Doing business is not that easy. Indeed it’s a big deal. Mayur is known for quality, timely large scale delivery model.
Mayur is an example of excellent “operational excellency”, where most of the peer businesses can’t make it
Ashish,
I have often pondered about this too. Not just Mayur, I am surprised that companies like Page Industries are able to parlay a simple licence into such profitability. This simply would not happen in China or other markets. Here are a few possible reasons/hypothesis on why Mayur continues to show superior metrics in a mostly commoditized industry:
1). The demand is simply too strong as increasing amounts of real leather get substituted by the artificial variety, Mayur with a long history and know-how in this industry is in the right time and place. During times like this even commodity companies make above average profits, an analogy would be the plastics industry in the US in the fifties. How long this period will last is anyone’s guess.
2). The management is especially astute in running this business. Taking on the Chinese and competing globally in a manufacturing business is no easy task.
3). Their moat may well be a process advantage enabling them to produce high quality at a good price, a very strong value proposition that others are unable to replicate- Industry insiders should be able to validate this hypothesis.
4). Synthetic leather plants are not environment friendly hence getting the required permits may be a major barrier to entry for new players.
5). The approval process to supply to major OEMs takes time and relationships need to be built, Mayur has a head-start here. The cost of synthetic leather as a proportion of a total cost of a Ford or a Mercedes is likely small, so OEMs will stick to a proven supplier unless there is a significant switch factor.
6). Potential competitors have better things to do, ultimately it is all about opportunity cost, there is more money to be made in service businesses without worrying about permits and labor unions.
7). Competition may well be coming! It is only over the past couple of years that Mayur has scaled up, this could possibly attract the attention of the biggies if they feel the market is big enough.
Bobby
Hi Bobby,
Here are my thoughts on your thoughts 
1). If demand is increasing rapidly, that gives more reason for competition to join.
2). That can be true but as far as i have read, what mayur is doing is not rocket science, even a modest management can do that with some willingness and efforts. And if management is the key, we must stay away asWB says “always bet on horse, never on jockey”
3.Process is also a good thing but as in point 2, can’t be durable, vulnerable to competition all the time.
4). That can be one thing but if u search on google, many existing players are there, especially in Merrut.
5). THAT CAN BE THE REASON but again it can’t be a durable one.
6). I am talking about current competitiors, potential might be busy
7). Agree with u.
Regarding PAge, they have franchisee of Jockey. I guess thats a big brand and more brands are coming as Fruits of the Loom, competition is gonna increase and returns are gonna go down only.
Hi Kunal
Here are my replies:
)–> But it is not that difficult too, is it? I meant that what Mayur’s management seems to be doing can be at least attempted by others, anyone can see that on balance sheet of 118 crores, if market cap of 1307 crores can be achieved, why not someone is at least trying to imitate or at least attempting the same? 30-40% ROE is damn good, sooner or later competition does come if any company is doing that but i think no competiton so far in the last 4-5 years… it–> Same as above
Super results!!!
Q4
Net Sales increased to 122 crs vs 98 crs registering 24% sales Growth
Net Profit increased to 18.5 from 12.9 registering 43% growth.
Eps 8.5 vs 5.9
NP margin at 15% from 13%.
For the full year FY14
sales at 469 vs 380 - 23% growth
NP at 56.7 crs vs 43.6 -30% growth
NP margin at 12%.
Am a new entrant to this forum and recently had a look at mayur… the question I have for all the experts is that quality stocks keep getting expensive- as is the case with Mayur-however, the beaten down stocks have indeed zoomed in the last week. at such a time, are stocks like Mayur still a good buy from a medium term perspective or should one look at different kind of stocks.
Dear Varun, I am by no means anywhere even close to a seasoned investor but I have learnt the hard way (huge permanent losses of capital by making wrong stock picks!) that there is no substitute for quality. My question to you is, why do you think buying beaten down names is the right thing? Fundamentally nothing has changed on the ground as yet. It will probably take more than a couple of years. Even if it does happen quicker than that, companies with huge amounts of debt (which are the ones that are beaten down mainly) are going to find it difficult to make the best of good times with that kind of balance sheets. Stocks like these tend to rise fast and drop even faster! I might be completely wrong and a stock like Suzlon which has gone from 5 to 25 in the space of 7 months can go to 100 but how much conviction can you really have and how much of your portfolio can you really bet to take that kind of advantage even if the best case scenario does happen! Is there any margin of safety at any price for a company losing 100’s of crores every quarter however cheap it may look, even if interest rates were to drop tomorrow? Lupin was trading at over 25 times earnings even 10 years back and look at the kind of returns it has given to the investor! Again, I am not an expert at investing but in the last 3 years my biggest learning has been that as an investor my first job is to protect against losses and then think about making money! I cant tell you whether investing in Mayur at this price is good or not! That is your decision based on your research but I hope this helps!
Any way, there are other parts of the forum to have such kinds of discussions rather than a mayur thread.
Disc: Invested in Mayur.
thanks Abhishek for your advice… sorry- this was more a mayur vs others kind of question so didnt know where else to put it. Still getting used to the forum and the various threads so hopefully will post at more appropriate threads next time
Great results from Mayur for the umpteenth time. That is what dust Ingushes a great co interms of predictability and consistency in earning with great opportunity size n great ROCE .
This is what investing is all about. Buy into a quality stock and sit tight.
Mayur is now seeing increased margins thanks to judicious backward integration, 5th line commissioning and now 6th line bought ata fraction of cost from a bankrupt Italian co. this is what you expect from a judicious yet typical Indian Bania buddhi. More importantly these new lines will mostly cater to OEM export markets resulting in healthy margins with price touching 4500 Rs per meter for these mkt. also MUL is a net importer so no effect rather benefit rupee appreciation. Further Fordn Chrysler themselves offer huge opp size without involving any new OEM names.
Co shud easily achieve EPS of 27-28 2 years down the line n will be a 25-30% fast grower due to export focus , pricing power . No wonder Westbride entered into it n this factor itself will ensure that PE doesn’t come down below 20.
So buy on dips n sit tight n see your money doubling in 2 years IMHO
Discl invested.
Correction 450 Rs per m
What is the EPS of Mayur? As per the results announced it is 26.23 and 9MFY134 EPS is 17.65. However we’d bonus and FY14 EPS should be 13.12, correct?
The EPS is 13.11, which can be obtainted by dividing the Net Profit of Rs. 56.79cr as stated by the company by 4.33 cr shares as stated on the BSE website. The company announcement does not take into account the 2:1 split.
Thanks Chintan. So trading at 24 times trailing and 19 times forward earning at CMP.
When would conference call happen? Where to find as when conference call for a company happens, number to call, etc?
Yes Ashwin. I also conservatively expect an FY15 EPS of Rs. 17.
I would also like to know a source to find info for conference call, etc.
fy15 eps expectations of rs.17 looks very conservative … if you annualize q4 eps of 4.3 ( adj for bonus) it comes to 17.2…line 5 contribution is gng to start frm april nd line 6 contribution can start from oct - nov… so top line growth of 25-30% can be expected… i am expecting eps of 22-24 for fy15
My Broker says the bonus stocks are not tradeable because the status is 'Approval waiting '. Can someone tell what this means and when can I start trading the bonus stocks?
I traded them so I guess there should not be any problem in yours… Please check with your broker again… !!
West Bridge was alloted equity shares at Rs. 233 but the stock was trading at around Rs. 300. Isn’t it unfair from an investor’s point of view?
Disc: Invested. And my avg. purchase price is less than 233
apparently edelweiss has an update on mayur post concall. Dont have details of either but found this on moneycontrol message board. Markets are so hot , valuepickr folks dont have time to look at old favs ! Looks a multibagger to me from here on as well.
Mayur Uniquoters Ltd. (MUL) reported good set of numbers for Q4FY14. Revenues grew by an impressive 25% YoY. EBITDA increased by 33% YoY and PAT stood at INR 19 cr, up 43.7% YoY, consolidating its strong growth story. MUL has been constantly increasing its presence of the domestic Auto OEM synthetic leather pie, with approvals from major Auto OEMs. Further, capacity constraints are expected to ease in FY15, positively impacting the topline going forward. MULâs foray into PU industry (which commands better realisation) and higher demand globally would also lead to strong revenue visibility going forward. The companyâs strong revenue visibility, strong RoE 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 22% in revenues and 26% in PAT over FY14-FY16E.
MULâs growth story intact
MULâs Q4FY14 numbers were impressive, with 25% expansion in topline at INR 470 cr. Auto OEM exports registered a 25.9% growth from INR 68 cr in Q4FY13 to INR 86 cr. General Exports saw 91% revenue growth from INR 11.65 cr to INR 22.25 cr. FY14 average realisations stood at INR 215/meter with reported average realisation of Auto OEM at INR 470/meter and General Exports at INR 184/meter.
The companyâs Gross Margin grew by 287bps on the back of a decline in raw material costs in view of the USD-INR appreciation. EBITDA in the quarter grew by 33% YoY to INR 27 cr with margins of 22.4%. PAT for the quarter grew by 43.7% YoY to INR 19 cr in comparison to INR 13 cr reported in Q4FY13.
Strong Client Addition continues
MUL has steadily increased its exposure to big Auto OEM players. It has received approvals and is named in the supplier list of Auto OEMs such as Ford India, GM India, Mahindra (for SUV500) etc. It is also a supplier to Ford Worldwide and Chrylser (USA). It intends to expand and double its presence in the global markets as a key supplier of synthetic leather.
Capacity expansion to ease constraints
MULâs current capacity stood at 2.45mn linear meters/month. The 6th line is expected to commence operations from October 2014. This line is expected to produce 600,000 linear meters per month, taking the total installed capacity to 3.05mn linear meters per month. The 5th line, which is currently operational on two shifts, is expected to operate on a 3-shift basis by September. With this, constraints on capacity would ease.Fully operational capacity is expected to generate revenues to the tune of INR 750-800 cr.
Foray into PU to drive growth, going forward
MUL has forayed into PU manufacturing. Global PU suppliers are dominated by Chinese manufacturers. The global market serviced by China is 10 times the size of the Indian industry. PU is lighter than PVC and is the preferred choice of synthetic leather users globally (exc. Auto OEMs). PU realization at INR 250-300 per meter is much higher than PVC realisation of INR 215 per meter.The current PU production is expected to commence with two lines, which would be scaled up to 6 lines by FY16. Each line is expected to contribute INR 90-100 cr incrementally.We expect MUL revenues to be boosted by its foray into PU. The capex requirement for Phase I (i.e. two lines) would be INR 70 cr.
Link to the above report -
Haven’t been able to download the complete report as you need to register on the Edelweiss website.