MAYUR UNIQUOTERS LIMITED

Result Update: Q2 FY14

CMP

341.90 376.00 NOVEMBER 29th 2013

ISIN: INE040D01038

BUY
Index Details

Target Price

Stock Data Sector BSE Code Face Value 52wk. High / Low (Rs.) Volume (2wk. Avg. Q.) Market Cap (Rs. in mn.) YEARS Net Sales EBITDA Net Profit EPS P/E FY13A 3805.39 717.84 436.26 40.30 8.48 Textiles 522249 5.00 372.45/200.03 3829 7402.82 FY14E 4490.36 887.16 485.86 22.44 15.24 FY15E 5074.11 1006.95 542.21 25.04 13.65

SYNOPSIS
Mayur Uniquoters Ltd established in 1994 with an installed capacity of 400,000 Linear Meters per month and the company in the Inc. India 500 Indias Best performing Mid Sized Companies for the year 2013. The companys net sales increased by 19.78% and stood at a record Rs. 1187.72 million from Rs. 991.55 million over the corresponding quarter last year. The company has recommended Second Interim Dividend of Rs. 1.25/- (i.e. 25%) per Equity Share of Rs. 5/- each for the financial year 201314. Mayur is in the process of installing 5th and 6th coating line at Dhodhsar and taking the production capacity to the new heights with total capacity of 3.05 million linear meters per month. Fifth coating line coating line would be functional by Jan 2014 and sixth coating line by Jan 2015. In the list of Business World Real 500 Ranking, the company has placed at 46th rank on the basis of return on net worth (RoNW) with 42.70% and 28th position on the basis of capital employed(RoCE) with 58.37%. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 18% over 2012 to 2015E respectively.
MARKET CAP Rs. in mn. EPS (Rs.) P/E (X) Ratio P/BV(X) Ratio DIVIDEND (%)

Annual Estimated Results (A*: Actual / E*: Estimated)

Shareholding Pattern (%)

1 Year Comparative Graph

MAYUR UNIQUOTERS LIMITED

BSE SENSEX

PEER GROUPS Company Name

CMP (Rs.)

Mayur Uniquoters Ltd Siyaram Silk Mills Ltd Raymond Ltd Vardhman textiles Ltd

341.90 257.30 272.10 387.00

7402.82 2411.40 16701.70 24633.30

40.30 59.77 1.13 81.88

8.48 4.30 240.80 4.73

3.12 0.77 1.62 1.08

95.00 75.00 10.00 45.00

QUARTERLY HIGHLIGHTS (STANDALONE) Results updates- Q2 FY14, Mayur Uniquoters limited, Indias leading Manufacturer of Artificial Leather/ PVC Viynl has focuses on servicing the various customers segments such as export (general & OEMs), Auto(OEMs), Footwear, upholistery, auto replacement and has a PAN India presence with offices in all the major business cities, serving customers across the globe, reported its financial results for the quarter ended 30th SEPTEMBER, 2013.

Months Net Sales PAT EPS EBITDA

SEP-13 1187.72 125.32 5.79 229.39

SEP-12 991.55 113.33 10.47 184.51

% Change 19.78 10.58 (44.71) 24.32

The company has a turnover of Rs. 1187.72 million for the 2nd quarter of the current year 2013-14 as against Rs. 991.55 millions in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs. 229.39 millions an increased by 24.32% and a net profit of Rs. 125.32 million against Rs. 113.33 million reported respectively in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 5.79 for the 2nd quarter as against an EPS of Rs. 10.47 in the corresponding quarter of the previous year. The value of EPS has been restated due to subdivision of one equity shares of Rs. 10/ each in to two shares of Rs.5/each.

Break up of Expenditure: During the quarter, Total Expenses rose by 19 per cent mainly increased on account of Cost of material consumed, employee benefit expenses with other expenses, when compare to previous quarter Q2 FY13. Total expenditure in Q2 FY14 was at Rs. 978.31 million as against Rs. 825.41 million in Q2 FY13.

During the quarter Q2 FY14, Cost of Materials Consumed at Rs. 810.44 mn against Rs. 743.11 mn in the correspondent quarter of the previous year. In the same quarter, Other Expenses was at Rs. 95.11 mn against Rs.

47.12 mn and Employee Benefits expenses are at Rs. 45.38 mn in Q2 FY14 against Rs. 29.61 in Q2 FY13, where as Depreciation & amortization stood at Rs.16.92 mn in Q2 FY14 compared to Rs. 12.39 million in Q2 FY13. Latest Updates The company has recommended Second Interim Dividend of Rs. 1.25/- (i.e. 25%) per Equity Share of Rs. 5/each for the financial year 2013-14. Mayur is in the process of installing 5th and 6th coating line at village Dodhsar, Govindgarh taking the production capacity to the new heights with total capacity of 3.05 million linear meters per month. Fifth coating line coating line would be functional by Jan 2014 and other line by Jan 2015. In the quarter ended Q2 FY14, total income of the company has increased by 19.37% to Rs. 1190.78 millions against Rs.997.53 millions in corresponding quarter of previous year. In the list of Business World Real 500 Ranking, the company has placed at 46th rank on the basis of return on net worth (RoNW) with 42.70% and also at 28th position on the basis of capital employed(RoCE) with 58.37%.

COMPANY PROFILE
Mayur Uniquoters Ltd has established and started operations in the year 1994 with an installed capacity of 400,000 Linear Meters per month Mayur Uniquoters limited, Indias leading Manufacturer of Artificial Leather/ PVC Viynl, has been included in the list of Inc. India 500 India's Best performing Mid Sized Companies for the year 2013. The coveted list features the top 500 mid-sized companies in India. The company has recognized amongst the fastest-growing companies in the country. The companys consistent focus on its core production areas and target segments along with the unwavering dedication of Team are the most important reasons behind the growth. Mayur did backward integration in manufacturing of knitted fabric. Knitted fabric is the largest input value-wise, after chemicals like PU, PVC, etc. Mayur is in the process of installing 5th and 6th coating line at village Dodhsar, Govindgarh taking the production capacity to the new heights with total capacity of 3.05 million linear meters per month. The fifth coating line is likely to be operational by January 2014. Products for Various Applications Automotive Footwear Furnishing Leather Goods & Garments

Distribution Network Mayur supplies synthetic leather to both domestic as well as overseas clients. Synthetic leather is used in industries such as footwear, automobile seats, furnishings, sports goods, ladies bags, and a number of fashion accessories. Mayur, a NSE & BSE listed business enterprise has a PAN India presence with offices in all the major business cities, serving customers across the globe. Mayur is a preferred original equipment manufacturer (OEM) supplier to national and international automobile giants like Ford (USA), Chrysler (USA), Maruti Suzuki, Tata Motors, M&M, Honda Motorcycles and Scooter Limited and RP Automobiles. Automotive segment is the second largest contributor to revenues after the footwear industry. The footwear industry is the largest consumer of Mayurs synthetic leather; India is the worlds second largest footwear producing country, second to China and the third largest market. Mayur also supply to leading footwear manufacturers like Bata, Action Group, Liberty Shoes, Paragon, VKC Group, Lancer Footwear and Relaxo Footwear. Clients Maruti Suzuki Tata Motors TS Tech Honda Bata Chrysler Magna Ford Foamex Lear Corporation Ningbo Jifeng Auto Parts Co. Ltd. Taj Vinyl Swaraj BSL Krishna Maruti Sharda Motor Sietz Technologies Alpha Foam Ltd Mahindra Tractors Sonalika Piaggio LML Nissan Hyundai VKC Liberty Footwear Condor India Ltd Paragon Lunar's Odyssia Saddles Marvin Carbon Footwear Khadim's Lehar Autoworld Bairathi Footwear Dawari Roadstar Footwear Tulip Enterprises Tej shoe SRN Enterprises Poddar Footwear Elegant

Ongoing Clients BMW GENERAL MOTORS DAIMLER.

FINANCIAL HIGHLIGHT (STANDALONE)

Balance Sheet as at March31, 2012 -2015E FY-12A

(A*- Actual, E* -Estimations & Rs. In Millions)

FY-13A

FY-14E

FY-15E

I
A)

EQUITY AND LIABILITIES Shareholder's Funds a) Share Capital b) Reserves and Surplus Sub -Total- Shareholder fund 54.13 804.68 858.81 29.22 30.23 1.26 60.71 108.26 1076.41 1184.67 45.92 35.54 0.61 82.07 108.26 1562.27 1670.53 123.98 46.20 0.37 170.55 108.26 2104.48 2212.74 210.77 57.75 0.31 268.83

B)

Non Current Liabilities

a) Long- Term Borrowings b) Differed Tax Liability c) Long Term Provisions Sub-Total Non Current Liabilities

C)

Current Liabilities a) Short Term Borrowings

b) Trade Payables c) Other Current Liabilities d) Short Term Provisions Sub-Total - Current Liabilities TOTAL EQUITY LIABILITIES ( A + B + C ) 0.00 467.42 158.30 39.78 665.50 1585.02 164.02 473.84 170.57 59.75 868.18 2134.92 246.03 521.22 194.45 71.70 1033.40 2874.49 332.14 562.92 219.73 85.32 1200.11 3681.69

II

ASSETS a) Fixed Assets i. ii. Tangible Assets Capital work In Progress 450.92 39.78 0.66 15.89 6.00 513.25 116.51 307.07 405.98 190.38 33.62 18.21 1071.77 1585.02 546.67 189.07 0.66 36.51 10.96 783.87 135.89 442.34 564.51 106.51 67.89 33.91 1351.05 2134.92 754.40 264.70 0.66 63.89 7.67 1091.33 170.50 583.89 762.09 122.49 81.47 62.73 1783.17 2874.49 1015.87 357.34 0.66 89.45 8.82 1472.14 204.60 747.38 990.72 85.34 93.69 87.83 2209.55 3681.69

D) Non- Current Assets

b) Non-Current Investment c) Long Term Loans & Advances d) Other Non Current Assets Sub -Total- Non- Current Assets

E)

Current Assets a) Current Investment b) Inventories c) Trade Receivables d) Cash & Cash Equivalents e) Short- Term Loans and Advances f) Other Current Assets Sub -Total Current Assets Total Assets ( E+ F )

Annual Profit & Loss Statement for the period of 2012 to 2015E Value(Rs.in.mn) Description Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Reserves Face value EPS FY12A 12m 3174.79 17.03 3191.82 -2641.64 550.18 -19.64 530.54 -38.72 491.82 -158.12 333.70 54.13 804.67 10.00 61.65 FY13A 12m 3805.39 27.36 3832.75 -3114.91 717.84 -24.35 693.49 -51.70 641.79 -205.53 436.26 108.26 1076.41 10.00 40.30 FY14E 12m 4490.36 20.52 4510.88 -3623.72 887.16 -82.50 804.66 -65.14 739.52 -253.65 485.86 108.26 1562.27 5.00 22.44 FY15E 12m 5074.11 22.57 5096.68 -4089.73 1006.95 -107.25 899.70 -78.17 821.53 -279.32 542.21 108.26 2104.48 5.00 25.04

Note: Earning per share has been restated due to subdivision of one equity shares of Rs. 10/ each in to two shares of Rs.5/each. Quarterly Profit & Loss Statement for the period of 31 MARCH, 2013 to 31 DEC, 2013E Value(Rs.in.mn) Description Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Face value EPS 31-Mar-13 3m 981.93 6.88 988.81 -776.50 212.31 -7.00 205.31 -13.68 191.63 -62.36 129.27 108.26 10.00 11.94 30-June-13 3m 1062.64 4.31 1066.95 -854.82 212.13 -22.28 189.85 -14.54 175.31 -60.54 114.77 108.26 10.00 10.60 30-Sep-13 3m 1187.72 3.06 1190.78 -961.39 229.39 -19.14 210.25 -16.92 193.33 -68.01 125.32 108.26 5.00 5.79 31-Dec-13E 3m 1140.21 3.52 1143.73 -921.29 222.44 -22.20 200.24 -18.27 181.96 -60.78 121.19 108.26 5.00 5.60

Ratio Analysis Particulars EPS (Rs.) EBITDA Margin (%) PBT Margin (%) PAT Margin (%) P/E Ratio (x) ROE (%) ROCE (%) Debt Equity Ratio EV/EBITDA (x) Book Value (Rs.) P/BV Charts FY12A 61.65 17.33 15.49 10.51 5.55 38.86 66.32 0.03 3.07 158.66 2.15 FY13A 40.30 18.86 16.87 11.46 8.48 36.83 55.18 0.18 5.30 109.43 3.12 FY14E 22.44 19.76 16.47 10.82 15.24 29.08 46.67 0.22 8.62 77.15 4.43 FY15E 25.04 19.84 16.19 10.69 13.65 24.50 39.38 0.25 7.81 102.20 3.35

OUTLOOK AND CONCLUSION

At the current market price of Rs. 341.90, the stock P/E ratio is at 15.24 x FY14E and 13.65 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.22.44 and Rs.25.04 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 18% over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 8.62 x for FY14E and 7.81 x for FY15E. Price to Book Value of the stock is expected to be at 4.43 x and 3.35 x respectively for FY14E and FY15E. Mayur Uniquoters Ltd has recognized amongst the fastest-growing companies in the country. The companys consistent focus on its core production areas and target segments along with the unwavering dedication of Team are the most important reasons behind the growth. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs. 376.00 for Medium to Long term investment.

INDUSTRY OVERVIEW
The Indian Textile Industry counts among the leading textile industries in the world. Apart from providing the basic necessities of life, its role in the countrys economic growth is significant. Indias textile industry contributes about 14 per cent to industrial production; 4 per cent to the countrys gross domestic product (GDP); 17 per cent to its export earnings; and is a source of direct employment for over 35 million people, which makes it the second largest provider of employment after agriculture. Abundant raw materials, healthy foreign direct investments (FDI) and a government willing to invest ensures a bright future for Indias textile sector. Market Size The industry is expected to touch US$ 220 billion by 2020, according to estimates by Alok Industries Ltd. Also, India has the capacity to improve its textile and apparel share in the world trade from the current 4.5 per cent to 8 per cent and reach US$ 80 billion by 2020. Garment exports from India grew by 19 per in the period July 2012July 2013 to touch US$ 1.27 billion, on the back of increasing demand in developed economies such as the US, according to the Apparel Export Promotion Council (AEPC).

India has the advantage of abundant resources of raw materials. It is one of the largest producers of cotton yarn in the world and there are good resources of fibres such as polyester, silk, viscose, etc. The country is also home to a wide range of cotton fibre and has a rapidly developing synthetic fibre industry.

The most significant change in the Indian textile industry has been the advent of man-made fibres (MMF). Indias innovative range of MMF textiles finds presence in almost all the countries across the globe. MMF production recorded an increase of 7 per cent in the month of August 2013 and grew by 4 per cent during AprilAugust 2013.

Cotton yarn production increased by about 10 per cent during August 2013 and by about 11 per cent during AprilAugust 2013. Blended and 100 per cent non-cotton yarn production increased by 5 per cent during August 2013 and by 8 per cent during AprilAugust 2013.

Cloth production by mill sector registered a growth of 4 per cent during August 2013 and 10 per cent during AprilAugust 2013. Cloth production by handloom and hosiery increased by 3 per cent and 12 per cent during AprilAugust 2013. The total cloth production grew by 6 per cent during August 2013 and by 3 per cent during AprilAugust 2013.

Investments Investment is the key for Indian textiles to make rapid strides. The industry (including dyed and printed) attracted FDI worth Rs 58837.10 million (US$ 928.63 million) in the period April 2000August 2013. Some of the major investments in the Indian Textile Industry are as follows: Trident Ltd plans to invest Rs 16670.00 million (US$ 263.24 million) to install 176,000 spindles and 500 looms to manufacture around 40,000 TPA of additional cotton yarn of higher count Exhilway, a US-based private equity firm, will fund a Kolkata-headquartered garments retail start-up firm Sconto Retail Pvt Ltd. The initial investment will only be in equity of around Rs 60.00 million (US$ 947,490.36), with the graded funding, both in equity and debt, likely to go up to Rs 240.00 million (US$ 3.79 million) by the first 18 months The DyStar Group and Arvind Ltd have signed an agreement for joint development in the field of denim. Dedicated teams from DyStar and Arvind's Denim Division will work closely to implement new technologies in indigo dyeing and finishing as well as develop new products, processes and effects for denim fabrics and garments

Gitanjali Group has entered into the apparels segment as part of its brand extension of its popular brands and plans to set up 300 selling points across the country in 2013

Swedish retailer Rusta plans to import Indian textiles and handicraft worth Rs 2000.00 million (US$ 31.58 million) annually over the next 3-4 years

Government Initiatives India is expected to become a significant player in the global textile economy, both as a consumer and as a producer of textiles. The efforts of the government have resulted in the industry growth rate of 89 per cent during the past 23 years. The Ministry of Textiles is responsible for policy formulation, planning, development, export promotion and trade regulation in respect of the textile sector. This includes all natural and man-made cellulosic fibres that go into the making of textiles, clothing and handicrafts. Some of initiatives taken by the government to further promote the industry are as under: The Government of India plans to set up a Rs. 1000.00 million (US$ 15.79 million) venture capital fund to provide equity support to start-ups in the textile sector, in order to encourage innovative ideas The Government has allowed 100 per cent FDI in the sector through the automatic route. In the 12th Five Year Plan (201217), the government plans to spend US$ 9.1 billion on textiles as against US$ 4 billion in the 11th Plan In order to make textile processing units more environment-friendly and globally competitive, the Cabinet Committee on Economic Affairs (CCEA) has approved an Integrated Processing Development Scheme (IPDS) with an investment of Rs 5000.00 million (US$ 78.94 million) Under the Technology Upgradation Fund Scheme (TUFS), the cotton textile industry of India will receive margin money from the Ministry of Finance. The industry is also expected to attract Rs. 40000.00 million (US$ 631.65 million) in the form of investments over the next six months The Government of India has allotted Rs. 7000.00 million (US$ 110.53 million) in the next Five Year Plan for the development of technical textiles. In 201213, the technical textiles industry reached Rs 7.48 trillion (US$ 118.19 billion) at an annual growth rate of 3.5 per cent In the new textile policy, the Government of Gujarat has announced 5 per cent interest subsidy on bank loans for five years, for those who establish new plants for value addition chain like ginning, processing, weaving, knitting, and machine carpeting

Road Ahead The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. The organized apparel segment is expected to grow at a compound annual growth rate (CAGR) of more than 13 per cent over a 10-year period

Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.

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