CD Equisearch

Mayur Uniquoters (Buy)

CMP: ₹425.90

Target: ₹500

The market size of country’s synthetic leather industry is expected to touch ₹9,000 crore by FY18 from ₹4,500 crore as of FY13 on account of increasing consumption and purchasing power. Mayur Uniquoters controlling nearly one-fourth share in organised market in the country would be one of the key beneficiaries of the uptick in overall demand. Capacity expansion to drive future growth — MUL has expanded its total capacity from 2.45 million metres a month to 3.05 in CY14 by adding another coating line of 0.6 mm a to cater to increasing demand.

Export market to remain buoyant — MUL’s exports have grown at a CAGR of 54 per cent over the last five years. Currently MUL derives around 22 per cent of its net sales from exports and almost 80 per cent of export revenue comes from automotive segment. We believe export will remain buoyant on account of strong overseas customers and increase in demand of synthetic leather. We expect company’s export revenue to grow by 25 per cent in FY15e and by 25 per cent in FY16e.

On the financial front, for FY14 the company posted a top-line of ₹469.61 crore and bottomlines of ₹56.80 crore as against ₹380.54 crore and ₹43.63 crore in FY13. The management is quite confident of sustaining its growth rate and the margins.