Investment Rationale (as on 31 Mar'12)
Many leading Automotive OEMs like GM, BMW, Daimler, now have Mayur Uniquoters on their approved vendor list. Orders received from Ford & Chrysler along with other clients will further scale up the company revenue significantly.
i) Mayur Uniquoters has developed nearly 400 different varieties of synthetic leather to offer for diverse requirements, while the nearest competitor can offer only about 50 varieties. Many leading Automotive OEMs like GM, BMW, Daimler now have Mayur Uniquoters on their approved vendor list which is a great achievement for such a small company.
ii) As per our estimates, Mayur Uniquoters can deliver bottom line of 350 million for full financial year 2012 – 13, annualized EPS of Rs. 65 with forward P/E ratio of 6.8 X for FY 2012-13, which makes stock of the company an attractive bet for long term.
iii) Company has paid regular interim dividends to share holders and dividend yield at CMP is at 2.2%. Management of the company has rewarded its share holders by increasing dividend payouts significantly every year in line with increase in profits.
iv) Net sales and PAT of the company are expected to grow at a CAGR of 29% during next 2 years. On the basis of EV/EBITDA, the stock trades at PE multiple of 4.5 and 4 for FY12 and FY13 respectively. Price to Book Value of the stock is expected to be at 2.45 and 1.77 respectively for FY12 and FY13.
v) On equity of Rs. 54.13 million the estimated annualized EPS works out to Rs. 56 and the Book Value per share is Rs. 112.71. At a CMP of Rs. 447.75, stock price to book value is 3.97.
Considering increase in demand of artificial leather, ongoing expansion plans of the company and addition of new clients in the list, FY 2012-13 & 2013-14 looks promising for the company and makes it an attractive buy.
Saral Gyan Team recommends “BUY” on Mayur Uniquoters Ltd. at current market price of 447.75 for a target of Rs. 850 over a period of 18-24 months.
Mayur Uniquoters has given returns of 775% within 3 years. Moreover, there are total 24 Hidden Gems out of 36 published by our equity analysts which have given returns in the range of 100% to 1100% to our members during last 4 years.
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Team - Saral Gyan.