Market Cap_ 1200 cr
Largest Player In Indian Synthetic Leather market scripting a turnaround available at an attractive valuations.
- Market leader_ in Synthetic Leather foraying into PU (Polyurethane) leather business dominated by Chinese Imports. With the recent health scare due to Corona Virus, global customers have realized the importance of non-dependence on single country for its Raw Material. China’s market share to global trade in Synthethic Leather is 26% vs India at 5%. Total import from China is around 3,500 cr and 20 mn meter/month.
- PU can be a game changer_ Due to high customization, pricing & quality threat of unorganized is very low in PU vs PVC
- Commercial Production_ of PU starts from Q3FY20. First phase of production consists 1mn meter/month capacity with capex of 120 cr and can reach reach a topline of 200 cr at peak utilization. Existing capacity of 3.05 mn meter/month is mainly in PVC Leather. Synthetic leather finds its application in Automobile Seat Covers, accessories, roof linings & footwear.
- Global Partners_ Company has all major approvals to supply synthetic leather to markets like US & Europe. The company already has partnership with Ford, Chrysler, GM and Daimler. Mayur is approved vendor for all these players.
- Revenue Split_ Export segment is higher margin business, contributes 18% of revenue & 30% of EBIDTA. Revenue Contribution, Export 25% & Domestic 75%.
- Financials_ Strong Operating Cash Flow track record, debt free in spite 120 cr capex. Net Debt of -250 cr. At 16 PE trailing company is at 10 year average multiple. Current market cap of 1200 cr, we have a PAT target of 110 for FY22, and Mayur Uniquoters is available at an attractive valuation 11 x.
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