Mayur Uniquoters: Synthetic Leather’s Silent Compounder Deep-Dive (Medium- to Long-Term View).

1. Elevator Pitch

Mayur Uniquoters is India’s largest manufacturer of synthetic leather. From car seats in a Maruti to dashboards in a BMW, soles for Bata shoes and upholstery for sofas, its products show up everywhere. The company’s edge rests on:

1. Scale & Technology – Italian coating lines churn out 400-plus SKUs a month.

2. Diversified End-Markets – Auto, footwear, furnishings, exports, and B2C décor share the revenue load.

3. Fortress Balance Sheet – Net-cash, debt-free and still buying back shares.

At roughly 16 × earnings the market prices Mayur like a middling industrial, while the business delivers mid-teen ROE, >20 % ROCE and healthy free cash flow. That blend of quality-at-reasonable-price is why it sits on my watch-list for a 3- to 5-year hold.

2. Business Snapshot

Item	Detail
Headquarters	Jaipur, Rajasthan, India
Core Products	PVC & PU synthetic leather (4.6 mn m / month capacity)
Key Clients	Maruti, Tata, VW, Mercedes, BMW (auto); Bata, Relaxo (footwear)
Revenue Mix	≈ 40 % auto, 35 % footwear, 15 % furnishings, 10 % others/exports
Near-Term Goal	Double export volume and lift PU share to >25 % of sales

3. Five-Year Financial Pulse

₹ crore	FY20	FY21	FY22	FY23	FY24
Revenue	528	552	610	776	803
PAT	80	90	100	115	122
PAT Margin	15 %	16 %	16 %	15 %	15 %

After a flat stretch, topline and profits have regained momentum.

4. Quality & Liquidity Metrics

Metric	Latest Reading	Why It Matters
ROE / ROCE	16 % / 22 %	Strong value creation versus cost of capital.
Debt / Equity	0.01 ×	Effectively net-cash; interest burden negligible.
EBITDA Margin	~21 %	Best-in-class within synthetic-leather peers.
Operating Cash Flow (FY24)	₹ 157 cr	Cash earnings back profits.
Free Cash Flow (FY24)	₹ 138 cr	>90 % OCF conversion after cap-ex.
FCF Yield	~6 %	Attractive for a growth manufacturer.
Dividend Payout	~9 % of profit	Low payout but topped up by periodic buybacks.

5. Working-Capital & Inventory Discipline

Ratio (FY24)	Value	Trend
Inventory Days	144	Down from >200 three years ago – improved planning.
Receivable Days	40	Stable; OEM credit terms under control.
Payable Days	52	Matches supplier arrangements for raw material imports.
Cash Conversion Cycle	~132 days	Heading lower; still high but manageable given margins.

Take-away: Mayur must hold a broad palette of colours, textures and gauges; that inflates stock levels. Nonetheless, inventory efficiency has been inching better, freeing up cash and supporting healthy FCF.

6. Valuation & Peer Check

Company	P/E	EBITDA Margin	Net Debt	Quick Take
Mayur Uniquoters	16 ×	21 %	Net-cash	Balanced growth & value.
Global PU Player	22 ×	18 %	Moderate	Higher multiple, lower margin.
Domestic PVC Peer	12 ×	12 %	High	Cheaper but weaker economics.
Mid-Cap Auto Ancillary Avg.	20 ×	12–15 %	Mixed	Lower margins, cyclical.

Fair-Value Band (today): ₹ 750 – ₹ 800 (≈ 18 × FY25e EPS)Three-Year Target: ~₹ 775 (≈ 45 % upside plus 2–3 % cumulative dividends)

7. Technical Dashboard (26

June 2025 Close ≈ ₹ 555)

Indicator	Reading	Comment
50-DMA vs 200-DMA	Price > 50-DMA (₹ 539); 200-DMA at ₹ 560	Golden-cross watch.
RSI (14-day)	42	Momentum reset; room to rise.
MACD	Just turned positive	Early buy signal.
Bollinger Bands	Mid-band ~₹ 573	Consolidating between ₹ 540–₹ 570.
Supports	₹ 540 → ₹ 500 → ₹ 441	Higher-lows pattern intact.
Resistances	₹ 600 → ₹ 700	Breakout over ₹ 600 would turbo-charge sentiment.

8. Investment Case — Pros & Cons

Pros

1. Market Leadership with sticky OEM relationships.

2. High Margins & Returns despite commodity inputs.

3. Clean Balance Sheet – near-zero leverage, ample cash.

4. Growth Catalysts: premium PU line, export tie-ups, organised shift in footwear retail.

5. Shareholder Friendly: steady dividends + buybacks, signalling confidence.

6. Reasonable Valuation versus both quality metrics and peers.

Cons

1. End-Market Cyclicality – auto and footwear demand can wobble.

2. Raw-Material Swings – PVC/PU chemicals track crude prices.

3. Working-Capital Heavy – still >130-day cash cycle, ties up funds.

4. Import Competition – cheaper Chinese PVC could pressure low-end segments.

5. Small-Cap Liquidity – sharp price moves on earnings days inevitable.

   
   

9. Bottom Line

Mayur Uniquoters offers a distinctive mix of quality, cash-rich safety, and a credible growth runway. Fundamentals suggest intrinsic worth in the high-₹ 700s, while technicals show a stock coiling for a move once ₹ 600 clears. With upside potential roughly three times the realistic downside to long-term support, the risk-reward tilts favourably for patient, medium-horizon investors.

Disclaimer: These are personal study notes prepared for educational purposes by a CFA Level I candidate. They do not constitute investment advice. Always perform your own due diligence or consult a registered adviser before acting on stock ideas.