This Company Has Announced A Buyback & Outlook Remains Robust

Broking firm, Anand Rathi has a buy call on the stock of Mayur Uniquoters and sees buyback prices and encouraging demand outlook as positives for the stock.

A big player in artificial leather

Mayur Uniquoters is the largest manufacturer of artificial leather, using the 'Release Paper Transfer Coating Technology' in India. The company in the past two decades has grown from a meager production of 0.25 million linear meters per month, to 4.05 million linear meters per month, through 7 state of the art Italian coating lines. It has also started its PU coating plant with a current capacity of 6 lacs linear meter per month.

Performance disappoints; outlook robust

According to Anand Rathi, weak demand in automobile (OEMs) and footwear led to Mayur's Q3 revenue growing just 6.3% year on year to Rs 1,804 million. Its gross/EBITDA margins contracted 567bps/588bps year on year to 40.1% and 20.8%. Net profits at the company was down a significant 26% year on year to Rs 259 million.

"Weak demand led to restrained revenue growth. Revenue grew at a soft pace due to subdued demand because of the slowdown in i) automobiles (OEMs) on global shortages in semi-conductors and ii) footwear, coupled with the new Covid-19 variant in the 3rd wave. The product mix, too, was unfavourable," the brokerage has said

Encouraging demand outlook

According to Anand Rathi, the management anticipates encouraging demand as challenges in the past seem to easing gradually. "Also, OEM clients added will start contributing meaningfully. Demand is expected to increase and the company, with its brand name, quality of products and regular addition of clients and products, is geared to cater to this

The Buyback at Rs 650 per share negates impact of dismal Q3 performance, given that the share is currently trading at Rs 479.

Disclaimer

Investing in stocks is risky and investors should do their own research before investing. The author and Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should also exercise due caution as markets are extremely volatile due to geo-political tensions and rising interest rates.