Mayur Uniquoters Q1 Results Review - Strong Margins Drove Pat; Many Levers For Re-Rating: Systematix

Systematix Report

Mayur Uniquoters Ltd. Q1 profit after tax (up 22% YoY) was driven by strong margins (gross 44.7%, Ebitda 22.6%) despite flat volume (7.13 million meters) and 6% rise in revenue. High exports (32%) and a superior product mix were key factors.

Domestic business contributed 68% to revenue, driven by auto as well as footwear segments. Newly added customers drove exports. For FY25, management has reiterated its strong growth guidance of 15-20%.

Original equipment manufacturer exports has strong order book to grow 2.5 times in three years. Footwear segment will take another one year to revive due to large inventory liquidation, post BIS implementation. Overall margins will improve with greater mix of exports.

The current ~75% capacity utilization provides ample room for healthy growth over 2-3 years. Supply to BMW Thailand has started; South Africa will be added soon and will boost revenue. MUNI plans to invest Rs 2 billion to set up manufacturing plant and warehouse in Mexico.

A similar set up is also under planning for Europe to expand business there. PU business will take one year to reach a scale. MUNI has announced buyback of 500k shares (~1.1% equity) worth Rs 400 million at Rs 800/share. 23 August 2024 is set as the record date. After a healthy 1Q, we maintained our earnings estimates.

After a muted 6%/6% compound annual growth rate in revenue/profit after tax over FY19-24, we now expect a healthy 16%/20% compound annual growth rate over FY24-26E, with 21%+ Ebitda margin and ~22%/34% return on capital employed/return on invested capital in FY26E.

Our estimates are based on management guidance of healthy recovery in FY25 and a strong bounce in FY26 (driven by exports). Maintain 'Buy' with a higher target price of Rs 800 (20 times FY26E price to earning, earlier Rs 720 at 18 times). We see large potential for more re-rating if MUNI meets its guidance

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