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CD Equisearch
Mayur
Uniquoters (Buy)
CMP: ₹371.95
Target: ₹444
The domestic footwear segment of Mayur Uniquoters was hit by demonetisation and saw a sharp decline in total revenue post demonetisation in the last two quarters of FY17. Although the last few quarters did witness de-growth in revenues and volatile raw material prices, Mayur managed to fetch decent margin last fiscal, a rise of 300 bps. Given the robust future outlook of the footwear industry, Mayur’s footwear market demand has started to revive in the last two months and management expects market to normalise by H1FY18. Mayur is also trying to enter the European OEM market by targeting customers such as BMW, Volkswagen and Mercedes Benz. Export contributed around 30 per cent to FY17 revenue and this segment’s share is expected to improve further. Mayur is also planning to make its furnishing segment more competitive; till date it has appointed 11 distributors and target to reach the 50 tally by the end of FY18.
The stock currently trades at 18.3x FY18e EPS of ₹19.71 and 16.2x FY19e EPS of ₹22.2. Margin would ascend on higher volumes and lag effect of recent price hike. Capex of about ₹150 crore is aimed at boosting capacities of polyurethane and cost optimisation. Implementation of GST will expand market presence of organised players in India footwear industry. Ample scope exists in India to meet increased outsourcing demand from European nations.
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