Apologies if this is naive question but what is this ‘PU Plant’?
Just thinking…This action might tempt other institutional investors to enter.
PU means Polyurethane n artificial leather made from it is the best in class n has almost leather like feel.
MUL will be the first one to make in India n export as well . So far it was dominated by China but thanks to yuan appreciation , labour cost becoming expensive, stringent pollution norms MUL will have a big edge
This increases the opportunity size nicely for MUL n keeping in mind the superb execution track record, moat, pricing power we are riding a 20-25 % growth story for several years .
No wonder a top notch quality player like Westbridge with a stellar execution track record has invested so heavily in Mayur.
A classic example of buy right n sit tight.
Discl- invested in MUL @ 200 odd rs
Kindly go back and read Page 8 of this thread to have some background on this.
Rudra , Do you think it is fully priced at current levels for FY14 , also your projection for FY16 after the dilution .Thankyou
kasi
Hi RK,
It is still too early. Without knowing the coupon rate onCCPPS and convertibility clause it would be futile to calculate dilution.
Given theprudenceof Mayur management, I believe when they have opted for 70 Cr equity infusion (the rest 40 Cr goes to the promoters and not to the company) the overall potential earnings should be EPS accretive over FY16-17.
MUL Has strong multibagger opportunity ahead?
Stage 1: In past 5 years, it have transitioned from micro-cap to small cap and generated several 100x times return.
Stage 2: Promoter equity dilution and open market purchase by westbridge is making liquidity higher.
Stage 3: If propomter continues with their superb results, prudent investment in raising with increasing margin and rising export then many other FIII/DII will start flocking slowly. This will trnasition MUL from small cap to mid-cap.
We have just started with stage 3, lets see if all goes well then MUL MCAP may swell to 5K in next few years i.e. 5x returns. If PE rerating happens then gain could be multifold…fingers crossed!
Hi Aman,
It might be too early to say but with the kind of re-rating and valuations the company has got, I think its not a bad idea to raise some money. PU plant seems to be a new thing in India and will surely have its own risk and rewards…hence by raising money probably the promoters are trying to de-risk and not have any debt overhang if things don’t go as expected. Everything is not easy and given in any business.
I also feel that had this fund raising not been done, then the PU thing would have taken a yr more to come up. So with this we may see higher growth in coming times.
Regards,
Ayush
PS: Just my thoughts. We need to monitor how things unfold.
Manish
Very much agree with your cogent arguments.the opportunity size of artificial leather was already 5-7000 cr with PVC . Now with PU also opening up implies huge exports opens up . With superb execution track record of promoters, land already bought,ROCE of 40-50%, moat, pricing power , minimal equity dilution market cap of 1000 cr can easily multiply from here
No wonder smart money in form of R Srinivasan of SBI MF, Westbridge , Indiia Malabar fund, Envision capital are already invested.
More such marquee names will come to this counter as Westbridge track record is superb. Liquidity will further improve post bonus issue.
Thanks Ayush for putting things in perspective.
The thing is I’m a rookie when it comes to investing in companies directly. All that I know has been picked up from One up on wall street (Mr. Lynch is simply amazing), Common stocks & uncommon profits and of course a lot through all the info present on valuepickr (this forum is god sent for rookies I think).
The reason this dilution raised a flag for me is bcoz Mr. Fisher in his book had 15 points to look at and equity not being diluted was one of the things. It was stated it is one of the last ways a company should be looking to raise money. So on my checklist for Mayur (while doing my due diligence) dilution of equity was a low probability. Thus the concern.
However the way you’ve put things across makes much sense to me. They have de-risked and accelerated growth by way of this dilution and thus increased share holder value. Boy! There is so much to learn. What I have learned abt business reading the above listed books & VP - I haven’t learnt in 2 years of attending business school.
Find enclosed link for presentation by the company. It reported sale of around Rs 79.88 Cr for Month of Jan and Feb 2014.
Tomorrow (27-03) is the last day to trade as Cum bonus. Then X-Bonus. Can anyone tell whether Mayur is worth trading in Cum Bonus or X-Bonus?
Can Seniors (Donald/Ayush) tell more on valuation?
I hold a little in the company. The valuations are getting heady. The company is amazing with all the growth lined up. But the valuations are like super duper high.
Thanks in Advance.
the share is already trading at Rs. 334 levels whereas the Record date for bonus is 2 April
How is this possible?
Amey,
I hope you are familiar with the concept of Record Date and Ex-Date. Normally the Cum-Bonus(T), Ex-Bonus(T+1 days) and Record date(T+2 days) are consecutive business days.
In this case, since both 31-Mar and 1-Apr are clearing holidays for NSE Link: http://www.nseindia.com/global/content/market_timings_holidays/market_timings_holidays.htm hence for Record Date of 2nd April, Ex-date falls on today (28th Mar)
20-25% Growth seems assured for next few years. Excellent co with good execution track record,opp size opens up further , leader going more strong. Land already in place. OEM connects n demand already there with moat n pricing power.
Ride it.
Reply
When company is growing at 25-30% rate yoy, best way to raise fund is debt. However equity delusion by promotors’ high stake is a complex subject to crack.
As Ayush said, promotors’ are doing smart work because of
- de-risking own stake
- new business lineup may take long time hence debt funding may be expensive
- visibility for institutional investor world will rise due to Westbridge investor
- liquidity increase hence free float money is available to institutional investors
- promotors can increase their stake to 75% again if PU business plan do not work as expected. market may provide bargain value in future and promotors shall be eagar to raise stake again
Overall Management is taking all wise steps to raise shareholder’s money - Henry
Singleton way ! (Teledyne, started as Manufacturing, generated a 23% compound annual growth rate over Singletonâs tenure from 1961-96.)
Kunal
i agree Rudra, i know this - thanks for reminding me
appreciate your brotherly gesture
appreciate valuepickr as a forum
Dear All,
I bought Mayur Uniquoters at 412Rs on 12th Feb. Now suddenly there is a 50% drop. Is this a stock split or a bonus? However, no extra shares are appearing in my account. Can anybody please explain the situation to me?
There is 1:1 bonus. Record date was 02 April. You should get credit shortly.
Cheers.