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Mayur Uniquoters: Short term Dust Settled. Exports and Expansion to trigger the Growth! - Views on News from Equitymaster
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  • Aug 31, 2017 - Mayur Uniquoters: Short term Dust Settled. Exports and Expansion to trigger the Growth!

Mayur Uniquoters: Short term Dust Settled. Exports and Expansion to trigger the Growth!
Aug 31, 2017

We present herewith result analysis of Mayur Uniquoters Ltd for the quarter and year ended June 2017.

Performance summary
  • Net sales for the quarter grew 8.8% YoY. The company produced 64.6 million metres (mm) for the quarter versus 59.26 mm in 1QFY17 , implying a volume growth of 9.07% YoY. The company did not undertake any price increase during the quarter.
  • The company is currently operating at 85% of capacity on 5 lines (total 6 lines with capacity of 30.5 million metres per month).
  • Footwear comprised 38% of the sales, and declined around 3.7% YoY (22% growth QoQ). Footwear market was impacted around mid-May on account of GST implementation issues during which clients deferred purchase. As per the management, orders have started flowing in again and footwear segment will witness a recovery.
  • Exports comprised 20.5% each in the revenues. Of this, auto OEM and general export accounted for 7.85% and 12.5% respectively. In the domestic market, footwear, replacement and Auto OEM comprised 38%, 20.5% and 10% of sales respectively.
  • The company added six new customers in general exports. Valuewise, OEM exports grew 20% YoY. Domestic OEM segment witnessed 18% to 18.5% growth while replacement segment grew 15%-16% YoY.
  • Standalone Financial Performance
    (Rs m) 1QFY17 1QFY18 Change
    Net Sales (net of excise duty) 1,294 1,408 8.8%
    Expenditure 908 1,003 10.5%
    Operating profit (EBDITA) 386 405 4.9%
    EBDITA margin (%) 29.9% 28.8%  
    Other income 24 23 -3.8%
    Interest 4 2 -48.3%
    Depreciation 42 42 1.4%
    Profit before tax 365 384 5.3%
    Profit before tax margins (%) 28.2% 27.3%  
    Tax 118 128 7.9%
    Effective tax rate (%) 32.4% 33.2%  
    Profit after tax/(loss) 247 256.8 4.1%
    Net profit margin (%) 19.1% 18.2%  
    No. of shares (m)   46  
    Diluted earnings per share (Rs)*   18.1  
    Price to earnings ratio (x)*   19.9  

    *On the basis of trailing twelve months' earnings


    Cost Breakup
    (Rs m) 1QFY17 1QFY18 Change
    Raw material cost 708 793 12.0%
    as a % of sales 54.7% 56.3%  
    Staff expenses 73 67 -7.9%
    as a % of sales 5.6% 4.8%  
    Other expenses 127 143 13.0%
    as a % of sales 9.8% 10.2%  
    Total expenses 908 1,003 10.5%
    as a % of sales 70.1% 71.2%  

  • PU Plant update: The company has made payment for land and has received government's nod to start plant construction. It is expected to take 15 to 18 months to commence production (by 3QFY19/4QFY19). The company is planning to start with one production line with capacity of 0.5 million metres per month and start the second line six months after. It is expected to take around one to 1.5 years for PU plant to operate at full capacity.
  • The PU market basically caters to the fashion industry and is estimated to be around 5 million metres per month in India. In addition to this, approximately around 20 million meters is imported from china by the un-organised sector.
  • Despite a good demand, the quality conscious clients have been avoiding PU imported from China due to quality and logistic issues. The plant is likely to entail a capex of Rs 800 million to Rs 1billion, most of which will be funded by internal accruals (barring 20% which is likely to be debt funded to avail TUF subsidy).

    The revenue potential of the plant, at full utilization, is expected to be upto Rs 2 billion.
  • Mysore plant update: Mysore plant delayed by 2.5 months as the company is looking at a different land piece as the cost of construction at the existing place is going up by Rs 1.5 to Rs 2 crores. Initially, the company will be shifting one of the existing lines only and depending upon demand and utilisation level could set up more lines at the Mysore plant. The company is shifting the production line to improve margins by saving transportation cost and improve logistic issues for footwear clients based in South India.
  • Furnishing segment update: Demonetization and GST implementation has also adversely impacted company's growth plans in furnishing business. As of now, the dealers that company is engaged with are not exclusive but overtime the company aims to move to that model.
  • Operating profit for the quarter grew 4.9% YoY with margins at 28.8% versus 29.9% in the corresponding quarter last year. Net profit for the quarter was up 4.1% YoY with margins at 18.2% versus 19.1% in the corresponding quarter last year.
  • The Board of Directors has recommended an interim dividend of Rs 0.5 per share for FY18.
  • At the end of the quarter, the company had a cash of Rs 1.4 bn and debt worth Rs 100 million on balance sheet.
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