Buy Multibagger Small Cap Artificial Leather Manufacturer Stock For Rs 610 Target Price: Anand Rathi

Anand Rathi recommended "Buy" Mayur Uniquoters Ltd. for a target price of Rs 610 apiece. Mayur Uniquoters is a small cap company having a market cap of Rs 2,180.93 crore. It is the largest manufacturer of artificial leather, using the 'Release Paper Transfer Coating Technology' in India. In 2012, the company made way into the 'Forbes Asia Top 200 under $1Bn enterprises' in the Asia Pacific region.

Stock Outlook

The current market price (CMP) of the stock is Rs 491.60 apiece on NSE. Its 52-week low is Rs 319.20 recorded on 12 May 2022, and the 52-week high is Rs 626.90 recorded on 13 December 2021, respectively.

Considering the estimated target price by the brokerage firm and the CMP of the stock, it has the potential to gain 25%.

Returns on investment

It has given 8.08% negative returns in a week, whereas, in the past 1 month, it has given 5.31% positive return & 38.36% in the past 3 months, respectively. Over the past 1 year, the stock surged roughly 2.84%. In the past 3 years, it gave a multibagger return of 133.67%, whereas in the past 5 years, it gave 32.06% positive return.

 

Encouraging outlook

A healthy demand environment, raw material tailwinds and operating leverage would boost Mayur Uniquoters' performance.

Revenue growth boosted by automotive segment

Healthy increase in off-take by Mercedes Benz, BMW and Volkswagen would lift utilisation at the PU plant. Also, clients added and strong launch pipelines by OEMs assure sustainable growth for the next 2-3 years.

The benefits of anti-dumping duty would be visible gradually. Solutions for mandatory airbags in all seats are being explored, and have not affected the business till now.

Margin expansion likely

Easing input cost pressures and vigorous plans to scale up the high-margin furnishing and accessories categories would help gross margin expansion. Also, economies of scale would provide operating leverage to boost EBITDA margins.

For wider reach the company is increasing the number of its dealers in home furnishings. It is eyeing a tie-up with the Kolkata-based fashion accessories manufacturer to replace genuine leather with artificial leather for a few clients who happen to command marque brands globally.

Working capital to rise, routine capex to continue

The furnishings category will increase working capital (stocks). More working capital and regular capex, however, will be funded through internal accruals.

Further buyback not ruled out

The company has rewarded shareholders with four buybacks in the last 5-6 years; management expects the trend to continue.

Bright outlook provides sustainable growth assurance; retaining a Buy

The brokerage said, "We expect 25%/38% revenue/earnings CAGRs over FY22-24 and retain our Buy rating on the stock, at an unchanged Target Price of Rs.610 based on 15x (unchanged) FY24e earnings."

 

Disclaimer

The stock has been picked from the brokerage report of Anand Rathi. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.