The two major challenges for manufacturing PU based leather are :
1). unavailability of PU resin manufacturers locally ( raw material will have to be imported from China or Italy, adding to the cost).
2). Pollution clearance requirements are higher for PU compared to PVC.
As of now, there seems to be growing demand for both PVC and PU based leathers, but not sure for how long it will remain so. It will be good to get a perspective from Mayur management on this.
Guys, at the outset, I will say that I am a huge fan of this site and have the deepest respect for the folks here and they way they follow and teach the art and science of investing.
With that being said, in my humble opinion, I cant help feeling somewhat piqued at the way we tend to go on and on about Mayur. I understand the attention since everyone has Mayur as their top pick but surely there must be more fish out there ?
Iād rather that we keep throwing in more and more new ideas and we use the collective energy and wisdom to analyse those instead of trying to overanalyze Mayur. I discovered this site a couple of months back and latched on to Mayur just as they announced the bonus so Iām relatively a newly wedbut a happy one. I already know enough to know that itās for keeps so Iād rather just look at it every valentine
The seniors have already said that we need to find new stories to fall in love with. We cannot let many a granules ( only an example in case the purists hate it) slip because we could not let our eyes off the peacock.
Iād suggest that the new ideas come in with enough research, conviction and presentation to let the seniors take a quick look and decide if itās worth spending more time on. We should not expect others to do the dirty work on every lousy idea.
Over the long term, itas hard for a stock to earn a much better return than the business which underlies it earns and thatās why we need to keep moving on to find the hidden gem sweetly positioned in a great business.
Most of Berkshireās billions were made from the top ten ideas. We have not found our top ten and until then, to use Gilleteās tagline, our motto should be:
Thereās a better stock out there and we shall find it !!
While i agree no stock should be over analysed but at the same time you should know what is the future of the business to stay invested in it.
There is no company in the market which can be left without constant prodding of its business. We need to re check the story once in a while to keep up to date.
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What i see from the discussion is a healthy analysis from people with good research and knowledge in the business.Which will make many to take informed decision going forward on the additional investment **possibilities or booking profit or just holding on or adjust the allocation.
There is always better stock out there but that doesnt mean you should forget the ones you already have in your portfolio.
Instead of asking others to look out,i would welcome more structured analysis and individual view point which will help other take decision which should be their own.**
Sood, welcome to valuepickr. This sudden burst of energy in Mayur was started after Donald and I had a discussion where I felt that the opportunity size for Mayur was the highest that I had seen for any company that I have looked at in the recent time. Donald disagreed and asked me to look at the numbers more closely. I must be honest that I have not looked at Mayurās numbers either closely or critically for over a year as I was happy with the business and stock performance. Donaldās comment (and his post here) made me go back and re-look at the numbers. And I am better able to appreciate the points that he was making.
Now, does it mean I will sell/reduce my holding? I am not sure. If I find a much better bargain where I can understand the business fairly well, I might. I am not as sure of Astral or Kaveri as Donald is ( and I have looked at Astral for a long time and Kaveri very recently).
But the overall point is:-
There is a definite need of looking at oneās portfolio picks close (even critically) so that one does not get blindsided by its virtues.
Understand the opportunity cost - and here I agree with Donald. In the near term, Mayur is unlikely to give blockbuster returns from here. It is more likely to be a steady compounder (nothing wrong with that either if it can compound at 20-25%!!).
Thanks for the welcome Abhishek. I hope I havenāt ruffled too many feathers as that was not my intent at all. Another disclosure is that some of what I quote above is stolen from Charles Mungerās speech ( I found the link on your blog !) Iāve re-entered the markets recently after a hiatus of several years and granules, dishman and Mayur were among my first purchases roughly at the same time a couple months back. I made more money on the first two ( I know itās pure dumb luck) even though Mayur had a great rerating as well.
So there must be several stocks out there at inflexion point ā now that we seem to be on the cusp of a new bull market. I am not for a moment saying that we chase momentum as to put things in perspective, hereās some more opinion on the impending bull market.
We recognize we have a moral responsibility to fulfill our promises, justify these investments,reward back our shareholders for every penny that they have invested in Mayur.
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What a statement The statement like this from the company alone would make the shareholder like me to sleep peacefully every night and not worry about the scrip on regular interval basis.
Excellent digging by Rudra! This shows us that sky is the limit in terms of research and knowledge.
Must say that the way Mayur is making announcements and walking the talk, they seem to be gearing up for next level. It gives a great comfort to be part of such cos.
I too am getting enormously interested in these so called classical patterns. Hence posting my charts and readings especially to monitor how accurate these things are.
Lets see how things play out and learn from successes and failures.
Mayur Uniquoters - An integrated play; initiating with Buy - Anand Rathi
The artificial leather industry in India has grown over 20% in the recent past. Mayur Uniquoters (Mayur), holding the lionās share of the industry, is bound to ride this tide. To meet greater demand from userindustries, Mayur is endeavouring to capture a larger part of the value chain. This would enable it to post revenue CAGR of 19% and also boost margin by 100bps over FY12-14e. We initiate coverage on the stock with Buy and 12-month price target of Rs.520.
)- User demand to grow exponentially. Artificial leather grew a robust 20% in the past few years, auguring well for Mayur, the synthetic leather giant. Moreover, footwear and automotives - Mayurās key user industries - are recession resilient, and the company has marquee players as its clients. This renders it higher realisation and economies of scale.
)- Integration to offer twin benefits. Mayur is setting up a fifth coating plant with capacity of 0.6m metres per month, to grow revenues at 19% CAGR over FY12-14e. Also, its knitted fabric unit is likely to commence production from Novā12, which will improve margins by way of lower rejection.
)- Financial health to improve further. Capacity expansions, and the ensuing economies of scale and lower fixed overheads, keep Mayur striving for consistent product improvement. It now intends to produce own knitted fabric, which will bring about even higher realisation and margin. Higher margin (up from 16.8% to 17.8% in FY12-14e), together with efficient working capital, are likely to drive better return ratios.
)- Valuation: Mayur has historically traded at P/E of 3-12x. We assign 12x PE to arrive at FY14 TP of Rs.520. At CMP of Rs.402, the stock trades at PE of 11.6x /9.2x FY13e/14e EPS of Rs.35/Rs.43 respectively. Risk: Rise in input prices.
but a happy one. I already know enough to know that itās for keeps so Iād rather just look at it every valentine
The statement like this from the company alone would make the shareholder like me to sleep peacefully every night and not worry about the scrip on regular interval basis.
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