About the Company

Mayur Uniquoters is the largest manufacturer of artificial leather/ PVC vinyl, using the ‘Release Paper Transfer Coating Technology’ in India.

Q2FY21 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
  Q2FY21 Q2FY20 YoY % Q1FY21 QoQ % H1FY21 H1FY20 YoY
Sales 114 129 -11.63% 44 159.09% 157 261 -39.85%
PBT 19 21 -9.52% 1 1800.00% 20 46 -56.52%
PAT 14 20 -30.00% 1 1300.00% 15 36 -58.33%

 

Consolidated Financials (In Crs)
  Q2FY21 Q2FY20 YoY % Q1FY21 QoQ % H1FY21 H1FY20 YoY
Sales 129 136 -5.15% 44 193.18% 173 267 -35.21%
PBT 26 24 8.33% 0 26 40 -35.00%
PAT 20 22 -9.09% 0 20 32 -37.50%

Detailed Results

  1. The company had a mixed quarter with consolidated revenues declining 5% YoY and PBT rising 8% respectively YoY.
  2. The company made a good recovery QoQ which is highlighted in the QoQ rise in almost all figures.
  3. H1 figures remained subdued due to bad performance in Q1.
  4. The company has announced a buyback offer for 1.65% of total equity shares at the price of Rs 400. The record date for the buyback has been set on 25th  November.

Investor Conference Call Highlights

  1. The months of September and October have been good for the company.
  2. The management has seen auto sector demand reviving but footwear demand remains subdued.
  3. December and January should be at most 10-15% lower than the last figures for the company according to the management.
  4. The bigger worry for the company is the onset of COVID-19 in the EU which can dampen the company’s fledging exports.
  5. The company is already approved by Mercedes-Benz for the supply to their South Africa plant and product supplies is expected to start for their new model from next quarter. The product approval from BMW has also been received.
  6. Automotive sales may have been revived due to people avoiding public transport due to COVID-19.
  7. The management expects footwear demand to come back since the wedding season has started in India.
  8. PU sales have been subdued as most customers had stocked up in imported PU before the lockdown and have yet to run out. The govt of India has imposed an import duty of 10% on Pu which should help boost sales for the company and any other local makers.
  9. The company has been able to increase pricing by 5% in Oct and 7% in Nov.
  10. Exports accounted for 22% of sales while the rest 78% was domestic in Q2.
  11. The breakup by segment is: Export general is 9%, export OM is 13%, domestic auto is 19%, auto replacement is 22%, footwear is 26%, furnishing and others are at 7%.
  12. Total volumes sold in Q2 was at 58,44,868 meters.
  13. Gross margins for the company depend primarily on volumes. Thus more volumes sold will yield greater gross margins.
  14. The management expects the company to come back to the old margin profile in Q3.
  15. Volkswagen orders are expected to be around 30,000, 40,000 meters per month at a price of at least INR 500 per meter. This is expected to start from March or April 2021.
  16. The company is also pitching hard to get new models from America like Ford and Chrysler.
  17. The management believes that it will take at least 1 year for the market to get established for PU.
  18. The price that the company can commend from auto companies in the USA should be at least $12 per meter. The company is also in good standing as Ford & Chrysler are looking to add PU and Mayur is one of the only 2 companies in the world doing PU for auto.
  19. The management maintains that Mayur will achieve cost savings of 15% in FY21.
  20. The management is confident that given the large export orders that the company has bagged, it can easily surpass its record volumes sold in FY22.
  21. IN the existing PVC lines, the company has a capacity to churn out 27-28 lac meters a month.
  22. The management is not concerned about competition from China for PU as Chinese companies for PU are in bad shape as most of them had resorted to price competition and the rise in RM costs has left them in big trouble.
  23. The annual revenue run rate for the PU line at full capacity is Rs 125 Cr.
  24. The footwear market is down as most of the industry sales were from physical stores where customers could try out the products. Even big players like Bata are running at lower than 70% capacity.
  25. The approved order from BMW will start in 2022.
  26. In exports, auto exports are going mainly to the USA while general export is going all over the world.
  27. For backward integration, the company is now adding foam laminations in the next 4-5 months as Ford, MG and Volkswagen are asking for laminated material and the integration can save Rs 25-30 on freight costs at the least.
  28. The company is also looking to move to microfiber which has a price range of $7-20 depending on quality.

Analyst’s View

Mayur Uniquoters has been one of the biggest artificial leather makers in the world. But the company has been through a rough patch in the past few years with stagnant revenues and decline of the unorganized footwear segment which was a big revenue generator for the company. The company is making good inroads into the auto-export segment. Q2 performance for Mayur was good with good recovery in the auto segment while footwear remained subdued. The management remains confident of the product’s technical and quality edge but has stated that it may take the rest of FY21 for the company and its customer segments to come back to normalcy. The company’s export orders from Mercedes and Volkswagen should help the company maintain good growth in the medium. The new import duty on PU should also help the company increase its PU sales which have stayed stagnant to date. It remains to be seen how long the current slow auto environment continues and how long will it take for the management vision to materialize. Nonetheless, given its dominant market position both in the domestic and export segments and the management’s focus on not compromising on quality no matter what, Mayur Uniquoters remains a good small-cap stock to watch out for.

 


Q1FY21 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
Q1FY21 Q1FY20 YoY % Q4FY20 QoQ %
Sales 44 132 -66.67% 145 -69.66%
PBT 1 24 -95.83% 35 -97.14%
PAT 1 16 -95.00% 27 -97.04%

 

Consolidated Financials (In Crs)
Q1FY21 Q1FY20 YoY % Q4FY20 QoQ %
Sales 44 131 -66.41% 137 -67.88%
PBT 0 17 -98.65% 33 -99.30%
PAT 0 10 -99.10% 25 -99.64%

 

Detailed Results

    1. The company had a dismal quarter with consolidated revenues and PBT reducing 66% and 99% respectively YoY.
    2. Standalone revenues and profits were almost the same as consolidated profits indicating that other subsidiaries of the company were not in the loss in Q1.

Investor Conference Call Highlights

  1. The company’s supply to the Mercedes plant in South Africa is expected to start from Q4FY21.
  2. The product approval of BMW is still going on.
  3. The sales for the quarter were down mainly due to production loss in the month of April and some days in May.
  4. More than 50% of the business is coming from the auto industry.
  5. Q2 is expected to be much better than Q1.
  6. All the supplies are to be made to new models that will be released in the future.
  7. The company is also expecting a deal from Volkswagon in the next few months.
  8. There is good import substitution in the PU space as 90% of domestic requirements are imported. Currently, the demand for the company’s PU is low as most makers have stocked up on imported PU before the lockdown. The company expects new orders to come in a few months once these stocks deplete.
  9. The management has stated that the rest of the year will be spent in getting back on track both for the economy and the auto and the artificial leather industry.
  10. Capacity utilization is expected to come up to 60% in Q2. It was at around 27% of last year’s levels in Q1.
  11. Most of the drop in other expenses is due to a drop in discretionary expenses like travel, etc. There shouldn’t much increase in these costs in Q2 as normalcy is expected to come back slowly.
  12. The management stresses that the current times are going to weed out weak players and will make existing players more resilient.
  13. The company has made sales of less than Rs 50 lacs in PU for Q1.
  14. Auto OEM exports for Q1 were low mainly due to no exports during April and May.
  15. Total volumes sold in Q1 were at 15.162 lac meters.
  16. Volkswagen India is expected to bring in sales of 30,000 meters per month with Rs 12-15 Cr per year.
  17. The value of the export sales is expected to be around 15% higher as compared to domestic sales.
  18. The company is now supplying MG in the recent entrants in the auto industry.
  19. The management maintains that the company remains competitive enough to compete for orders anywhere in the world.
  20. Most of the plant operations were in 2 weeks of May and in June. Thus the company has only accounted for depreciation for the period when operations were open.

Analyst’s View

Mayur Uniquoters has been one of the biggest artificial leather makers in the world. But the company has been through a rough patch in the past few years with stagnant revenues and decline of the unorganized footwear segment which was a big revenue generator for the company. The company is making good inroads into the auto-export segment. Q1 performance for Mayur was dismal mainly on the back of the production shutdown during the lockdown. The management remains confident of the product’s technical and quality edge but has stated that it may take the rest of FY21 for the company and its customer segments to come back to normalcy. It remains to be seen how long the current slow auto environment continues and how long will it take for the management vision to materialize. Nonetheless, given its dominant market position both in the domestic and export segments and the management’s focus on not compromising on quality no matter what, Mayur Uniquoters remains a good small-cap stock to watch out for.


 

Q4FY20 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
Q4FY20 Q4FY19 YoY % Q3FY20 QoQ % FY20 FY19 YoY%
Sales 145.2 128.4 13.08% 129.1 12.47% 535.5 594.9 -9.98%
PBT 35.7 27.2 31.25% 24.4 46.31% 105.9 130.1 -18.60%
PAT 26.6 19.8 34.34% 18.2 46.15% 80.6 87.2 -7.57%

 

Consolidated Financials (In Crs)
Q4FY20 Q4FY19 YoY % Q3FY20 QoQ % FY20 FY19 YoY%
Sales 137.2 132.6 3.47% 143.4 -4.32% 547.8 612.9 -10.62%
PBT 32.8 28.7 14.29% 30.7 6.84% 103.6 132.1 -21.57%
PAT 24.8 21.2 16.98% 23.3 6.44% 79.8 89.6 -10.94%

 

Detailed Results

    1. The company had a modest quarter with consolidated revenues and PBT growing 3.5% and 17% respectively YoY.
    2. FY20 performance was still dismal with consolidated revenues and profits falling 10.6% and 11% YoY respectively.
    3. Standalone revenues and profits were higher than consolidated profits indicating that other subsidiaries of the company were in the loss in Q4.
    4. The board has recommended a final dividend of Rs 1 per share for FY20.

Investor Conference Call Highlights

  1. In the PU plant, most of the project construction activities are completed now with the commissioning of wet and dry lines of PU Plant. Small supply orders and dispatches also started from the plant on March ’20.
  2. The plants were shut down 100% in April and were only operational 15% in May in the auto segment. The company expects sales to normalize from August onwards.
  3. The management does not see any problems arising from China as the government continues to keep import duty and surcharge for leather products high which is beneficial for local players.
  4. The management expects stock levels to normalize from Q3 onwards for most of the footwear industry.
  5. The management has stated that among the major Indian auto companies only Hero MotoCorp is not a customer yet and the company is in the process of on-boarding them currently.
  6. The overall volume decline in FY20 was 10%.
  7. The main driver for the company in Q4 was OEM export which is expected to maintain its momentum going forward.
  8. Auto sales have risen to 61% of sales in Q4FY20 vs 56% a year ago. Footwear has also risen 4% YoY in Q4.
  9. The volumes breakup was 55% auto, 30% footwear, and 15% others.
  10. The company expects good demand for PU footwear going forward due to the increase in import duty for PU footwear from China. The price difference is around 15-20%.
  11. The company has placed an order for an additional coating line which has gotten delayed by 6 months due to COVID.
  12. Growth in Value of exports in Q4 was 19% YoY. In volumes terms, it was 12.5% YoY. OEM exports grew 58% YoY in Q4.
  13. In the domestic OEM, value growth was 6% YoY while volumes declined 2% YoY. This was due to more orders for value-added products which increased value.
  14. The management has stated that there is huge potential in OEM exports which yields the company around Rs 550 per meter vs Rs 230 per meter from domestic OEM.
  15. The company is in close talks with a Korean company to supply PU to the auto industry there.
  16. The company is also close to a deal with Ford Motors to supply PU.
  17. Most of the raw materials for the company are crude derivatives and the management does not expect any big rise in RM costs for the company going forward.
  18. The management has provided a contrast in the footwear industry in India and China, wherein in China 80% footwear is PU and 20% is PVC while in India 95% footwear is PVC and 5% is PU. The management has stated that this is mainly due to the huge demand for cheap footwear in India.

Analyst’s View

Mayur Uniquoters has been one of the biggest artificial leather makers in the world. But the company has been through a rough patch in the past few years with stagnant revenues and decline of the unorganized footwear segment which was a big revenue generator for the company. The company is making good inroads into the auto-export segment. The OEM export revenues have risen 58% YoY indicating good performance in this segment. This is also good for the company as the realization per meter from OEM exports is more than double the realization from domestic OEMs. The management remains confident of the product’s technical and quality edge. It remains to be seen how long the current slow auto environment continues and how long will it take for the management vision to materialize. Nonetheless, given its dominant market position both in the domestic and export segments and the management’s focus on not compromising on quality no matter what, Mayur Uniquoters remains a good small-cap stock to watch out for.


 

 

Q3 FY20 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
Q3FY20 Q3FY19 YoY % Q2FY20 QoQ % 9MFY20 9MFY19 YoY%
Sales 129.12 165.59 -22.02% 129.36 -0.19% 390.36 466.54 -16.33%
PBT 24.38 33.97 -28.23% 21.48 13.50% 70.16 102.94 -31.84%
PAT 18.18 21.75 -16.41% 20.01 -9.15% 54.06 67.38 -19.77%

 

Consolidated Financials (In Crs)
Q3FY20 Q3FY19 YoY % Q2FY20 QoQ % 9MFY20 9MFY19 YoY%
Sales 143.4 166.04 -13.64% 136.15 5.33% 410.58 480.36 -14.53%
PBT 30.66 33.43 -8.29% 23.53 30.30% 70.74 103.37 -31.57%
PAT 23.29 21.17 10.01% 21.91 6.30% 54.94 68.33 -19.60%

 

Detailed Results

    1. The company had another dismal quarter with consolidated revenues and PBT falling 13% and 8.3% respectively YoY.
    2. But the recovery was good with revenues and PBT rising 5% and 30% QoQ showing good quarter on quarter progress.
    3. Standalone revenues and profits were lower than consolidated profits indicating that other subsidiaries of the company are generating considerable profits in Q3.
    4. The main reason for the difference in PBT decline and PAT increase is the reduced tax expenses for the quarter.
    5. The board has recommended an interim dividend of Rs 1.5 per share for Q3FY20.

Investor Conference Call Highlights

  1. The management has stated that it has seen a small rise in the auto market since December. The company is also getting greater sales to demand from the auto market customers.
  2. The company has approved by the South Africa plant of Mercedes Benz from Q4FY21. The company is still in the product approval phase with BMW.
  3. The management expects good revenue growth from auto customers in both the export and domestic markets.
  4. The management expects a 20% increase from exports and a 10-15% increase in the domestic market in the coming quarters from auto customers.
  5. The construction of the PU plant is complete and commercial production has started in January. The management expects plant stabilization of large supply orders within the next 2 months.
  6. The company is not dependent on China for raw materials as most of the imports are from western countries.
  7. The management has said that auto demand has increased for the company’s products and it has received a few big orders here.
  8. The share of footwear in revenues is around 30% in Q3.
  9. The management has stated that the company has been strict in its credit policy and thus the share of the revenue from footwear has gone down. The automotive share has gone up which has also pushed the footwear segment share down. The management is confident of demand coming back for PU in the footwear segment from China if not from India.
  10. The management is also looking to introduce the PU material to auto customers which can turn out to be a big opportunity for the company if it materializes.
  11. The total volumes for the company were at 60,77,000 meters with 73% in domestic & 27% in exports.
  12. The management has mentioned that PU can be used by anyone using PVC except in the auto industry where the company is pushing for this substitution.
  13. The management maintains that the company still retains its technical and quality advantage over its domestic peers. It has lost the automotive market share in recent years mainly due to the management commitment to not compromise on the quality and margin of the product. This is what enables the company to compete in the auto export market as compared to other domestic players who can only work in the domestic auto market.
  14. The management believes that in the long term the footwear industry should move towards quality as demand for high-quality products rises and the company stands to capitalize on this as the only PU manufacturer in the country.
  15. The management has stated that the company has achieved margins of 20%+ despite an increase in raw material costs. This is mainly due to the company’s ability to deliver superior products which have helped keep margins up.
  16. The company is also looking for opportunities to tie up with Korean manufacturers to address international market orders.

Analyst’s View

Mayur Uniquoters have been one of the biggest artificial leather makers in the world. But the company has been through a rough patch in the past few years with stagnant revenues and decline of the unorganized footwear segment which was a big revenue generator for the company. The company has stayed resilient in maintaining and even improving its margins. The company is making good inroads into the auto-export segment. The company has already started commercial production in its PU. It is also seeing good demand coming in from new auto entrants like MG where the company is 100% supplier for artificial leather. The management remains confident of the product’s technical and quality edge. It remains to be seen how long the current slow auto environment continues and how long will it take for the management vision to materialize. Nonetheless, given its dominant market position both in the domestic and export segments and the management’s focus on not compromising on quality no matter what, Mayur Uniquoters remains a good small-cap stock to watch out for.


 

 

Q2 2020 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
Q2FY20 Q2FY19 YoY % Q1FY20 QoQ % H1FY20 H1FY19 YoY%
Sales 129.36 154.56 -16.30% 131.86 -1.90% 261.23 301.92 -13.48%
PBT 21.48 29.44 -27.04% 24.3 -11.60% 45.78 68.96 -33.61%
PAT 20.01 20.02 -0.05% 15.86 26.17% 35.87 45.62 -21.37%

 

Consolidated Financials (In Crs)
Q2FY20 Q2FY19 YoY % Q1FY20 QoQ % H1FY20 H1FY19 YoY%
Sales 136.15 167.24 -18.59% 131.01 3.92% 267.17 314.32 -15.00%
PBT 23.53 34.74 -32.27% 16.54 42.26% 40.08 69.94 -42.69%
PAT 21.91 24.29 -9.80% 9.74 124.95% 31.65 47.16 -32.89%

Detailed Results

    1. The company had a dismal quarter with consolidated Q2 revenues and PBT falling 19% and 32% respectively YoY.
    2. Standalone revenues and profits were lower than consolidated profits indicating that other subsidiaries of the company have started generating profits in Q2.
    3. The main reason for the difference in PBT decline and PAT decline is the reduced tax expenses for the quarter.
    4. The board has recommended an interim dividend of Rs 1 per share for Q2FY20.

Investor Conference Call Highlights

  1. The management attributed the decline in revenues to the current auto sector slowdown which has trickled down to supplying industries.
  2. The company expects its deal with BMW to be completed within the next few months.
  3. The new plant construction is completed and the trial runs are expected to take place in the last week of November with commercial production starting from January onwards.
  4. The management remains committed to keeping the company performing as best as it can despite the difficult environment.
  5. The management is hopeful that the situation gets better from Q4 onwards and they are also trying to reduce their dependence on domestic revenues and seeking out new export clients for their products.
  6. The management has stated that the downturn in the auto sector is not as bad as the footwear sector.
  7. The management has stated that margins have suffered due to oversupply in the market due to demand slowdown.
  8. The management doubles down on the market potential of artificial leather considering the cost advantage, quality consistency and the environmental impact vs genuine leather.
  9. The other expenses have risen due to the booking of provisions in the quarter.
  10. The monthly fixed expenses of the new PU plant are estimated to be around Rs 1.35 Cr.
  11. The company has also added TVS and MG Motors as clients in the quarters.
  12. The raw material prices are expanding in line with crude oil prices.
  13. The capacity of the new plant is expected to be around 450,000 to 500,000 m/month with machine cuts.
  14. The company is looking to add marquee names in the footwear industry once the new PU facility is completed.
  15. The company already has purchased the machines for capacity expansion but it will be installed once the market conditions normalize and get better.
  16. The company has opted for the new reduced tax regime of 25%.
  17. The company has laid off 120 people and have been rationalizing their expenses to reduce total costs for the company.
  18. The management has affirmed their commitment to maintaining a high margin business and they will be doing the same with their new PU product line.
  19. Total volume for Q2 was 61,83,411 m vs 77,42,381 m last year. The main declining segments have been the auto replacement (42% down) and footwear (37% down).

Analyst’s View

Mayur Uniquoters has been one of the biggest artificial leather makers in the world. But the company has been through a rough patch in the past few years with stagnant revenues and decline of the unorganized footwear segment which was a big revenue generator for the company. Additionally, the focus segment of Auto OEMs has also been going through an industry slowdown which has further depressed the company’s revenues. It remains to be seen how long this auto slowdown shall last. Mayur has been proactive in attracting and negotiating with export customers despite the process being long and time-consuming. Nonetheless, the promise of their upcoming PUC leather segment and their export customer acquisition including Mercedes Benz and MG is what keeps this stock in our watchlist.


 

Q1 2020 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
Q1FY20 Q1FY19 YoY % Q4FY19 QoQ %
Sales 131.86 147.9 -10.85% 128.36 2.73%
PBT 24.3 39.52 -38.51% 27.18 -10.60%
PAT 15.86 25.6 -38.05% 19.79 -19.86%

 

Consolidated Financials (In Crs)
Q1FY20 Q1FY19 YoY % Q4FY19 QoQ %
Sales 131.01 147.08 -10.93% 132.72 -1.29%
PBT 16.54 35.19 -53.00% 28.71 -42.39%
PAT 9.74 22.87 -57.41% 21.25 -54.16%

Detailed Results

    1. The company had a dismal quarter with consolidated Q1 revenues and profits falling 11% and 57% respectively YoY.
    2. Standalone revenues and profits were higher than consolidated profits indicating that other subsidiaries of the company have been operating at a loss in Q1.
    3. Other income has also taken a drastic fall from Rs 6.8 Cr in Q1FY19 to Rs 3.7 Cr in Q1FY20.
    4. The board has recommended an interim dividend of Rs 0.50 per share for Q1FY20.

Investor Conference Call Highlights

  1. The management has attributed the decline in revenues to the auto sector slowdown.
  2. The company has been approved by Mercedes and product supply for this is expected to start from Q3FY21. The company is also inline to secure other contracts from major auto manufacturers including BMW in the coming quarter.
  3. In the PU project, major construction has been completed and most of the machinery has been assembled. The company is targeting trial production start from October 2019 and commercial production from December 2019.
  4. The difference in standalone and consolidated numbers of Rs 7 Cr around 4 Cr is from an increase in inventory on a consolidated basis. This occurs because during every Q1 the company sells some stock to subsidiary companies which gets reduced over the rest of the year. This causes overall profits to go down but this downfall is unrealized and gets mitigated over the rest of the year.
  5. The company is in ongoing talks with a major US car manufacturer for providing 150,000 yarns of products per month and the decision for this contract shall be known by August end.
  6. The management has refrained from providing any guidance on the auto sector slowdown but they assure that the company is keeping on adding new customers in this sector.
  7. The automotive segment revenue is down only 10% in the current quarter.
  8. The major part of the revenue fall in this sector is from the replacement segment of the market.
  9. In the current low demand environment, the management is focusing on cost control measures.
  10. The management is confident of good growth in the coming years on the back of the auto sector supplying. This is because auto OEMs tend to be loyal customers once the business relationship been established.
  11. The raw material prices increased by more than 60% due to rise in oil prices.
  12. Revenue breakup is as follows:
    • Exports General:             Rs 10.2 Cr
    • Export OEM:                    Rs 27.28 Cr
    • Total exports:                   Rs 36.61 Cr
    • OEM Domestic:               Rs 14.47 Cr
    • Replacement:                   Rs 19.2 Cr
    • Footwear:                          Rs 46.09 Cr,
    • Furnishing:                       Rs 1.54 Cr
    • Others:                               Rs 7.71
  13. The company has a cash position of Rs 184 Cr and the balance of Capex left for the year is around Rs 45 Cr.

Analyst’s View

Mayur Uniquoters has been one of the biggest artificial leather makers in the world. But the company has been through a rough patch in the past few years with stagnant revenues and decline of the unorganized footwear segment which was a big revenue generator for the company. Additionally, the focus segment of Auto OEMs has also been going through an industry slowdown which has further depressed the company’s revenues. It remains to be seen how long this auto slowdown shall last. Mayur has been proactive in attracting and negotiating with export customers despite the process being long and time-consuming. Nonetheless, the promise of their upcoming PUC leather segment and their export customer acquisition including Mercedes Benz and MG is what keeps this stock in our watchlist.

 

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