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Anand Rathi
Mayur Uniquoters (Buy)
Target: ₹474
CMP: ₹425.05
With its user industries (auto, footwear) and its exports doing well, Mayur’s Q3 revenue/EBITDA/PAT were up 31 per cent/78 per cent/91 per cent y-o-y. The strong 27.2 per cent EBITDA margin was driven by the gross margin, cost control and OpLev benefits.
On the improving outlook, we expect 16 per cent/19 per cent CAGRs in revenue/PAT over FY20-23 after low 2 per cent/6 per cent CAGRs over FY14-20. After a significant de-rating of its scrip since FY18 on its declining earnings, we now see good scope for a re-rating, backed by strong earnings growth/better RoE.
While Covid-19 delayed the ramp-up, management sees strong demand for its PU products from domestic auto/footwear OEMs on ADD imposition. Mayur’s quality product and long relations with these OEMs will throw up huge opportunities.
With its user industries (auto, footwear) and exports doing well, Mayur’s Q3 was strong. Healthy cash/FCFs are positives too.
At nearly 13X FY23 P/E, we retain a Buy with a target of Rs 474 (16x FY23e P/E).
Risks: Volatile RM prices, keen competition
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