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Company has declared its 2nd quarter results which exceeded our expectations. Net profit of Mayur Uniquoters rose 52.08% to Rs 11.33 crore in the quarter ended September 2012 as against Rs 7.45 crore during the previous quarter ended September 2011. Sales increased by 28.29% to Rs 96.41 crore in the quarter ended September 2012 as against Rs 75.15 crore during the previous quarter ended September 2011. Company has delivered robust growth with increase in operating profit margins to 18.53% in the quarter ended September 2012 as against 15.87% in September 2011.
Mayur Uniquoters has delivered EPS of Rs. 19 for first half of financial year 2012-13. We expect company to deliver EPS of Rs. 42 for full financial year. At CMP, Mayur Uniquoters is trading at estimated PE of 11 for FY12-13 which make it still attractive at CMP for long term. With good demand of its product, we believe Mayur Uniquoter will continue to deliver bottom line growth above 25% in coming quarters.
Since our recommendation, stock price has appreciated by more than 100% and target price of Rs. 850 (bonus adjusted price - Rs. 425) is achieved within short span of 7 months but still we are not suggesting partial or full profit booking as we find that stock is still not expensive considering its growth potential and earning visibility, stock can continue to make new highs in days to come. We advice all our member to hold Mayur Uniquoters in their portfolio.
Below is the summary of Mayur Uniquoters Ltd published in our Hidden Gem research report - March'12.
Company Background
Mayur Uniquoters was established and started operations in the year 1994 with an installed capacity of 400,000 Linear Meters per month. The guiding principle of the organization has always been fulfilment of customer requirement and progressive thinking. With constant human and technological development, the company today has an installed capacity of 2.1 Million Linear Meters per month which is fully utilized.
The Company is one of the largest manufacturers of synthetic leather industry in India and specialized in the automotive OEM Segment. Mayur Uniquoters Limited with 30 years experience has established its presence in the leading automotive OEMs across different continents. MUL is supplying to US auto major's i.e. Ford and Chrysler. The Company is in the process of developing the products for GM, Toyota, and BMW & Mercedes Benz. Supplies to these auto majors are high quality products. Besides auto OEMs, general exports would continue to grow to different region and countries like Middle East, UK, Russia, Sri Lanka, Bangladesh, Nepal, China, Mexico, and Kuwait.
Mayur Uniquoters operates with a full range of machinery to fulfill Printing, Embossing, Lacquering, Sueding and Laminating needs. The company possesses fully equipped Physical, Chemical and Product Development Laboratories capable of testing nearly all the properties of Artificial Leather for different segments and applications.
Enterprise Resource Planning (ERP) / IT is now a part and parcel of all functions in our company and with constant persistence, the organization has understood and also finds it a better way to stay organized, improve productivity, communicate faster within the organization and ensure product and process traceability from start to end. We have been certified with ISO 9001:2008 (Quality Management System) which is demonstrative of our commitment towards continual improvement.
Investment Rationale (as on 31 Mar'12)
Mayur Uniquoters is looking aggressive to increase its capacity, a 4000-5000 Cr annual market size is the scale of the opportunity for Mayur Uniquoter. Given its Profitability, strong Balance Sheet, Free Cash Flows and dominant competitive position, Mayur Uniquoters is in a strong position to scale up and address the opportunities before it.
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.
Saral Gyan Recommendation (31 Mar'12)
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. for a target of Rs. 850 over a period of 18-24 months.
Buying Strategy:
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. for a target of Rs. 850 over a period of 18-24 months.
Buying Strategy:
- 30% at current market price of 447.75
- 70% at price range of 310-325 (If stock price falls during market correction)
To Read/Download Hidden Gem Mar'12 Research Report - Click Here
Mayur Uniquoters has given returns of 108% within 7 months. There are 8 more Hidden Gems out of 21 published by our equity analysts in last 2 years which gave more than than 100% returns to our members. We suggested partial profit booking in many of these stocks and our members registered more than 100% returns and now hold remaining quantity for free in their portfolio.
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Team - Saral Gyan
