Mayur Uniquoters - wah kya stock hai?


(Donald Francis) #21

Mayur Uniquoters makes it to 6th position in ETIG 100 fastest growing small companies.

Congratulations Hitesh & Nagabrahma!


(Abhishek Basumallick) #22

Good results from Mayur…

Sales - 54.19 cr vs 39.82 cr (yoy) [growth of about 36%]
NP - 6.03 vs 4.04 [growth of about 50%]
EPS - 11.15 vs 7.46 [growth of about 50%]

Half Yearly EPS - 20.85 vs 14.52 (yoy)

2010 Full year EPS was 29.95.


(Donald Francis) #23

The good results have reflected in the stock price rise.

Thanks Hitesh for the find and Nagabrahma for your diligence. This looks good for more and teh results give the confidence that margins can be sustained.

I am planning to accummulate more on dips.


(G.V. NAGA BRAHMA) #24

As mentioned in their website, they would be spending another 8cr and add one more line which would increase the capacity by 5L meter/month. Eventhough they have mentioned that it will be ready by September 2011, it should be ready by June 2011 itself.

Small changes in one more line should be done during December which will increase the capacity to 14L Meters/month. They are already running at more than full capacity and the waiting period has increase to 20 days from the normal 7 days.

The export quantity which was 10K Meters/month has gone up 70K meters/month.

The EPS for the current year is expected to be more than Rs.40/-


(Hitesh Patel) #25

The thing to watch out here would be how much rerating occurs in this stock. Currently it is at around 9-10 times fy 10 earnings. So if fy 11 eps is around 40 and the earnings expectation for fy 12 is also robust then by oct 11, based on fy 12 expectations and projections this could go up to around 380-400 levels. And if some sort of rerating occurs, then who knows this could even double from here.

There seems to be a lot of buying interest in this stock as it does not seem to fall too much in view of market correction.


(Hitesh Patel) #26

q3 fy 11 results are good.

sales up to 68.84 cr vs 45.1 cr (q3 fy 10)

net profits at 7.3 cr vs 5.7 cr

9m sales at 177 cr vs 9m fy 10 sales of 117 cr

net profit at 18.6 vs 13.6 cr

9m eps (not annualised) at 34.

Full year could be well above 40 per share.


(Donald Francis) #27

Mayur Uniquoters is another stock where the story remains intact, the quality of earnings is getting better.

I have been accumulating on dips. I bought some more today but cautiously as I feel the market situation is not changing in a hurry…so no rush…patiently…who knows what levels the market goes to!


(ravikumar bhoopal ) #28

Hi,

I just wanted to add to the points that have already been observed. Please note that in the previous year they had a loss on foreign exchange fluction and this year a profit on foreign exchange fluctuation (refer AR for more details). However, I do not know understand why they showed it in two different schedules. Anyway, the point is that all positives have happened last year which shows high ROE and NPM. Can those sustain in the next few years? Is theAuto demand at its cyclical high? What would be the impact on NPM for export if USD goes down? If you take all these into consideration, I think it is very fairly valued and there is very little margin of safety at this point.Any views?


(G.V. NAGA BRAHMA) #29

Supplies to Automotive Industry is within the range of 20 to 25% of the total sales which includes after sales market. Management has confirmed that within a year or two, after sales market will become bigger than that.

Since the beginning of the year, exports to US OEMs have started and doing well.

Hopefully all these should take care of downward sales in the automotive segment in case if it happens in future.


(Jarvis) #30

will be meeting the company next week. anyone wants any clarifications? i will be focussing on

1). Delisting?
2). Raw Materials?
3). Competitors?
4). Market Size?
5). Expansion Plans (Other than the plant Sep, 11)


(Ayush Mittal) #31

Hi Aditya,

1). Try to understand the reason for the significant jump in the OPM from historial 10% to 17% in last year…and the sustainability of the same

2). Whats the competitive advantage for the company? Why can’t competitors come in? How is the co making super normal profit.

3). They don’t have much fixed assets when compared to turnover…so whats the critical factor in this business.

Thanks & Regards,

Ayush


(Donald Francis) #32

Hi Aditya,

Sorry for the late reply. Was out the whole of last week and inaccessable:) (sometimes that has its benefits).

The key things I would look to understand are:

1.As per the company the margins are 2-3x in OEM exports. What is the progress made. Number of new clients. their biggest (also potentially) client, current export meters/month, export segment contribution to total sales. Where do they see this going in next 2-3 years

2). Progress on backward integration (knitted fabrics) and capacity expansion. What are the plans for FY12, and FY13.

3). Sustainability of Margins/Competitive advantage. Who do they compete with in the export market? why will they be able to get a bigger share of the customer’s spend than their competitors? Remember RM is 70-80% of Sales, roughly. So this is really a big deal if they can maintain margins anywhere near current for the forseeable future.

4). Asset-light business? if you see the Capital expenditure spend over the years, it looks like an asset light business. That seems too good to be true to be sustainable…maybe initially they got a lot out of de-bottlenecking and process efficiency improvements…Its crucial to understand this aspect of the business and question critically…understand the sales and related capex plans for the next 2-3 years. if FCF levels (10% of Sales) can remain where they are, you have a sure winner here.

Let me know if you need help in compiling a structured set of questions. We can put that together if you are visiting in the later half of this week. Else, this captures most of my key questions. Its important to guage the managements confidence and focus on earnings quality which seems to be there from the numbers. It cant be without that in this kind of an industry.

-Donald


(Hitesh Patel) #33

If you can get the management to answer, then please try to get their projections on the exports as percentage of total revenues maybe two three years down the line? Do they see exports contributing around 40-50% of total sales in next 2-3 or more years? Are they working in that direction? And what would be the percentage contribution of various sectors in exports namely footwear, automobile, luggage, tapestry, apparels, sports goods etc.

If so then they would be effectively diversifying the risk from only Indian demand.

regards

hitesh.


(G.V. NAGA BRAHMA) #34

Just check with them regardingcontigent liability not provided worth around 22 crores (letter of credit) and some minor items.

Just my input for the first two questions of Donald:

  1. Regarding the new OEM customers of US & Europe : They are already running at full capacity with good order backlog. They are not in a position to entertain any new OEM customers. Infact they have instructed their man to take orders from GM only after their new facility comes through.

  2. Regarding knitting facility, conversion from revenue to industrial site is in process. They have already started constructing the boundary wall. But check with them whether they have taken a decision to go ahead or not? In case YES, how much time it will take to commission?


(Hitesh Patel) #35

The mayur juggernaut rolls on. Fantastic results for fy 11.

YEARLY FIGURES

Year

05

06

07

08

09

10

11

Sales

50

62

71

97

115

165

248

NP

1.9

2.6

2.7

5.1

6

16.21

25.27

EPS

3.8

5.2

5.3

9.8

11

30

46.69

Div

1

1.5

2

3.5

7

10

Mayur sales and profits last few qtrs

Qtr

Mar11

Dec 10

Sep 10

June 10

Mar 10

Dec 09

Sep 09

June 09

Mar09

Dec 08

Sales

71.58

68.84

54.2

54

47.4

45.1

39.8

32.3

33.3

25.5

Raw m

53.71

49.56

42.23

38.74

36

32

28.7

23.34

23

18.5

RM %

75

72

78

71.74

76

71

72.11

72.26

69

72.54

oth exp

5.38

5.56

3.58

5.08

5.17

2.54

2.6

1.9

2.67

2.7

np

6.66

7.32

6.03

5.25

2.6

5.76

4.04

3.8

2.34

1.7

eps

12.38

13.52

11.15

9.7

4.8

10.7

7.46

7.06

4.58

3.3

Npm

9.3

10.63

11.12

9.72

5.47

12.78

10.17

11.76

7.03

6.66


(Donald Francis) #36

Yes Hitesh. What a fantastic find this has been from you.

Thanks also are due to Nagabrahma (who had the conviction to go to Jaipur from Bangalore just to visit the company) whose detailed inputs on the company, made it possible for us to document the excellent Mayur Uniquoters Stock Story and Mayur Uniquoters Stock Analysis

Those who do not have Mayur Uniquoters top of mind, may refer to the two docs above and re-inforce why this is a long term stock to hold on to for next 5 years.

What I like best from these results:

1). Strong growth momentum continuing- Sales growth at over 50% and EPS growth at 55%. If you study the sales growth over the last few years you cant help notice that the trend is accelerating! no cyclicality -simple qr on qr growths for the last few years.

2). Sustainable & Increasing margins - I had raised doubts if net margins can be sustained at FY10 9%+ levels (since it had jumped from just over 5% in FY09). The company has done better and increased net margins to 10.17% for FY11. Operating margins are marginally better at 16.44% (16.13%).

3). Increasing efficiency & profitability - confirming the earlier trends

The company has done better on debt Management -both working capital & overall. No wonder that Debtor days are down to 46 (54) and Inventory days are down to 21 from 28 days a year ago.

Return on Assets has gone up to 35.71% from 34.91% as has RoE has gone up to 41.42% from 38.57%. If you want to quibble about something, okay RoCE has gone down a bit to 55% from over 57% a year back.

4). Strong balance sheet - Debt/Equity remains low at 0.13

What can you fault in a company like this?

a) perhaps expansions should have been completed by Q4 in readiness for FY12. The company is already operating at 100% capacity. It announced in April that it will install and commission by July 2011 another coating line to take capacity to 1.9 million linear meters from 1.4 million linear meters. This is a ~36% increase in capacity available for some 8 months.

It should be noted that 1QFY11 sales were at 54 Cr vs latest Qr at 72 Cr, a 33% rise.

So it looks like growth momentum at 30% plus will continue for sure. which means this is a fantastic growth story still available to you at less than 5x 1 year forward PE! I am buying more into Mayur.

Disc: I have a big vested interest in Mayur Uniquoters, So take all above with a pinch of salt. This is one company I haven’t yet met Management, but continue to increase my positions - simply by observing how it has been quietly delivering (without aggressive expansions, et al) quarter on quarter.


(TCX) #37

Thanks Donald.

It is an amazing story and still going cheap. I bought quite a bit today [email protected]/296


(Elusionist) #38

S P Tulsian @ Moneycontrol

This is a very established company which makes synthetic leather. If you see their financials, the company has posted an EPS of close to Rs 45 for FY11 with PAT margin of close to about 10%. Presently, the company is operating with a plant capacity of 1.4 running million meters per month. Now they are raising their production capacity from 1.4 million per month to 1.9 million per month with the increased capacity operational from July.

Their topline has seen a growth of 50% in FY11. Their total income was about Rs 250 crore while the bottomline grew by about 56-57%. The best part is that they are debt free and have a cash balance of about Rs 24 crore in the books. The expansion will get implemented in this cash balance and since their EPS for FY11 is Rs 44-47, I am expecting the expansion to happen by July. That will also contribute for about eight-nine months working in FY12. One can safely assume that they should be able to post an EPS of at least Rs 60.

The product has very good demand and is supplied largely to auto seats and in furnishing. Their customers are Maruti, Honda, Hero Honda which they supply synthetic leather too. The share is viable at a PE multiple on historic earning at about 5 PE multiple. If I take the forward earnings it is ruling at 3.5-4 PE multiple and debt free status with promoter stake of 75%. This is quite a safe and good growth oriented stock.


(Vivek Gautam) #39

I purchased it today for the 2nd time.First time was around Jan 10 around 75 when I had discovered the stock in DSIJ & mentioned it to Hitesh.But got out early at that time

The problem in the co is of low liquidity as most of the stock is with promoters only & no MF/FII holding due to small cap nature.PE would always remain in single digit.

Silver lining is the huge growth & margins in OEM exports to auto majors liek BMW & Chrysler etc.Does the management has the managerial & financial bandwidth to move into next orbit n become a midcap or large cap.

Have asked few of my Jaipur based friends to find out more about the company & the promoter


(Donald Francis) #40

Mayur Uniquoters has been rising steadily since the excellent results posted.

Thats about a 20% plus rise in about 2 weeks. Today it made a sharp 5% plus rise. Volumes were decent at 8000+, vs avg (3m) volume of 3000.

Its good if this stock comes into the reckoning of Institutional buyers, slowly. The low float will be a constraint though.