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Mayur Uniquoters Ltd: A year of strong performance - Views on News from Equitymaster

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Mayur Uniquoters Ltd: A year of strong performance
Jun 5, 2012

We present herewith the March 2012 quarter result analysis of Mayur Uniquoters Ltd..

Performance summary
  • Net sales grew by 25.9% YoY (year-on-year) for the fourth quarter of the financial year 2011-12 (4QFY12). For the year ended March 2012 (FY12), sales grew by 27.7% YoY.
  • Operating margins improved handsomely by 5.1% YoY to 19.5% in 4QFY12 as compared to 14.4% seen during the same period of the last financial year. This was largely due to lower raw material costs as well as lower other expenditure (both as percentage of net sales) during the quarter. For FY12, margins at operating level were marginally up by 0.3% YoY to 16.8% as compared to 16.5% in the same period last year.
  • On the back of a good growth at topline level and a huge margin expansion at operating levels, net profits grew by huge 67.5% YoY during the quarter. This was aided by higher other income which offset some negative impacts of higher depreciation charges as well as higher effective tax rate during the quarter. For FY12, net income increased by 32.0% YoY.
  • The company declared a final dividend of Rs 5.00 per share (yield of 1.0%). Adding this total dividend for FY12 is Rs 13.50 per share (yield of 2.8%).
Financial performance snapshot
(Rs m) 4QFY11 4QFY12 Change FY11 FY12 Change
Net sales 715.8 901.5 25.9% 2485.6 3174.8 27.7%
Expenditure 612.6 725.7 18.4% 2075.7 2641.6 27.3%
Operating profit (EBDITA) 103.2 175.8 70.4% 409.9 533.2 30.1%
Operating profit margin (%) 14.4% 19.5%   16.5% 16.8%  
Other income 3.2 6.2 96.3% 10.4 17.0 63.0%
Interest 5.4 6.4 19.8% 18.6 19.6 5.4%
Depreciation 7.2 11.3 56.3% 26.7 38.7 44.8%
Profit before tax 93.7 164.3 75.3% 375.0 491.8 31.2%
Exceptional items 0.0 0.0   0.0 0.0  
Tax 27.1 52.6 94.4% 122.2 158.1 29.4%
Effective tax rate 28.9% 32.0%   32.6% 32.1%  
Profit after tax/(loss) 66.7 111.7 67.5% 252.7 333.7 32.0%
Net profit margin (%) 9.3% 12.4%   10.2% 10.5%  
No. of shares (m)       5.4 5.4  
Fully diluted EPS (Rs)*         61.6  
P/E (x)*         7.8  
* Based on trailing 12-months earnings
What has driven performance in 4QFY12?
  • Mayur Uniquoters Limited (Mayur) registered a good growth of 25.9% YoY in net sales during the quarter.

  • A good performance at the topline level translated into higher profitability for the company. Total operating costs declined during the quarter largely due to decline in raw material costs as well as other expenditure (both as a percentage of net sales). Employee costs were slightly up by 0.3% YoY during the quarter (a percentage of net sales). As a result, operating margins expanded by around 5.1% YOY to 16.2% during the quarter.

  • Net profits went up by 67.5% YoY during the quarter. This was on account of a good growth at topline level, a huge margin expansion as well as higher other income. All this offset the negative impacts of higher depreciation charges as well as higher effective tax rate during the quarter. Interest cost was also slightly higher during the quarter. As a result, margin at the net level expanded to 12.4% as compared to 9.3% seen during 4QFY11.

What to expect?
At the current price of Rs 479, the stock is trading at a multiple of 7.8 times its trailing twelve month earnings and 6.2 times our estimated FY15 earnings.

The company maintained its growth momentum on the topline front throughout the financial year 2011-12. Margins at operating level were under pressure for some part of the year. However, the company ended the year with a small expansion in the margins as well. This definitely bodes well for the company’s future considering the high oil prices during the year. The company’s raw material costs depend a lot on oil prices. Despite adverse currency movement, the company managed to keep its raw material costs in check during the quarter as well as full year FY12. Please note that it imports about 70% of its raw material (around 50% of total sales).

The growth momentum of the company would continue on the back of recent capacity expansion for synthetic leather. Considering strong fundamentals of the company, we maintain our Buy view on the stock from a 3 years perspective.

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