Monarch Networth Capital Research, a well know and leading brokerage firm is bullish on the Mayur Uniquoters Ltd, a leather & leather products company. Brokerage its recently published report has recommended investors buy the stocks of the company for a target price of Rs 600/share. The brokerage has recently visited the company's plants in Jaipur & Gwalior and also interacted with the CMD, Mr Suresh Kumar Poddar. According to the brokerage, both plants are one of a kind with state-of-the-art infrastructure and streamlined manufacturing.
Stock Overview- CMP, Target Price, Returns, & Potential Gains
Mayur Uniquoters stock closed at Rs 354.95/share after a dip of 2.53%. In May 2022, the shares of the company hit the 52-week low of Rs 319.20/share level. As of now, the share is trading at Rs 35.75 above the 52-week low levels. The 52-week high of stock record on 13 December 2021 at Rs 626.90/share.
As mentioned, the stock has recently touched the 52-week low. It has fallen nearly 2.86% in the last 1 week, and it has maintained its price last 1 month, with 0.85% gains. In 3 months, and 1 year, it has fallen. In a year, its share price witnessed a massive 30% dip. However, it has given around the same positive gains in the last 3 years, almost 30.11%. Over the last 5 years, the stock has performed average on the stock market, however, given a negative return of 4.04%
Potential Gains - Taking the estimated target price and the CMP of the stock into the account, the stock of the company has huge potential to climb 70% upside in 12 months.
The company's Gwalior plant is highly automated with state-of-the-art machinery. Mayur has installed most of its machinery from China with Italian design, at a fraction of the cost of the Italian machines. The other critical equipment is procured from Japan and USA. The Gwalior plant is spread across 25 acres, with around 16 acres currently being occupied, which leaves ample space for further expansion. The SAP-led inventory management, RM and finished good warehouses, were an impressive demonstration of its organised manufacturing process. Proper effluent treatment at its facility, waste recycling and regular CSR spending keeps Mayur in conformity with good ESG practices.
The plant in Dhodsar is a top-class facility that caters mainly to the automotive segment (~54% of revenue). With a new fully automated kitchen (chemical mixing) in place for Daimler and BMW, we feel that Mayur has successfully entered the luxury auto segment and should be successful in bringing in more such clients with its dedicated machines. The rigorous testing labs for RM and finished goods are a testament to Mayur's status as a world-class producer of synthetic leather, fully dedicated to the high-margin OEM business.
Management passion paints an optimistic scenario
While interacting with the management one could sense the optimism with a likelihood of demand recovery in both the automotive and footwear segments, the former being a victim of steep increases in RM prices and chip shortage, both on their way to normalisation, and the latter likely to see substantial improvement from FY22 that was impacted by an increase in GST rates. PU volumes should recover with the anti-dumping duty on leather from China, evidence of which is already visible. Overall, recent underperformance is very likely to reverse, a process that we believe has already begun.
Monarch Networth Capital Suggests Buy For Target Price Of Rs 580/share
The brokerage said, "While at both plants we could see optimism across, the Dhodsar plant trial orders for BMW have already commenced & we could see orders flowing in soon. Additionally, the recent orders for Hyundai and Kia for their high-end models provide comfort. The PU plant has already seen a recovery in volumes post-duty for Chinese products and we expect a healthy uptick in volumes. We maintain our Target Price of Rs 600. Our DCF fair value base Target Price stands at Rs 580 (Bull/Bear Target Price of Rs690/290)."
Company Overview- Mayur Uniquoters Ltd
Mayur Uniquoters Ltd is a synthetic leather manufacturing company with a market capitalisation of Rs 1,560.10 Crore. It is a small-cap company. The company is primarily engaged in the business of manufacturing Coated Textile Fabrics, artificial leather and PVC Vinyl which are widely used in different segments such as Footwear, Furnishings, Automotive OEM, Automotive replacement market, and Automotive Exports. The business has operations on various continents in the original equipment manufacturing (OEM) of automobiles. PVC bonded foam, textile fabrics impregnated coated covered or laminated with PU, textile fabrics impregnated coated covered or laminated with polyvinyl chloride (PVC), non-woven materials whether or not impregnated coated covered or laminated, and flexible PVC sheets with a plain surface are among its products.
The stock has been picked from the brokerage report of Monarch Networth Capital Research. 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 taking any investment decision.