Mayur Uniquoters - Op. performance beats estimates; maintain Buy - Centrum

We retain Buy rating on Mayur Uniquoters (Mayur) with a revised TP of Rs.611, upside of 36% and raise our EBITDA margin estimate for FY14E/FY15E by 153bps/139bps respectively. Our confidence is driven by sustained op. performance seen over the past few quarters aided by rising share of exports, ability to pass on cost increases and its focus towards high value added products. Strong YoY revenue growth of 18% reflects its ability to manage healthy growth despite supply constraints through higher productivity. Fresh capacity addition (7.2mn mtrs p.a by end Nov'13) and new order win from GM, US further lend visibility to strong revenue growth.

Operating performance beats estimates: In 1QFY14, revenues stood at Rs.1.1bn (in-line) registering a healthy YoY/QoQ growth of 18%/8% despite capacity constraints, driven by higher productivity (output for 29days/mth vs. 25-26days/mth in 4QFY13). Gross realization was at Rs.210 vs. Rs.206 in FY13. EBITDA margins stood strong at 19.6% beating our estimate by 152bps largely on account of lower RMC despite higher other expenditure. PAT stood at Rs.115mn vs. our est. of Rs.117mn.

Strong traction in high margin export market continues: Exports stood at Rs.232mn registering a strong YoY growth of 24%. The share of exports now stands at 22%. GM, US has approved Mayur as a preferred vendor for one its upcoming models and orders are likely to start from early 2015 (this could lead to incremental business of Rs.30mn/month). Order win from GM, US further lends visibility to strong export growth and reflects its growing footprint.

Conference call highlights: 1.) Management has guided for a revenue growth of 15-20% for FY14E and 20%+ for FY15E. 2.) In the domestic market, the company has raised prices by 3% effective August 1, 2013 3.) The company has already started seeing benefits of backward integration with the rejection rate coming down from current 10% to 6% for US exports.

Retain Buy, estimates and TP revised upwards: We are raising our EBITDA margin estimate by 153bps/139bps for FY14E/FY15E leading to upwards revision in earnings by 8.0% /7.2% respectively. At the CMP of Rs. 450, the stock trades at 9.5x/7.7x FY14E/FY15E EPS of Rs.47.3/Rs.58.2. We maintain Buy rating with a revised target of Rs.611. Key Risks: 1.) Delay in commencement of new capacities. 2.) Delay in supply to GM,US.

Source : Equity Bulls

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