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CD Equisearch Pvt Ltd

Equities Derivatives Commoditie

Mayur Uniquoters Ltd.

No. of shares (m) 45.3

Mkt cap (Rs crs/$m) 2156/332.8

Current price (Rs/$) 476/7.3

Price target (Rs/$)

561/8.7

52 W H/L (Rs.) 570/311

Book Value (Rs/$) 94.8 /1.5

Beta 0.8

Daily volume (avg. monthly) 40830

P/BV (FY18e/19e)

4.6/3.7

P/E (FY18e/19e) 23.3/18.7

EPS growth (FY17/18e/19e) -3.5/19.5/24.7

ROE (FY17/18e/19e) 21.5/21.6/21.9

OPM(FY17/18e/19e) 26.9/26.2/27.4

Net D/E ratio (FY17/18e/19e) -0.3/-0.5/-0.3

BSE Code 522249

NSE Code MAYURUNIQ

Bloomberg MUNI IN

Reuters MAYU.BO

Shareholding pattern %

Promoters 61.3

MFs / Banks / FIs 6.1

Foreign Portfolio Investors 13.8

Govt. holding -

Public & others 18.9

Total 100.0

As on March 09, 2018

Recommendation

Accumulate

Phone: + 91 (33) 4488 0011

E- mail: [email protected]

Figures (Rs crs)

Income from operations

Other Income

EBIDTA (other income included)

PAT (after EO items)

EPS (Rs.)

EPS growth (%)


ities Distribution of Mutual Funds Dist

FY15

FY16

FY17

506.32 511.02 484.76

5.94 5.79 7.37

107.71 141.18 137.58

65.70 82.07 78.79

15.17 17.73 17.12

14.4 16.9 -3.5

Company Brief Mayur is one of the largest synthetic leather manufacturers in India having an

installed capacity of 3.05 million linear meters per month.

Quarterly Highlights

• Mayur witnessed recovery in its business catapulted by growth in domestic

sales volume of 32.8% while export sales registered volume growth of 9.7%

in Q3FY18. Revenues jumped to Rs 137.99 crs

108.81 crs ($16.1m) in the previous year (severely marred by

demonetization and the resulting slowdown in the economy) registering a

growth of 26.8% y-o-y. On the domestic front, recovery in sales volumes

from footwear segment and automotive OEMs has been remarkable.

Management expects the domestic sales from footwear (accounts for nearly

45% of its revenues) to expand further with the onset of summer.

• Raw material to sales has been demonstrating an uptrend since the last four

quarters on the backdrop of rising crude oil prices (accounts for about 80% of

its raw material cost, though not directly). However, if such trend continues,

the company will undertake a consequent price hike (previously, increase of

3% was undertaken in April, 2017). Besides, appreciation of rupee in Q3 by

3% also aided suppression of EBITDA margins

• The company enjoys current production capacity of 3.05 million meters per

month with total capacity utilization of 85%. In order to capture the expected

growth in sales and thereby foster its business growth, the company has

ordered a 7th PVC line that will increase its production capacity by 5 lakh

meters per month.

• The stock currently trades at 23.3x FY18e EPS of Rs 20.46

of Rs 25.50. Commencement of the production for polyurethane (PU)

synthetic leather in Madhya Pradesh and PVC leather in Mysore plant will

undoubtedly expand the company’s ambit of business. Additionally, its entry

into the European markets via Mercedes Benz and BMW

export revenues. Margins would enlarge on account of value addition and

expanding horizon of its business. Yet, massive reliance on imported raw

materials could strain margins and profits. Strong resurrection

Q2 and Q3 prompted revision in FY19e EPS by 14.9%

‘accumulate’ rating on the stock with revised target of

target: Rs 444) based on 22x FY19e EPS (peg ratio: 1

months.

CD Equisearch Pvt Ltd March 28, 2018

istribution of Life Insurance

FY18e

FY19e

563.05 662.14

10.25 12.07

158.00 193.61

93.49 115.58

20.46 25.50

19.5 24.7

Mayur is one of the largest synthetic leather manufacturers in India having an

installed capacity of 3.05 million linear meters per month.

Mayur witnessed recovery in its business catapulted by growth in domestic

sales volume of 32.8% while export sales registered volume growth of 9.7%

in Q3FY18. Revenues jumped to Rs 137.99 crs ($21.3m) in Q3FY18 from Rs

in the previous year (severely marred by

demonetization and the resulting slowdown in the economy) registering a

y. On the domestic front, recovery in sales volumes

from footwear segment and automotive OEMs has been remarkable.

gement expects the domestic sales from footwear (accounts for nearly

45% of its revenues) to expand further with the onset of summer.

Raw material to sales has been demonstrating an uptrend since the last four

quarters on the backdrop of rising crude oil prices (accounts for about 80% of

its raw material cost, though not directly). However, if such trend continues,

take a consequent price hike (previously, increase of

3% was undertaken in April, 2017). Besides, appreciation of rupee in Q3 by

suppression of EBITDA margins.

The company enjoys current production capacity of 3.05 million meters per

. In order to capture the expected

growth in sales and thereby foster its business growth, the company has

e its production capacity by 5 lakh

23.3x FY18e EPS of Rs 20.46 and 18.7x FY19e EPS

. Commencement of the production for polyurethane (PU)

in Madhya Pradesh and PVC leather in Mysore plant will

of business. Additionally, its entry

rkets via Mercedes Benz and BMW will nurture its

export revenues. Margins would enlarge on account of value addition and

expanding horizon of its business. Yet, massive reliance on imported raw

Strong resurrection in business in

by 14.9%. Therefore, we assign

‘accumulate’ rating on the stock with revised target of Rs 561 (previous

(peg ratio: 1) over a period of 9-12



[

Outlook & Recommendation

Synthetic Leather Industry

Future Market Insights, provider of market intelligence and consulting services,

reach a valuation of $56.3 bn in 2027 from $36.2 b

its application in various segments - furnishing, footwear

the leading segment in terms of its revenue share and growth rate

assessment period. Advances in manufacturing processes and innovation along with increasing affordability of luxury products

in emerging markets are expected to stroke the demand of synthetic leather globally.

The market forecasts and trends highlight that

next decade. The polyurethane artificial leather market in India was recorded at 931.2 million square meters in 2

estimated to headway at a CAGR of 7.5% from 2017 to 2025

Grand View Research, augmented by demand in the

Increasing penetration of PU synthetic leather materials in t

driver for market growth. The footwear industry has been a key end user of polyurethane ar

its usage in men and women’s footwear, including boots, sneakers, and sandals.

processing, PU has been replacing ethylene vinyl acetate (EVA) and polyvinyl chloride (PVC) in footwear

Leather industry has been identified as a focus sector in India. It is among the top ten forex earners of the country. Under

‘Make in India’ programme, leather sector is a thrust segment whereby synthetic leather accounts for 90% of total lea

manufacturing in the country. As a part of ‘Make in India’

strides in boosting production. The growing concern over killing of animals is reducing the demand for pure leather and is

working in favor the synthetic leather market.

Outlook of Auto Sector

S&P Global foresees the global auto sales to grow by about 2%

GDP growth hovering at around 2% in Europe and the US, 5

America. Global light vehicle sales are expected to trend toward 96 million units in 2018 and 98 million units in 2019.

Wire, global leader in press release distribution, reckons that

of 7.8% over period of 2017-2023.

Society of Indian Automobile Manufactures (SIAM)

performance in FY19. Revival of the economy post demonetization and GST is expected to foster the auto industry and

manufacturing activities albeit issues related to monsoons in FY19 may impair rural auto consumption. Nevertheless,

production continues to attract various promine

India Ratings and Research (Ind-Ra) has maintained a stable outlook for the auto ancillary sector for FY19, based on the

expectation of healthy growth in original equipment manufacturers (OEMs) volumes and continued replacement demand.

a credit rating service provider, projects the growth in the auto components industry to be relatively higher than the underlying

growth in the automotive industry in medium to long term.

According to IBEF, by 2020, India is expected to become the fourth largest

Japan while the auto components industry is expected to become the third largest in the world by 2025.

boost the revenues from automobile segment for Mayur.

2



Future Market Insights, provider of market intelligence and consulting services, envisages the global synthetic leather market

reach a valuation of $56.3 bn in 2027 from $36.2 bn in 2016 growing at a CAGR of 4.2% from 2017 to 2027. Synthetic leather finds

furnishing, footwear, automotive, bags and wallets, clothing, and sports

the leading segment in terms of its revenue share and growth rate and is predicted to retain its dominance throughout the

Advances in manufacturing processes and innovation along with increasing affordability of luxury products

n emerging markets are expected to stroke the demand of synthetic leather globally.

s and trends highlight that Polyurethane (PU) synthetic leather will experience the highest growth in the

leather market in India was recorded at 931.2 million square meters in 2

at a CAGR of 7.5% from 2017 to 2025 – is expected to touch $8.14 bn by the ter

Grand View Research, augmented by demand in the automotive and footwear industries.

Increasing penetration of PU synthetic leather materials in the automotive sector, particularly in car seats, is expected to be a

The footwear industry has been a key end user of polyurethane artificial leather market considering

its usage in men and women’s footwear, including boots, sneakers, and sandals. As a result of ease in designing and

has been replacing ethylene vinyl acetate (EVA) and polyvinyl chloride (PVC) in footwear

Leather industry has been identified as a focus sector in India. It is among the top ten forex earners of the country. Under

‘Make in India’ programme, leather sector is a thrust segment whereby synthetic leather accounts for 90% of total lea

manufacturing in the country. As a part of ‘Make in India’ initiative, the Indian leather industry

. The growing concern over killing of animals is reducing the demand for pure leather and is

working in favor the synthetic leather market.

S&P Global foresees the global auto sales to grow by about 2%-3% in 2018 and 1%-2% in 2019, consistent with their projections of

GDP growth hovering at around 2% in Europe and the US, 5.5% in the Asia-Pacific region, and in the 2%

America. Global light vehicle sales are expected to trend toward 96 million units in 2018 and 98 million units in 2019.

Wire, global leader in press release distribution, reckons that the global automotive interior leather market will grow at a CAGR

Society of Indian Automobile Manufactures (SIAM) anticipates considerable improvement in the Indian automotive industry

economy post demonetization and GST is expected to foster the auto industry and

manufacturing activities albeit issues related to monsoons in FY19 may impair rural auto consumption. Nevertheless,

various prominent auto companies to capture a dominant share in Indian automobile industry

Ra) has maintained a stable outlook for the auto ancillary sector for FY19, based on the

expectation of healthy growth in original equipment manufacturers (OEMs) volumes and continued replacement demand.

projects the growth in the auto components industry to be relatively higher than the underlying

growth in the automotive industry in medium to long term.

India is expected to become the fourth largest automobiles producer globally after China, US and

Japan while the auto components industry is expected to become the third largest in the world by 2025.

boost the revenues from automobile segment for Mayur.

2



global synthetic leather market to

CAGR of 4.2% from 2017 to 2027. Synthetic leather finds

, clothing, and sports – where footwear is

and is predicted to retain its dominance throughout the

Advances in manufacturing processes and innovation along with increasing affordability of luxury products

Polyurethane (PU) synthetic leather will experience the highest growth in the

leather market in India was recorded at 931.2 million square meters in 2016 and is

is expected to touch $8.14 bn by the terminal year - according to

in car seats, is expected to be a

tificial leather market considering

As a result of ease in designing and

has been replacing ethylene vinyl acetate (EVA) and polyvinyl chloride (PVC) in footwear segment.

Leather industry has been identified as a focus sector in India. It is among the top ten forex earners of the country. Under the

‘Make in India’ programme, leather sector is a thrust segment whereby synthetic leather accounts for 90% of total leather

, the Indian leather industry is expected to make great

. The growing concern over killing of animals is reducing the demand for pure leather and is

2% in 2019, consistent with their projections of

Pacific region, and in the 2%-3% range in Latin

America. Global light vehicle sales are expected to trend toward 96 million units in 2018 and 98 million units in 2019. Business

the global automotive interior leather market will grow at a CAGR

considerable improvement in the Indian automotive industry

economy post demonetization and GST is expected to foster the auto industry and

manufacturing activities albeit issues related to monsoons in FY19 may impair rural auto consumption. Nevertheless, low cost of

nt auto companies to capture a dominant share in Indian automobile industry.

Ra) has maintained a stable outlook for the auto ancillary sector for FY19, based on the

expectation of healthy growth in original equipment manufacturers (OEMs) volumes and continued replacement demand. ICRA,

projects the growth in the auto components industry to be relatively higher than the underlying

automobiles producer globally after China, US and

Japan while the auto components industry is expected to become the third largest in the world by 2025. This will substantially



Outlook of Footwear Sector India is the second-largest manufacturer of footwear in the world, accounting for approximately 9.0% of the annual global

production. Increasing investments by foreign players in the footwear industry are anticipated to further drive penetration o

polyurethane faux leather market in future. The Indian footwear industry has also received immense support from the

government, recognizing it as a priority sector and has introduced beneficial policy reforms that are likely to work in its favor.

A recent report by Global Industry Analysts, Inc. posits the global market for footwear to reach $430 bn by 2024 invigorated by new

design trends and mount in discretionary spending among the ever rising middle class population. Asia Pacific is acknowledged

the fastest growing market, growing at a CAGR of 8% in volume terms, over the period 2016

Source: Global Industry Analysts, Inc.

Financials and Valuations

Mayur reported 16.3% growth in its revenues in 9MFY18 galvanized by the recovery of economy, essentially the f

automotive sectors. The footwear industry in India was fatally afflicted amidst the cash crunch and tax reform, albeit these

have been characterized by shift from the unorganized sector (accounting for

which is propitious for Mayur since 95% of its business in the footwear segment is with the organized players.

forward, revival in the domestic economy along with addition of PU plant and expansion of Mayur’s export market woul

17.6% growth in sales for FY19.

Sources: CD Equisearch, Mayur Sources: CD Equisearc

India presently imports a bulk of its PU leather demand

the domestic market which currently relies on imports.

Gwalior, Madhya Pradesh with a production capacity of 0.7 mn l

increase in India with the entry of many international brands that use the material in products such as footwear, garments, l

purses and bags.

Sources: CD Equisearch, Mayur Sources: CD Equisearch, Mayur

3



largest manufacturer of footwear in the world, accounting for approximately 9.0% of the annual global

production. Increasing investments by foreign players in the footwear industry are anticipated to further drive penetration o

ux leather market in future. The Indian footwear industry has also received immense support from the

and has introduced beneficial policy reforms that are likely to work in its favor.

al Industry Analysts, Inc. posits the global market for footwear to reach $430 bn by 2024 invigorated by new

design trends and mount in discretionary spending among the ever rising middle class population. Asia Pacific is acknowledged

g market, growing at a CAGR of 8% in volume terms, over the period 2016-2024.

Mayur reported 16.3% growth in its revenues in 9MFY18 galvanized by the recovery of economy, essentially the f

automotive sectors. The footwear industry in India was fatally afflicted amidst the cash crunch and tax reform, albeit these

shift from the unorganized sector (accounting for over 70% of market share) to the or

which is propitious for Mayur since 95% of its business in the footwear segment is with the organized players.

forward, revival in the domestic economy along with addition of PU plant and expansion of Mayur’s export market woul


demand. The foray into PU leather would enable Mayur to cater to the segment of

the domestic market which currently relies on imports. The company is therefore, in the process of setting up a PU leather plant at

Gwalior, Madhya Pradesh with a production capacity of 0.7 mn linear meters per month. Demand for PU leather is also expected to

increase in India with the entry of many international brands that use the material in products such as footwear, garments, l

: CD Equisearch, Mayur

3



largest manufacturer of footwear in the world, accounting for approximately 9.0% of the annual global

production. Increasing investments by foreign players in the footwear industry are anticipated to further drive penetration of

ux leather market in future. The Indian footwear industry has also received immense support from the

and has introduced beneficial policy reforms that are likely to work in its favor.

al Industry Analysts, Inc. posits the global market for footwear to reach $430 bn by 2024 invigorated by new

design trends and mount in discretionary spending among the ever rising middle class population. Asia Pacific is acknowledged as

Mayur reported 16.3% growth in its revenues in 9MFY18 galvanized by the recovery of economy, essentially the footwear and

automotive sectors. The footwear industry in India was fatally afflicted amidst the cash crunch and tax reform, albeit these events

70% of market share) to the organized side,

which is propitious for Mayur since 95% of its business in the footwear segment is with the organized players. However, going

forward, revival in the domestic economy along with addition of PU plant and expansion of Mayur’s export market would lead to

would enable Mayur to cater to the segment of

The company is therefore, in the process of setting up a PU leather plant at

Demand for PU leather is also expected to

increase in India with the entry of many international brands that use the material in products such as footwear, garments, ladies



To expand their footprint in southern India, the company is in setting up a PVC leather plant with a capacity of 0.10 mn line

meters at Mysore, Karnataka. This plant will help Mayur to leverage the

capacity to propel higher future growth as well as establish proximity to its customers in the southern market. The company

wishes to shift one existing line to the Mysore plant after which, the company will have capacity to install four more li

production ramps up in the long run.

The company intends to undertake its capacity addition activities in Karnataka and Madhya Pradesh

accruals. The company has already acquired the requisite land for the PU project and embar

last year. They have also identified the prospective supply of plant and machinery for PU, the negotiations for which will be

settled by the end of current fiscal. Mayur has not undertaken significant capital expenditu

to incur a capex of ~ Rs 135 crs ($20.8m) in FY19

company is also undertaking measures to make its furnishing segment more competitive. It ha

Surat, Chennai, Indore and Kanpur to establish a distribution chain and build its brand through the furnishing route.

Sources: CD Equisearch, Mayur Source

The stock currently trades at 23.3x FY18e EPS of Rs 20.46

85%, significant increase in capacity utilization is anticipated on the backdrop of revival of demand in do

increasing population and rising disposable income and its potential admittance into the European markets. The company is

confident of getting approvals for orders by Mercedes Benz in FY19 and has been modifying its process to grab such app

This would doubtlessly accentuate greater exposure to other prospective customers in the European market. However, product

obsolesce as a result of continuous technological innovation and government regulations pertaining to the harmful environment

effects of processing PVC may serve as major restraints for the market.

revise our FY19e EPS by 14.9% and assign ‘accumulate’ rating

based on 22x FY19e EPS (peg ratio: 1) over a period of 9


4



To expand their footprint in southern India, the company is in setting up a PVC leather plant with a capacity of 0.10 mn line

meters at Mysore, Karnataka. This plant will help Mayur to leverage the existing opportunities in the i


wishes to shift one existing line to the Mysore plant after which, the company will have capacity to install four more li

The company intends to undertake its capacity addition activities in Karnataka and Madhya Pradesh

accruals. The company has already acquired the requisite land for the PU project and embarked on its civil activity in November


settled by the end of current fiscal. Mayur has not undertaken significant capital expenditure in the current fiscal and is expected

in FY19 – Rs 100 crs ($15.4m) for the PU plant and Rs 35 crs

company is also undertaking measures to make its furnishing segment more competitive. It has, therefore, set up s

to establish a distribution chain and build its brand through the furnishing route.

Sources: CD Equisearch, Mayur

23.3x FY18e EPS of Rs 20.46 and 18.7x FY19e EPS of Rs 25.50. With a current capacity utilization of

ignificant increase in capacity utilization is anticipated on the backdrop of revival of demand in do


confident of getting approvals for orders by Mercedes Benz in FY19 and has been modifying its process to grab such app


obsolesce as a result of continuous technological innovation and government regulations pertaining to the harmful environment

effects of processing PVC may serve as major restraints for the market. In view of vigorous recovery of sales in Q2 and Q3, we

assign ‘accumulate’ rating on the stock with a revised target of Rs

period of 9-12 months. For more information, refer to our June report.

: CD Equisearch, Mayur Sources: CD Equisearch, Mayur

4



To expand their footprint in southern India, the company is in setting up a PVC leather plant with a capacity of 0.10 mn linear

existing opportunities in the industry with the additional


wishes to shift one existing line to the Mysore plant after which, the company will have capacity to install four more lines as

The company intends to undertake its capacity addition activities in Karnataka and Madhya Pradesh mainly through internal

ked on its civil activity in November


re in the current fiscal and is expected

for the PU plant and Rs 35 crs ($5.4m) for PVC. The

therefore, set up stores in Delhi,

to establish a distribution chain and build its brand through the furnishing route.

With a current capacity utilization of

ignificant increase in capacity utilization is anticipated on the backdrop of revival of demand in domestic economy,


confident of getting approvals for orders by Mercedes Benz in FY19 and has been modifying its process to grab such approvals.


obsolesce as a result of continuous technological innovation and government regulations pertaining to the harmful environmental

In view of vigorous recovery of sales in Q2 and Q3, we

Rs 561 (previous target: Rs 444)

For more information, refer to our June report.



Risks and Concerns

Raw material risk

The company heavily relies on crude oil for its raw materials

company’s margins (OPMs down 131 bps in 9MFY18)

potentially roil margins.

Dependency on footwear and automotive industry

The company derives 70% of its revenues from the footwear and automobile industry having a dominant presence

segment. Any disruption in the footwear and automobile industry could sever

Competition

China gives a tough competition to Indian leather manufacturers in terms of pricing

therefore, have to undertake cut in its prices offered in order to remain competitive in

5



company heavily relies on crude oil for its raw materials (~80%). Rising crude oil prices have already been affecting the

(OPMs down 131 bps in 9MFY18) and any further rise in oil prices would lead to cost escalations that could

Dependency on footwear and automotive industry

company derives 70% of its revenues from the footwear and automobile industry having a dominant presence

in the footwear and automobile industry could severely impair the company’s topline.

China gives a tough competition to Indian leather manufacturers in terms of pricing in the global market

therefore, have to undertake cut in its prices offered in order to remain competitive in the industry.

5



. Rising crude oil prices have already been affecting the

and any further rise in oil prices would lead to cost escalations that could

company derives 70% of its revenues from the footwear and automobile industry having a dominant presence in B2B

ely impair the company’s topline.

in the global market. The company may

the industry.



Financials

Quarterly results- standalone

Income From Operations (Net) Other Income

Total IncomeTotal Expenditure

EBITDA (other income included)Interest

Depreciation

PBT

Tax

PAT

Extraordinary Item

Adjusted Net Profit

EPS(Rs)

Income Statement- standalone

Income From Operations (Net)

Growth (%)

Other Income

Total Income

Total Expenditure

EBITDA (other income included)

Interest

Depreciation

PBT

Tax

PAT

Extraordinary Item

Adjusted Net Profit

EPS (Rs)*

*EPS on weighted average equity

6



standalone Figures in crores

Q3FY18 Q3FY17 % chg 9MFY18 9MFY17

137.99 108.81 26.8 416.68 358.401.56 1.14 36.7 8.22 7.54

Total Income 139.55 109.95 26.9 424.90 365.93Total Expenditure 101.93 78.34 30.1 305.74 258.30

EBITDA (other income included) 37.61 31.61 19.0 119.16 107.630.45 0.38 19.9 1.09 0.91

4.33 4.23 2.6 12.76 12.59

PBT 32.82 27.00 21.6 105.31 94.14

Tax 11.07 8.98 23.2 35.36 30.31

PAT 21.75 18.02 20.7 69.94 63.82

- - - - -

Net Profit 21.75 18.02 20.7 69.94 63.82

EPS(Rs) 4.75 3.94 20.7 15.28 13.59

standalone Figure in crores

FY15 FY16 FY17 FY18e FY19e

506.32 511.02 484.76 563.05 662.14

7.8 0.9 -5.1 16.2 17.6

5.94 5.79 7.37 10.25 12.07

Total Income 512.26 516.81 492.13 573.30 674.21

Total Expenditure 404.55 375.63 354.54 415.30 480.60

EBITDA (other income included) 107.71 141.18 137.58 158.00 193.61

2.60 3.40 2.38 1.69 1.13

11.86 16.12 16.69 17.29 22.51

PBT 93.25 121.66 118.51 139.02 169.98

Tax 27.35 39.15 37.83 45.53 54.39

PAT 65.90 82.51 80.68 93.49 115.58

0.20 0.44 1.89 0.00 0.00

Adjusted Net Profit 65.70 82.07 78.79 93.49 115.58

EPS (Rs)* 15.17 17.73 17.12 20.46 25.50

6



Figures in crores

9MFY17 % chg

358.40 16.3 9.1

365.93 16.1 258.30 18.4

107.63 10.7 19.8

12.59 1.4

94.14 11.9

30.31 16.7

63.82 9.6

-

63.82 9.6

13.59 12.4

Figure in crores FY19e

662.14

17.6

12.07

674.21

480.60

193.61

1.13

22.51

169.98

54.39

115.58

0.00

115.58

25.50



Standalone Balance Sheet

Sources of Funds

Share Capital

Reserves

Total Shareholders' Funds

Long Term Debt

Total Liabilities

Application of Funds

Gross Block

Less: Accumulated Depreciation

Net Block

Capital Work in Progress

Investments

Current Assets, Loans & Advances

Inventory

Trade receivables

Cash and Bank

Short term loans (inc. other current assets)

Total CA

Current Liabilities

Provisions-Short term

Total Current Liabilities

Net Current Assets

Net Deferred Tax

Net long term assets ( net of liabilities)

Total Assets

*includes preference shares of Rs 59.44 crores

7



Figure in crores


81.09 23.14 22.89 22.66 22.66

201.58 318.97 370.75 452.35 560.28

282.67 342.11 393.64 475.01 582.95

13.75 9.05 3.93 3.00 2.50

296.42 351.17 397.57 478.01 585.45

179.99 194.06 204.00 219.91 354.91

43.48 59.43 75.74 93.03 115.54

136.50 134.63 128.26 126.88 239.37

6.18 7.86 3.91 0.00 0.00

75.82 97.06 119.74 185.00 175.00

56.10 50.39 58.29 61.79 64.88

90.69 123.82 130.38 143.42 157.76

26.59 14.13 20.29 35.29 28.13

Short term loans (inc. other current assets) 17.80 11.53 11.13 11.15 11.15

191.19 199.87 220.09 251.65 261.92

102.63 73.85 73.87 77.68 82.77

7.03 10.42 2.09 4.55 5.44

109.65 84.27 75.96 82.23 88.21

81.53 115.60 144.14 169.42 173.72

-4.76 -4.98 -4.19 -8.98 -8.98

1.15 1.00 5.70 5.69 6.34

296.42 351.17 397.57 478.01 585.45

of Rs 59.44 crores

7



Figure in crores FY19e

22.66

560.28

582.95

2.50

585.45

354.91

115.54

239.37

0.00

175.00

64.88

157.76

28.13

11.15

261.92

82.77

5.44

88.21

173.72

8.98

6.34

585.45



Key Financial Ratios

Growth Ratios (%)

Revenue

EBITDA

Net Profit

EPS

Margins (%)

Operating Profit Margin

Gross profit Margin

Net Profit Margin

Return (%)

ROCE

ROE

Valuations

Market Cap/ Sales

EV/EBITDA

P/E

P/BV

Other Ratios

Interest Coverage

Debt Equity

Net Debt-Equity Ratio

Current Ratio

Turnover Ratios

Fixed Asset Turnover

Total Asset Turnover

Inventory Turnover

Debtors Turnover

Creditor Turnover

WC Ratios

Inventory Days

Debtor Days

Creditor Days

Cash Conversion Cycle

8




7.8 0.9 -5.1 16.2 17.6

12.0 30.8 -4.1 17.2 22.5

14.4 24.9 -4.0 18.7 23.6

14.4 16.9 -3.5 19.5 24.7

20.1 26.5 26.9 26.2 27.4

20.7 26.8 27.3 27.8 29.1

13.0 16.1 16.3 16.6 17.5

25.5 24.3 20.8 21.4 21.8

34.2 29.0 21.5 21.6 21.9

3.9 3.5 3.6 3.8 3.3

17.8 12.2 11.9 12.3 10.0

29.9 21.8 22.1 23.3 18.7

8.8 5.2 4.4 4.6 3.7

36.8 36.6 49.6 83.4 151.6

0.2 0.1 0.0 0.0 0.0

-0.3 -0.2 -0.3 -0.5 -0.3

2.4 3.5 4.4 5.2 4.9

4.3 3.8 3.7 4.4 3.6

2.1 1.6 1.3 1.3 1.2

6.7 7.1 6.5 6.9 7.6

6.4 4.8 3.8 4.1 4.4

7.0 8.4 8.5 8.2 8.3

54.1 51.7 55.9 52.8 48.1

56.9 76.6 95.7 88.7 83.0

51.9 43.4 43.0 44.5 44.0

59.1 84.9 108.6 97.0 87.1

8



FY19e

151.6



Cumulative Financial Data FY08-10 FY11 Income from operations 370

Operating profit 51

EBIT 47

PBT 43

PAT after MI 28

Dividends 7

OPM (%) 13.7

NPM (%) 7.4

Interest coverage 12.2

ROE (%) 29.8

ROCE (%) 26.0

Debt Equity 0.1

Fixed asset turnover 6.3

Debtors turnover 5.8

Inventory turnover 11.3

Creditors turnover 5.1

Debtor days 62.8

Inventory days 32.4

Creditor days 72.0

Cash conversion 23.2

Dividend payout ratio (%) 23.9

FY08-10 implies three years ending fiscal 10

The margins have expanded in the recent years owing to

consistent improvement on its performance in the export segment (where margins are higher) along with growing popularity

and advantages of synthetic leather. As a result, OPMs surged from 13.7

witnessed an uptick from a single digit of 7.4% i

of its highest levels in period FY11-13 on the backdrop of very high growth in revenues during these years (51%, 28% and 20%

respectively).

Degrowth of revenues in FY17 along with disruption the business caused due to GST will impair the growth in FY17

and lead to a growth of 15%. Such growth will be led by expansion in capacit

market. Margins would undoubtedly rise as a result along with very high interest coverage ratio. However, mounting cash

conversion cycle and drastic fall in dividend payout ratio cannot be ignored (see table).

9



Cumulative Financial Data Figures in crores

FY11-13 FY14-16 FY17-19e

946 1487 1710

164 332 460

157 309 430

151 299 428

102 205 288

26 51 21

17.3 22.3 26.9

10.8 13.8 16.8

25.1 30.0 82.7

42.6 29.7 20.8

37.5 27.7 20.4

0.2 0.1 0.0

8.1 5.2 3.0

7.7 5.5 4.0

9.7 8.1 7.2

7.0 9.1 8.5

47.5 66.4 90.2

37.8 44.8 50.5

52.5 40.2 43.0

32.8 71.0 97.6

25.3 24.6 7.2

expanded in the recent years owing to 4x increase in cumulative revenues from FY08

performance in the export segment (where margins are higher) along with growing popularity

As a result, OPMs surged from 13.7% in FY08-10 to 22.3% in FY14

witnessed an uptick from a single digit of 7.4% in FY08-10 to double digit of 13.8% in FY14-16. Return ratios spiked up to

13 on the backdrop of very high growth in revenues during these years (51%, 28% and 20%

th disruption the business caused due to GST will impair the growth in FY17

Such growth will be led by expansion in capacities, addition of PU and entry


conversion cycle and drastic fall in dividend payout ratio cannot be ignored (see table).

9



4x increase in cumulative revenues from FY08-10 to FY14-16 led by

performance in the export segment (where margins are higher) along with growing popularity

10 to 22.3% in FY14-16 while NPMs

16. Return ratios spiked up to one

13 on the backdrop of very high growth in revenues during these years (51%, 28% and 20%

th disruption the business caused due to GST will impair the growth in FY17-19 period

ies, addition of PU and entry into the European




Financial Summary – US dollar denominated

million $ FY15

Equity Share capital 3.7

Shareholders' funds 35.7

Total debt 7.2

Net fixed assets (incl. CWIP) 22.8

Investments 12.1

Net Current assets 13.0

Total Assets 47.4

Revenues 82.8

EBITDA 17.6

EBDT 17.1

PBT 15.2

PAT 10.7

EPS($) 0.25

Book value ($) 0.82

Income statement figures translated at average rates; balance sheet at year end rates; projec*All dollar denominated figures are adjusted for extraordinary items.

10



US dollar denominated FY16 FY17 FY18e FY19e

3.5 3.5 3.5 3.5

51.6 60.5 73.1 89.8

3.9 1.9 0.9 0.8

21.5 20.4 19.6 36.9

14.6 18.5 28.6 27.0

17.4 22.0 25.9 26.6

52.9 61.1 73.6 90.1

78.1 72.3 86.9 102.2

21.5 20.1 24.4 29.9

20.9 19.7 24.1 29.7

18.5 17.3 21.5 26.2

12.5 11.7 14.4 17.8

0.27 0.26 0.32 0.39

1.11 1.32 1.61 1.98

Income statement figures translated at average rates; balance sheet at year end rates; projections at current rates (Rs 64.80adjusted for extraordinary items.

10



tions at current rates (Rs 64.80/$)



Disclosure & Disclaimer

CD Equisearch Private Limited (hereinafter referred to as

Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited (Formerly known as MCX Stock Exchange Limited)

Equi is also registered as Depository Participant with

engaged in activities relating to NBFC-ND - Financing and Investment, Commodity Broking, Real Estate, etc.

CD Equi is registered under SEBI (Research Analysts) Regulations, 201

declares that –

• No disciplinary action has been taken against CD Equi by any of the regulatory authorities.

• CD Equi/its associates/research analysts do not have any financial interest/benef

conflict of interest in the subject company(s)

• CD Equi/its associates/research analysts have not received any compensation from the subject company(s) during the past twelv

months.

• CD Equi/its research analysts has not served as an officer, director or employee of company covered by analysts and has not b

engaged in market making activity of the company covered by analysts

This document is solely for the personal information of the recipient and must not be singularly used as the basis of any inv

Nothing in this document should be construed as investment or financial advice. Each recipient of this document s

investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the compan

in this document (including the merits and risks involved) and should consult their own advisors to

an investment.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positio

volume, as opposed to focusing on a company's fundamentals

The information in this document has been printed on the basis of publicly available information, internal data and other rel

believed to be true but we do not represent that it is accurate or complete and it should not be relied on as such, a

general guidance only. CD Equi or any of its affiliates/group companies shall not be in any way responsible for any loss or d

arise to any person from any inadvertent error in the information contained in this report. C

information contained within this document. Accordingly, we cannot testify nor make any representation or warranty, express o

the accuracy, contents or data contained within this document.

While, CD Equi endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory complia

other reasons that prevent us from doing so.

This document is being supplied to you solely for your information and its co

redistributed or passed on, directly or indirectly. Neither, CD Equi nor its directors, employees or affiliates shall be liab

damage that may arise from or in connection with the use of t

CD Equisearch Private Limited (CIN: U67120WB1995PTC071521)

Registered Office: 37, Shakespeare Sarani, 3rd Floor, Kolkata

Vasawani Mansion, 5th Floor, Dinshaw Wachha Road, Churchgate, Mumbai

Website: www.cdequi.com; Email: [email protected]

buy: >20% accumulate: >10% to ≤20% hold:

Exchange Rates Used- Indicative

Rs/$ FY14 FY15

Average 60.5 61.15

Year end 60.1 62.59

All $ values mentioned in the write-up translated at the average rate of the respective quarter/ year as applicable. Projections converted

current exchange rate. Cumulative dollar figure is the sum of respective yearly dollar value

11



CD Equisearch Private Limited (hereinafter referred to as ‘CD Equi’) is a Member registered with National Stock Exchange of India Limited,

Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited (Formerly known as MCX Stock Exchange Limited)

Equi is also registered as Depository Participant with CDSL and AMFI registered Mutual Fund Advisor. The associates of CD Equi are

Financing and Investment, Commodity Broking, Real Estate, etc.

CD Equi is registered under SEBI (Research Analysts) Regulations, 2014 with SEBI Registration no INH300002274. Further, CD Equi hereby

No disciplinary action has been taken against CD Equi by any of the regulatory authorities.

CD Equi/its associates/research analysts do not have any financial interest/beneficial interest of more than one percent/material

conflict of interest in the subject company(s) (kindly disclose if otherwise).

CD Equi/its associates/research analysts have not received any compensation from the subject company(s) during the past twelv

CD Equi/its research analysts has not served as an officer, director or employee of company covered by analysts and has not b

engaged in market making activity of the company covered by analysts.

This document is solely for the personal information of the recipient and must not be singularly used as the basis of any inv

Nothing in this document should be construed as investment or financial advice. Each recipient of this document s

investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the compan

in this document (including the merits and risks involved) and should consult their own advisors to determine the merits and risks of such

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positio

volume, as opposed to focusing on a company's fundamentals and as such, may not match with a report on a company's fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other rel

believed to be true but we do not represent that it is accurate or complete and it should not be relied on as such, a

general guidance only. CD Equi or any of its affiliates/group companies shall not be in any way responsible for any loss or d

arise to any person from any inadvertent error in the information contained in this report. CD Equi has not independently verified all the

information contained within this document. Accordingly, we cannot testify nor make any representation or warranty, express o

the accuracy, contents or data contained within this document.

CD Equi endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory complia

This document is being supplied to you solely for your information and its contents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly. Neither, CD Equi nor its directors, employees or affiliates shall be liab

damage that may arise from or in connection with the use of this information.

CD Equisearch Private Limited (CIN: U67120WB1995PTC071521)

Floor, Kolkata – 700 017; Phone: +91(33) 4488 0000; Fax: +91(33) 2289 2557 Corporate Office: 10,

Wachha Road, Churchgate, Mumbai – 400 020. Phone: +91(22) 2283 0652/0653; Fax: +91(22) 2283, 2276

Website: www.cdequi.com; Email: [email protected]

hold: ≥-10% to ≤10% reduce: ≥-20% to <-10% sell: <

FY16 FY17

65.46 67.09

66.33 64.84

up translated at the average rate of the respective quarter/ year as applicable. Projections converted

current exchange rate. Cumulative dollar figure is the sum of respective yearly dollar value.

11



) is a Member registered with National Stock Exchange of India Limited,

Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited (Formerly known as MCX Stock Exchange Limited). CD

CDSL and AMFI registered Mutual Fund Advisor. The associates of CD Equi are

Financing and Investment, Commodity Broking, Real Estate, etc.

4 with SEBI Registration no INH300002274. Further, CD Equi hereby

icial interest of more than one percent/material

CD Equi/its associates/research analysts have not received any compensation from the subject company(s) during the past twelve

CD Equi/its research analysts has not served as an officer, director or employee of company covered by analysts and has not been

This document is solely for the personal information of the recipient and must not be singularly used as the basis of any investment decision.

Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such

investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to

determine the merits and risks of such

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading

and as such, may not match with a report on a company's fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources

believed to be true but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for

general guidance only. CD Equi or any of its affiliates/group companies shall not be in any way responsible for any loss or damage that may

D Equi has not independently verified all the

information contained within this document. Accordingly, we cannot testify nor make any representation or warranty, express or implied, to

CD Equi endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory compliance or

ntents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly. Neither, CD Equi nor its directors, employees or affiliates shall be liable for any loss or

700 017; Phone: +91(33) 4488 0000; Fax: +91(33) 2289 2557 Corporate Office: 10,

400 020. Phone: +91(22) 2283 0652/0653; Fax: +91(22) 2283, 2276

<-20%

up translated at the average rate of the respective quarter/ year as applicable. Projections converted at

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