Mayur Uniquoters Q3 Results Review - Soft Demand To Gradually Improve, Strongly Rebound By FY26: Systematix

Systematix Report

Mayur Uniquoters Ltd.'s Q3 came weak (revenue flat YoY and down 12% QoQ, gross margin expanded 45 basis points QoQ, Ebitda margin contracted 123 bps QoQ at 19.8%).

Revenue was impacted due to weak demand for footwear (down 18% YoY; intense competition) and the auto replacement segment; exports volume grew 27% YoY. Auto replacement demand remained low since the govt’s additional airbag mandate for backseat.

Mayur Uniquoters existing order book for new models of global original equipment manufacturer makes management upbeat on growth momentum accelerating. Focus remains on margins over volumes; the company is adding value-added products (marine etc.).

Expansion of its business-to-consumer vertical by selling furnishing products directly to retailers (aims to grow to 1,000 in a year from ~350 currently) and its pan India distribution too is on the cards.

Discussion with Zara is also at an advanced stage. After a likely flattish revenue in FY24, management aims healthy recovery in FY25 and a strong bounce in FY26 driven by exports business.

We introduce FY26E and expect 12%/12%/20% compound annual growth rate in revenue/Ebitda/profit after tax over FY23-26E with Ebitda margin and return on capital employed at 22% each in FY26E.

Maintain 'Buy' with a lower target price of Rs 608 (earlier Rs 619) at 15 times FY26E earning price. Strong earnings and superior return ratios are key valuation re-rating triggers.

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