Management Meet Note

April 18, 2016

Rating Matrix
Rating : Unrated Mayur Uniquoters (MAYUNI)
Target : NA
Target Period : NA | 390
Potential Upside : NA Leader in synthetic leather industry...
Key Financials We recently visited Mayur Uniquoters (Mayur) at Jaipur, Rajasthan. We
(| Crore) FY12 FY13 FY14 FY15 conducted a plant visit and met the senior management of the company
Net Sales 317.4 380.5 469.6 506.3 including Suresh Poddar, Chairman and Managing Director at Mayur.
EBITDA 53.3 69.1 93.2 101.8 Mayur is a technical textile player, manufacturing synthetic leather (PVC),
Net Profit 33.4 43.6 56.8 65.9 with an installed capacity of 3.05 million linear metre per month. In the
EPS (|) 7.2 9.4 12.3 14.2 organised segment of the domestic synthetic leather industry (total
Valuation Summary industry size ~ | 5000 crore, 50% organised), Mayur has the largest
(x) FY12 FY13 FY14 FY15 installed capacity with product application in footwear (shoe & sandals-
P/E 54.1 41.4 31.8 27.4 upper, insoles), automobile (seat upholstery, interiors), furnishing and
EV / EBITDA 32.8 25.3 18.8 17.2 apparels (purses, belts, jackets etc.) among others. On the back of cost
P/BV 21.0 15.2 11.2 6.4 effectiveness of synthetic leather (~70-80% cheaper than natural leather),
RoNW (%) 38.9 36.8 35.3 23.3 environmental and ethic issues in manufacturing natural leather, synthetic
RoIC (%) 93.2 66.6 57.5 60.1 leather industry is on a strong footing with Mayur on a robust growth
journey ahead. In 9MFY16, sales & EBITDA were at | 384 crore and | 97.2
Stock Data
crore, respectively, with corresponding EBITDA margins at 25%. The
Particular Amount
Market Capitalization | 1805 crore
company has been one of the major beneficiaries of a drop in crude
Total Debt (FY15) | 46 crore linked raw material costs. However, we do not expect the same to sustain
Cash (FY15) | 102 crore with EBITDA margins moderating to ~20%, going forward. Mayur has a
EV | 1748 crore long term vision to clock | 1000 crore sales by 2020.
52 week H/L (|) 515 / 376 Footwear main revenue contributor, global auto OEM key driver!
Equity capital | 23.1 crore
In FY15, the total sales volume at Mayur was at 23.2 million metre with
Face value |5
FII Holding (%) 8.3
corresponding sales at | 492.3 crore, blended realisations at | 212/metre.
DII Holding (%) 5.6 The footwear segment contributed ~50% of sales with main clients being
Bata India, Relaxo and Paragon among others. Domestic auto OEMs
Price Performance
contributed 13% to sales with marquee clients being Maruti India, M&M
Return (%) 1M 3M 6M 12M
and GM India among others. Automotive replacement segment & general
Mayur Uniquoters (4.5) (11.3) (8.1) (10.9)
Jasch Industries 22.2 (19.1) 54.1 107.0
exports contributed ~7% each to sales. Global auto OEM contributed
Garware Wall Ropes 18.0 (10.0) 0.8 74.3 15% to sales (blended realisation: ~| 471/metre) and is the highest
quality & margin accretive product at Mayur with clients being Chrysler,
Price Movement GM and Ford. Mayur has developed innovative product solutions in this
10,000 600 domain and is aggressive pursing global OEMs for an increase its wallet
500 share and is the main thrust area for Mayur, going forward.
8,000
400 Healthy balance sheet, strong returns ratios, premium valuations!
6,000 300 Mayur is a cash surplus company with five year average RoE, RoIC at
200 35%, 74%, respectively, with CFO: EBITDA at ~0.5x. Net working capital
4,000
100 (NWC) cycle is controlled at Mayur with NWC days at 66 days as of FY15.
2,000 0 Mayur has been a wealth creator for its shareholders and had a recent
stock price appreciation in the past corresponding to strengthening of
May-13

Sep-13

Jan-14

Jun-14

Oct-14

Mar-15

Jul-15

Dec-15

Apr-16

competitive advantage (moat) and consequent increasing profitability. On

a TTM basis, Mayur quotes at 22.6x P/E, 14.6x EV/EBITDA and 5.6x P/BV.
Price (R.H.S) Nifty (L.H.S)
Exhibit 1: Financial Performance
Research Analysts (| Crore) FY11 FY12 FY13 FY14 FY15
Chirag J Shah Net Sales (| crore) 248.6 317.4 380.5 469.6 506.3
shah.chirag@icicisecurities.com EBITDA (| crore) 41.0 53.3 69.1 93.2 101.8
Net Profit (| crore) 25.3 33.4 43.6 56.8 65.9
Shashank Kanodia EPS (|) 5.5 7.2 9.4 12.3 14.2
shashank.kanodia@icicisecurities.com P/E (x) 71.4 54.1 41.4 31.8 27.4
Price / Book (x) 29.6 21.0 15.2 11.2 6.4
EV/EBITDA (x) 42.7 32.8 25.3 18.8 17.2
RoIC (%) 92.5 93.2 66.6 57.5 60.1
RoE (%) 41.4 38.9 36.8 35.3 23.3
Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

 Key financials
Revenues at Mayur has grown at a CAGR of 19.5% in FY11-15 to | 506
crore in FY15 vs. | 249 crore in FY11.
Exhibit 2: Revenue grows at 19.5% CAGR in FY11-15

600
506
470
500
381
400
317

| crore
300 249

200

100

-
FY11 FY12 FY13 FY14 FY15

Source: Company, ICICIdirect.com Research

Sales can be bifurcated into two broad heads namely domestic sales and
export sales with domestic sales constituting ~74% of sales and exports
constituting the rest i.e. ~26%.
Exhibit 3: Revenue bifurcation (domestic sales vs. exports)

400 364
Domestic sales have grown at a CAGR of 16% in FY11-15 347
to | 364 crore in FY15. Export sales at Mayur have grown 290
at a CAGR of 28% in FY11-15 to | 129 crore in FY15 300 260

200
| crore

200
129
108
100 80
48 52

0
FY11 FY12 FY13 FY14 FY15
Domestic Sales Export Sales

Source: Company, ICICIdirect.com Research

Mayur has been at the forefront of capacity addition gauging the

increasing demand of its product profile with current capacity at 3.05
million metre/month i.e. 36.6 million metre/year. Sales volume in FY15
was at 23.2 million with corresponding capacity utilization at 63%
Exhibit 4: Production capacity trend Exhibit 5: Sales volume & realisation trend

3.5 25 215.1 250

3.05 207.5 211.8
198.7
3.0 175.6
20 200
million linear metres/month

2.45
2.5
million metres

15 150
|/metre

2.0 1.85
23.2

1.63 1.63
21.2

10 100
17.8

1.5
15.7
14.2

1.0 5 50

0.5 0 0
0.0 FY11 FY12 FY13 FY14 FY15
FY11 FY12 FY13 FY14 FY15
Sales Volume Realisation

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 2

 Exhibit 6: EBITDA & EBITDA margins trend

120 25
19.9 20.1
100 18.1 20
16.5 16.8
80
EBITDA has grown at 25.5% CAGR of in FY11-15 to | 102 15

| crore
crore in FY15. Margins, on the other hand, have continuously 60

%
102
improved over the years with FY15 EBITDA margins at 20.1% 10

93
40

69
53
20 5

41
- -
FY11 FY12 FY13 FY14 FY15

EBITDA (| crore) EBITDA Margin (%)

Source: Company, ICICIdirect.com Research

Mayur has superior return ratios with five year average RoE & RoIC at
35% & 74%, respectively. The return ratios, however, look muted in FY15
vs. historical average on the back just concluded capex programme,
muted demand scenario with capacity utilisation level at 63% as of FY15.
Exhibit 7: RoCE & RoE trend Exhibit 8: PAT grows at CAGR of 27.1% in FY11-15

92.5 93.2
100 70 14.2 16
90 12.3 14
60
80 66.6
50 12
70 57.5 60.1 9.4
60 10
40 7.2

|/share
| crore

50 66 8
%

30 5.5
40 57 6
30 41.4 20 44
38.9 36.8 33 4
35.3
20 25
23.3 10 2
10
- - -
FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15

RoIC (%) RoE (%)

Net Profit (| crore) EPS (|)

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

PAT has grown at a CAGR of 27.1% in FY11-15 to | 66 crore in FY15. EPS

in FY15 was at | 14.2/share (on a revised equity base).
Exhibit 9: Net working capital days Exhibit 10: Debt: equity profile

70 66 300 283 0.3

60 250 0.3 0.3

48 47
50 0.2
200 0.2
161
40
| Crore

150 0.2 0.2

days

0.1
x

118
30
21 100 86 0.1
18
20 61 42 45
50 0.0 25 0.1
10 8 4
- -
-
FY11 FY12 FY13 FY14 FY15
FY11 FY12 FY13 FY14 FY15
Debt Equity Debt:Equity Ratio

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 3

RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns
ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No. 7, MIDC,
Andheri (East)
Mumbai 400 093

research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research Page 4

Disclaimer
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