Mayur Uniquoters - On track; Maintain Buy - Centrum

Mayur Uniquoters (Mayur) reported total operating income of Rs.982mn (up 9% YoY and 5% QoQ) in 4QFY13. EBIDTA margins for the quarter came strong at 20.9%, up 141bps YoY and 366bps QoQ. Driven by strong operating performance, reported PAT stood at Rs.129mn for the quarter registering a growth of 16% YoY and 26% QoQ. While demand continues to remain strong, 1HFY14E revenue growth is likely to remain muted due to capacity constraints. However, this is likely to be addressed by Nov'13 (new coating line with a capacity of 7.2mn meters annually will be operational by then). Management has guided for revenue growth of 15-20% for FY14E and sounded confident on achieving 20%+ revenue growth for FY15E vs. 20% YoY in FY13. Focus on high realization export market continues, reflected from the fact that the share of exports to overall revenues has inched up to 22% in FY13 vs. 16% in FY12. We continue to remain positive on the stock and maintain Buy rating with a revised target of Rs.570.

- Strong operating performance for the quarter and FY13: During the quarter, operating income stood at Rs.982mn (up 9% YoY and 5% QoQ). For FY13, operating income stood at Rs.3.8bn, registering a YoY growth of 20%. During the quarter, Mayur reported EBITDA margins of 20.9%, up 141bps YoY and 366bps QoQ. EBITDA stood at Rs.205mn for the quarter, a growth of 17% YoY and 27% QoQ. For FY13, EBITDA stood at Rs.691mn (up 32% YoY) and EBITDA margins at 18.1% (up 168bps YoY). For 4QFY13, Mayur reported PAT of Rs.129mn, a growth of 16% YoY and 26%QoQ. For FY13, reported PAT stood at Rs.436mn, registering a growth of 31%.

- Conference call highlights: 1.) Management has guided for a revenue growth of 15-20% for FY14E and 20%+ for FY15E. 2.) Exports as a % of sales are pegged at 22% in FY13 vs. 16% in FY12. The company is currently working on new programs with Ford and Chrysler and these are expected to fructify in November 2013. 3.) Gross realizations for the company stood at Rs.206 per meter in FY13 vs. Rs.200 in FY12 4.) The current capacity stands at 23mn meters annually; the 5th coating line with an annual capacity of 7.2mn meters is likely to be operational by Oct-Nov'13 taking the capacity up to 30mn meters. 5.) The company has already started seeing benefits of backward integration with the rejection rate coming down from current 10% to 6%. 6.) During FY13, the company witnessed pressure on working capital with inventory days moving to 40 from 33 in FY12 and receivable days to 51 from 44 in FY12. Management also indicated about creditor's days moving up.

- Valuations and Recommendations: At the CMP of Rs. 431, the stock is currently trading at 9.8x FY14E EPS of Rs.43.8 and 7.9x FY15E EPS of Rs.54.3. We continue to remain positive on the stock and maintain Buy rating with a revised target of Rs.570.

Source : Equity Bulls

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