Mayur Uniquoters - Knitted fabrics plant operation to benefit margin; Buy - Anand Rathi

Mayur Uniquoters' (Mayur) 2QFY13 revenue was at Rs.991mn, up 30.1% yoy and 7.3% qoq, ahead of our estimates. EBIDTA margin in 2QFY13 was 18%, up 200bps yoy. Margin inched up despite rise in material cost, primarily due to exchange gain of Rs.21mn against loss of Rs.13mn in 2QFY12 and Rs.6.5 mn in the previous quarter. We believe H2FY13 will benefit from: (1) higher revenues with robust demand from user footwear industry (50% of revenue) which is likely to benefit in the third quarter from delayed festive season; (2) fall in rejection rate (sold at 10-35% discount) with the start of knitted fabrics plant, aiding margin growth. We revise our revenue and earnings and upgrade our target price to Rs.590 from Rs.520 earlier with a Buy.

Sales up 30% yoy. Mayur reported topline of Rs.991m in 2QFY13, up 30.1% yoy and 7.3% qoq, ahead of our estimates. We expect 2HFY13 to be better with robust demand from its user footwear industry (50% of revenue) on account of delayed festive season and strong demand in the fourth quarter. We revise upward our revenue for FY13e and FY14e by 2.1% and 2.2%, respectively.

- EBIDTA margin higher. EBIDTA margin in 2QFY13 was 18%, up 200bps yoy and 182bps qoq. Margins rose despite rise in material cost (up 200bps yoy, 220bps qoq) due to fall in other expenses, primarily on exchange fluctuation gain of Rs.21m in 2QFY13 against loss of 13m last quarter. Operation of knitted fabrics plant in last week of Sept'12 is likely to further enhance margin due to fall in rejection rate (rejected goods sold at 10-35% discount). We revise earnings 14% for FY13 and FY14e.

- Valuation. We maintain Buy on the stock with upward price target of Rs.590 against Rs.520 earlier. We have assigned target of 12x for FY14e. Risk. Rise in raw material prices.

Source : Equity Bulls

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