@harsh.beria93 has succintly highlighted the recent concall above.
It’s very difficult to gauge what will happen to Mayur 3 years down the line however I am trying a simple extrapolation.
Background:
Company enjoyed a very strong growth period earlier around 2009-14 when it added export oem’s and had a cagr return of over 50% for few years before the company went into consolidation. At present juncture company has tied up with Mercedes and BMW and the supplies have already started for the former and more are lined up for both however business has been quite volatile since 2014 and marred with issues and somehow has not been able to grow consistently.
Apart from external volatility in the past few years internal issues currently like china dumping PU, slow offtake to export oem’s, scaling up of furnishing business, slow progress in professionalising the company are hindering growth.
Targets in 3 years as per q1fy24 concall
3 years down the line ie by FY26.
- exports general is 20cr this q ie 80cr per year. Considering it a 100cr business.
- Replacement was 26cr this quarter ie roughly 100 per year and considering an increase to 150cr in 3 years.
- PU/Footwear was around 48cr this q taking it as 200 for the year poddar ji expects this to increase by 50% in 2 years but ill take it in 3 ie 300cr in 3 years
- Auto domestic was 44cr this q ie around 180 for whole year; this he expects 10% -12% growth hence considering 10% this could become 240cr
- Export oem he expects 575-600 in 3 years but ill keep it 500cr.
A back of the envelope calculation indicates that this is revenues of around 1300cr in 3 years.
And if we take margins of 21% (considering a 2% increase from present due to contribution from better margin products) this shud translate to annual pat of ~190cr or eps of 45 roughly.
Valuing it at 25p/e this translates to share price around 1100.
Risks:
- All This could have been said many years to quarters ago hence the above carries very little literal value but gives a sense of direction. The only positive is that now approvals from export oem’s are in place and shipments have started already.
- Succession planning and key man risk persists
- raw materials are crude oil linked and company has always struggled to pass on prices immediately taking a hit on margins. Hence, in case of volatility and increases in crude oil prices could impact margins and deter returns.
[Disclosure : Studying, planning to take a small position]
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