. MUL’s unwavering focus on business, RoE in excess of 40% supported by strong cost control, better working capital management and negligible debt-equity ratio are positives for the stock. We believe that MUL can sustain CAGR of 23% in revenue and 24% in PAT over FY14-FY16E.

MUL reports strong growth across Revenue, EBITDA and PAT

MUL recorded an impressive 10.6% expansion in Q2FY15 topline at INR 131 cr. Global Auto OEMs Exports grew by 7.7% while General Exports jumped by 14.7% YoY. Volume for the quarter stood at 60.62 lac linear meters, a YoY growth of 10.7%. In value terms, Exports contributed 22% to Q2FY15 revenue; Auto OEMs Exports contributed 16.7% and General Exports contributed 5.16%. On the domestic front, Footwear contributed ~50-55%, Auto OEMs (incl Replacement Market) contributed ~18-20% and ‘Others’ segment (including leather goods, furnishings etc) contributed ~6-8%. The company has obtained two new orders for OEM exports, scheduled for Q1FY16 and Q4FY16.

EBITDA in Q2FY15 grew by 8.6% to INR 25cr, with EBITDA margins at 18.7% down 35bps yoy. In the coming quarters, the sharply lower crude oil prices would have a positive impact on the company’s the raw material prices. The commissioning of the sixth production line this month and the subsequent set-up costs resulted in muted EBITDA margins for this quarter. PAT for the quarter grew by 24.3% YoY to INR 16 cr.

Capacity expansion to ease constraints

MUL’s current capacity stood at 2.45mn linear meters/month with utilisation rate of 95-96%. The sixth line was commissioned this month with trial scheduled for end of the month. This line is expected to produce 600,000 linear meters/month; taking the total installed capacity to 3.05mn linear meters/month. The company expects the sixth line to begin operating on a three-shift basis in 2015. With this, capacity constraints would ease materially. MUL is actively considering setting up a seventh line, keeping in mind future demand. Addition of the seventh line would enhance total capacity to 3.6mn linear meters/month. MUL may consider an eighth line in the future depending upon the capacity constraints.

MUL diversifies into Furnishings

MUL has forayed into the furnishing segment. The company has witnessed steady demand for its products in the furnishing segment from 5000 meters/month in Q1FY14 to 35000 meters/month currently. It has appointed two distributors to cater to this segment, one in Delhi and recently another in Hyderabad catering to the northern and southern zones, respectively. MUL plans to target India’s major furnishings players through 4 distributors in 4 zones. We foresee furnishing segment becoming a key driver of growth in the future for MUL.

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https://www.edelweiss.in/research/Mayur-Uniquoters-Ltd--Good-Set-of-Numbers;-Result-Update-Q2FY15/10005187.html