Anil Singhvi picks Mayur Uniquoters as SIP STOCK of the DAY; Know the reasons WHY
Zee Business Managing Editor Anil Singhvi said that Mayur Uniquoters is into the unique business of making artificial leather for cars. Margins in this business are extremely high. They have big clients like Ford, Chrysler and many others. The Fundamental difference between artificial leather & genuine leather is that genuine leather is made from animal hides and the artificial other is made from a plastic base
Zee Business Managing Editor Anil Singhvi said that Mayur Uniquoters is into the unique business of making artificial leather for cars. Margins in this business are extremely high. They have big clients like Ford, Chrysler and many others. The Fundamental difference between artificial leather & genuine leather is that genuine leather is made from animal hides and the artificial other is made from a plastic base. Many clients don’t want to harm animals and hence they prefer artificial leather which benefits this company.
Singhvi said that companies which make premium cars are clients of Mayur Uniquoters. The company is into a strong business and has strong positioning. Balance sheet of the company is extremely strong. Singhvi said that the company is a net cash rich company. Cash flows will remain strong even if they have expansion plans in future. Valuations are extremely attractive at current levels.
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The Market Guru said that the company will do EPS of around 28 in FY22, which means Trading at a forward PE of just around 15 and ROE of 20%. Singhvi said it is a good quality midcap company available at PE of 10. The stock is a good rerating candidate from here on. The target price on the stock is Rs 600 – Rs 700.
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Singhvi said that this company is a good turnaround story as its major capex is done and major fund selling which was an overhang is nearly over. The company did a small buyback recently. It is a good investment opportunity as the company will post strong results in the next 2 to 3 quarters.
Avinash Gorakshkar, Director Research at ProfitMart Securities said that this is an excellent auto ancillary company and generates good margins. It is a good investment company at current levels. Return on Equity (RoE) and Return on Capital (RoC) of the company is extremely strong.
Ashish Chaturvedi. Research Analyst at Zee Business said that Mayur Uniquoters started its Commercial production back in 1994 and is now the largest manufacturer of artificial leather using 'Release Paper Transfer coating Technology'. The company's management has ample amount of Experience and they keep focus on continuing innovation. The company usually does R&D expenditure around 1.5% of its Total Revenue. The Company is aggressively doing both Backward and Forward.
Ashish said that the company installed 35 Circular Knitted Machines. The Top Quality Circular knitting machines are from Germany, China, Japan, Italy and company has bought these machines from Japan & Europe hence, they are not willing to brook any compromise with quality. In 2.5 years the company did a capex of around 105 cr while borrowings just rose by around 50 cr. The Company's DE ratio is just 0.1. Promoter's increased stake from 61.48% to 61.56% and also DII raised stake from 1.66% to 3.96% in Q4 of FY21.
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