Mayur Uniquoters Limited is engaged in the business of manufacturing of coated textile fabric (artificial leather). Coated Textile Fabric is used in different segments, such as footwear, furnishings, automotive original equipment manufacturer (OEM), automotive replacement market and automotive exports. The Company is selling its products directly to OEMs and other manufacturers, wholesalers in India and is also exporting to various countries, including the United States and the United Kingdom. The Company has its manufacturing units situated at Jaitpura and Dhodsar villages near Jaipur, India. The Company offers products for various parts of footwear like shoe uppers, shoe lining and insoles. These products find application in formal shoe and boots, sports shoes, sandals, slippers, as well as women’s footwear. It supplies leather to big auto companies like Maruti, honda, ford, Mercedes and major footwear makers like Bata, Action, Liberty, Relaxo, lancer, Paragon.
The political impact
Beef ban in BJP ruled states has started creating leather shortage. Read BBC Report BJP is mostly like come in power in UP & Bihar , if they ban beef there also there will be good shortage of leather. As these states are one of the major producer of natural leather. This is very positive for Mayur Uniquoters which is India’s largest artificial leather producer and has market share of over 50%. Natural leather is costly and I don’t think Indian footwear companies will import natural leather as that will reduce their margin, they have to buy more artificial leather only.
As per the weekly charts mayur uniquoters is consolidating from around a year and trading in the range 400-500. It has formed a strong base at 400. Any weekly close above 500 will be a breakout.
Shareholding Pattern : FIIs hold 6.87% and DIIs hold 4.97% stake in the company. Promotor holding is 66.42% . The good promoter holding suggests trust of promoters in the company.
Debt situation: Company’s debt to equity ratio is 0.22. Which is quite low. Current ratio stands at 1.61 which means company has surplus funds to manage the debt. As per Benjamin Graham concept company with debt to equity ratio below 0.5 and current ration above 1.5 are financially safe to invest.
Growth: The company has average sales growth of 32% and profit growth of 42% over the last five years. Return on equity stands at 43.5%. Return on capital invested stands at 64.5 % which mean for every 100 Rs invested in the business company is able to make a return of 64 Rs. These number are very good.
The stock is currently trading at a PE of 26 which says its not cheap and doesn’t offers margin of safety but the kind of growth potenti
Future outlook: Company drives its 50% revenue from footwear industry, which is a growing industry. The company is continuously expanding in the automobile and furnishing segment as well. One of its products PVC Vinyl is supplied to the automobile industry which is used in making steering wheel covers, gear boot, knob covers etc. Covering of sofas, bean bags, cushions etc are one of major products of this company for furnishing sector. Sectors like footwear, furnishing have natural growth and are recession-proof sectors. This shows that company will be able to increase its sales growth. It has a diversified clients base across the globe from footwear and automobile sector.
Challenges: Crude is an important raw material for its plastic products any great rise in the crude prices can affect its margin. Also Chinese companies are doing good in the artificial leather business. If the competition intensifies the company won’t be able to manage the profit margins.
Disclaimer: This article is for information purpose only, not the recommendation of investment. Kindly consult your financial advisor before investing.