Mayur Uniquoters Limited (522249) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Mayur Uniquoters Limited Q3 and FY '25 Earnings Conference Call, hosted by Monarch Networth Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Dani from Monarch Networth Capital. Thank you, and over to you, sir.

Thank you, Manav. Good afternoon, everyone. On behalf of Monarch Networth Capital, it's a pleasure to host the senior management of Mayur Uniquoters. We have with us Mr. Suresh Kumar Poddar, Chairman and Managing Director; and Vinod Kumar Sharma, CFO of the company. We will start the call with opening remarks from the management and then move to Q&A. Thank you, and over to you, sir.

Thank you, Rahul. Good afternoon, dear investors and analysts. It's a great pleasure to address you as we reflect on the past year and look forward to the future of the company. Your support and trust in Mayur Uniquoters have been instrumental in our success, and we are honored to share with you the performance of Mayur. Thanks for giving your precious time to join Mayur Uniquoters Limited Q3 FY '25 Conference Call. Mayur Uniquoters Limited being the market leader in the synthetic leather industry and an organized player has been able to leverage the emerging opportunities and delivered exemplary performance in past years, both in national and international business markets. Now I would like to start with financial highlights for Q3 FY '25 under review, and we will also reply to our queries after our review of the financial results for the quarter. The company has achieved the revenue from operations on consolidated basis is INR [ 8.39 ] crores, PBT is INR 42.40 crores and PAT INR 30.57 crores. In the quarter, the consolidated revenue increased by 17%. PBT and PAT increased by 16% and 12%, respectively, on Y-on-Y basis. The revenue from operations on a stand-alone basis is INR 194.94 crores, PBT 41.08 crores and PAT INR 29.84 crores. In the quarter, stand-alone revenue, PBT, PAT increased by 12%, 6% and 2%, respectively. Further, our endeavor is to make the company a preferred supplier for the leading OEMs, especially in U.S. and European regions. As we have received some good export orders from U.S.A and [ RSA ] for OEM supplies to new models and based on that, OEM export sales is expected to increase further in the coming years also. So we are hoping for a very good sales performance in automotive segment in coming 2, 3 years. Furthermore, to start general and furnishing segment business in European markets, we have already set up a subsidiary company in Lithuania, and trading activities is also expected to start soon to Lithuania and nearby countries in Europe. While pursuing our business interest, Mayur Uniquoters has also been endeavoring to fulfill our responsibilities towards society. Under the corporate social responsibility programs, we have contributed towards regular plantation and have a plan to do it at a large sale in coming years. The company has also adopted many [ happy ] schools for education of children. The company has worked on education for all and underprivileged children, various health care initiatives, especially child skill development, water for all, sanitation at school area, distribution of books, bags, clothes and most importantly family planning and family welfare schemes in nearby villages. The state government has also recognized these initiatives on various platforms. And I'm thankful to all the investors for their valuable time to those who became the part of this earning call. With this positive note, I would like to conclude and request you all to open the forum for questions and answers. Since we have limited time of 40 minutes for all on the call, therefore, please avoid repeated questions. And to avoid the use of unnecessary times in data query, I want to tell you the data value-wise, you can note down. Total revenue in the quarter 4, INR 195 crores, in which export general is INR 20 crores, export OEM INR 39 crores and OEM domestic INR 43 crores, replacement INR 40 crores, footwear INR 44 crores, furnishing INR 5 crores, others INR 3 crores. It means total export is INR 60 crores, which is 31%, and domestic INR 135 crores, which is 70%. And our OEM export and domestic value-wise is INR 122.49 crore, which is INR 63 crores of total revenue. So this is the summary of our self-revenue and breakup I have given segment-wise and automotive and others. So now we can begin -- start question and answer. Over to you, Rahul.

[Operator Instructions] We have our first question from the line of Bhargav from Ambit Asset Management.

Congratulations on a good performance. My first question is on the CapEx that you are planning in Mexico. So given that there is now a tariff imposition, and we were waiting for the Trump to come in and give more visibility on this. So what is the plan now, sir, if you can share.

You see the plan is hold up for a month. You see how it happens. We have already put 25% tax on Mexico and Canada also. So we are seeing that whether it is going to affect us. Accordingly, so far, we study that it is politically, it should not affect. But until and unless in 1-month time everything come in real picture, we will come to know. So after 1 month, it will be clarified. But as it is whatever information we have seen, there should not be any effect to us.

Okay. Understood. So then we will decide in a month's time where we want to set up our plant, but we'll go for CapEx. It's just that we don't know which country.

Yes. Yes.

Sir, my second question is that in the budget, there were very favorable announcements for component manufacturing within the footwear, both leather and non-leather. So given that we have a PU business, any thoughts on whether this will be positive for us going forward?

You see, if the business increases, definitely, it will be better. But we have to wait and see what kind of a policy is coming out, is taking place because all these things, you -- just on the budget, you cannot say anything. And of course, if the footwear increases, our business will definitely increase, no doubt.

So sir, within PU, who will be our top 3 customers? Is it possible to highlight do we supply to Bata, et cetera, et cetera? Who will be our customers, sir, here?

Our customers?

Yes. Top 3 in PU footwear.

Customers here mainly in Agra and Kanpur.

Agra and Kanpur.

Agra and Kanpur. And Delhi also, Bata also, but Bata is very small quantity.

Understood. But I think post this, they may be wanting to ramp up their domestic manufacturing versus earlier imports. So maybe they can help us give more business. And lastly, sir, 60% of our exports, I believe, is to Stellantis. So given that there is no import duty to import from India, do you believe in this tariff regime, our share in Stellantis can sort of further increase because we are sort of not subject to an import duty as a country.

[Foreign Language]

[Foreign Language]

And today, we cannot say anything.

we cannot say all these things at the moment. Let us see what happens. These are the very deep things, cannot be discussed at this moment. What is going to happen Stellantis. I don't know what is going to happen to American automotive industry...

Sure, sure. And lastly, sir, we were in talks with Nissan and Hyundai, any updates?

Sorry to interrupt, Bhargav. May I please request you to rejoin the queue?

Yes, this is just my last question. Any update, sir, on this front?

Only we are supplying here in India.

Sorry, sir, I could not hear you.

Hyundai and Nissan, we are supplying in India.

[Operator Instructions] The next question is from the line of Ritika, an Individual Investor.

Congratulations on a good set of numbers. Can you tell me how do we see the outlook for export OEM going forward? Have we won any new orders in this past quarter? And given the competition from Chinese cars, how do we see exports to the EU and U.S. automakers?

You see the Chinese competition is always there all over the world. There is nothing new. There is not going to happen anything, but I can assure you that my export OEM will be better in this quarter compared to -- but this quarter also, we have done better than [Foreign Language]

INR 72 lakhs this quarter [Foreign Language]

INR 39 crores.

[Foreign Language]. Yes, about INR 40 crores. It will increase this quarter. It will increase definitely because this December quarter is not very good. First 2 months, we are, mean, very [ distinct ]. Third month was very good because you know in December, they are closer and all that. Now in this month, we have done much better in January, and February, March also will do good. [Foreign Language].

Okay, sir. That helps. Sir, and regarding PU capacity utilization, what would that be? Like would it be at the similar levels of last quarter only? Or is there any pickup.

No, it's a pickup in last quarter, around 27% to 28%, we have increased in PU sell in last quarter.

There's been a growth of 27%, you say?

Yes, over the last quarter.

Okay. So it has broken even at PBT level?

Yes, it is impacting PBT.

No, is the PBT positive for PU segment?

In PU?

Yes.

No, we don't have cash losses. Still we have PBT negative, but far cash loss is not there.

Understood. Understood. And my last question is, can you tell you what is the outlook in general for the company for FY '26? Because there's been good growth in all these 3 quarters. How do we see FY '26 playing out?

And next year, it will be good. It's better than this year. Definitely, it will be good.

So any like guidance you can give in terms of volume or revenue growth guidance?

It will be double digit.

We have our next question from line of Siddharth Sreekumar from iThought PMS.

My first question is, you said to the other participant that you will be selling almost 2 lakh meters for Jan, Feb and March for the export OEM. So this quarter...

This is only for America...

This is only for America. Export [Foreign Language].

Yes, yes. Fine, fine. For America. But in this quarter, how many meters did you sell per month to USA?

In Q3? Q3?

Yes, Q3, Q3.

Average was 1.5 plus.

1.5 plus.

Yes.

The next question I have is regarding the guidance that you had given that your export revenue that you had in, let's say, FY '25, which is almost INR 220 crores will double by FY '26 because of the orders you had from BMW, Mercedes and all. What do you think about that? And what is the update?

Yes, total automotive export will be INR 200 crores plus -- INR 200 crores to INR 225 crores, nearly. So definitely, it would be around that we already told you.

Okay. So what is -- you had given a guidance that it would double by FY '26. So like the current numbers don't seem like, I mean, going to that trajectory. So what do you have to say regarding that?

Yes, definitely. But it has impact the U.S. elections and all. So that's why this Q3 was not done so well. So it has impacted our expectations.

Okay. So one more question I have is that...

Sorry to interrupt, sir, may I please request you to rejoin the queue. We have our next question from the line of Awanish Chandra from SMIFS Limited.

Congratulations, management team, for decent performance continuation...

Can you please hold, the management got disconnected. I'll reconnect them. Ladies and gentlemen, thank you for patiently waiting. The management is back with us. Awanish Chandra, you may please proceed with the question.

Congratulations, sir, on continuation of the decent performance. My first question is on footwear side. Last 2 quarters, we are doing INR 43 crores, INR 40 crores kind of revenue. Last time in fourth quarter and then quarter 1 we have done good business. So are we seeing improvement in the business run rate on the footwear side, but it is still the same INR 43 crores, INR 44 crores quarter run rate?

So the footwear is improving. Quarter to quarter, it should improve.

Because we had INR 48 crores, INR 49 crores INR 50 crore business in the earlier 2 quarters. So can we expect a similar kind of performance again in quarter 4?

So in quarter 4, we can expect, say, INR 50 crores, approximately...

Better than this quarter.

Better than this quarter.

Okay, sir. This BIS thing is now totally settled down? Or we are still having some impact of BIS thing...

We are safe. There is no effect of BIS...

From now...

Whatever happened has happened. And because of that, market went down, and it will not pick up that much, which was supposed to pick up. So for us, it's okay.

Okay. And sir, quickly on BMW side, when we can expect full-fledged bigger business from BMW to start?

May I please request you to rejoin the queue.

I think it should come up in the next 3 months. It should be in...

Next financial year, I think...

No. And then it depends on the how the Indian economy is doing. That is the main thing. That means, now also it is increasing, no doubt. But how much it will go up, I can't say now. But of course, before BIS, whatever was there, it is coming close to that.

BWM...

Oh, you are talking about BMW. It is doing good, full-fledged because BMW also, we have -- they have started buying from us, South Africa this quarter. Now we are doing about 50,000.

5-0?

Yes.

50,000 in the quarter, right, sir?

No, no. In a month.

Okay. 50,000 in a month from the BMW. Okay, sir.

We have our next question from the line of Garvita from Seven Islands PMS.

Am I audible, sir?

Yes, please continue.

Sir, I have 2 questions. I have 2 questions, sir. One is, if you could please give guidance upon by when can we expect 15% of or more top line growth. And second is what is the current capacity utilization, sir?

Current capacity is around 70%. In PU or overall?

Overall, and in PU as well, sir.

Yes. It's nearly 70% overall and PU in 25%, 30%.

25%, 30%. And sir, by when can we expect top line growth of 15% or more because from last many a quarters, we are segment to a particular level only.

Top line growth in this segment?

Overall top line growth, sir?

It is continuously increase -- every year, it is increasing. And next year, we are also expecting increase in double digits in top line.

Double-digit top line growth we are expecting next year? And if you could guidance -- give guidance for FY '25, sir?

It would be around INR 825 crores nearly.

Sorry, sir? INR 825 crores, you are saying?

It will be better than this quarter. Definitely, it will be better than this quarter, and we'll be crossing INR 200 crores plus.

We have our next question from the line of Senthil Manikandan. We have our next question from the line of Alisha Mahajan (sic) [ Mahawla ] from Envision Capital.

[Foreign Language] Automotive exports was INR 60 crores, which has become INR 40 crores in Q3. [Foreign Language]

You see, as I told you already, we have to told that in the last quarter, there was this U.S.A. [Foreign Language], everything is closed. So that's why also it is less.

3 weeks. They resume holidays.

Okay. So is it possible to quantify [Foreign Language] export to auto OEMs got delayed because of holidays and election?

Sorry, we could not get your questions. Hello?

Sir, the line got disconnected. We'll move on to the next participant.

Yes, please move to the next participant.

The next question is from the line of Senthil Manikandan from iThought PMS.

Sir, just 1 question. On the export OEM side, so we had this aspiration of doubling the FY '22 sales of around INR 40 crores to around, let's say, INR 400 crores. So if you can just explain where are we on that journey on the export volume side and any change in that trajectory, sir.

This year, we would be crossing INR 200 crores -- INR 225 crores automotive exports, okay? And next year, definitely, it will increase further. And we are expecting very good sales performance to automotive and exports in next 2 to 3 years. So INR 400 crores will be achieved in coming years.

[Operator Instructions] We have our next question from the line of Vivek Kumar from [indiscernible] LLP.

Sir, can tell us what is the growth rate that you're expecting over the next 2 to 3 years, sir, sales growth?

Sorry?

Sales growth rate you're expecting for the next 2, 3 years because export OEM, we are expecting to do very well.

Yes, definitely in double digits.

And we'll go to that INR 400-odd crore export OEM in the next 2 years?

We expect -- seeing how the situation in the worldwide, the things are very confusing. But so far we are concerned, our position is okay. If this automotive companies does good, then we may reach that stage. But it's never -- you cannot confidence every time there is up and down, up and down. So [indiscernible] right manner, then, yes, in 4 years' time, we may reach.

We have our next question from the line of Rushabh Shah from Berger (sic) [ Buglerock ] PMS.

I had one question. This marine product, which you have started sometime back, if you could give any sense how is that segment growing for us?

Marine business?

Yes.

Yes, marine business, we have taken part in 3, 4 different exhibitions, and we are getting good result, and the business is increasing every month.

So who -- okay.

A few additional lines we have added this -- and has given good satisfactory results. Everything, when you enter in a new business, it's not that suddenly you will start getting good business because people have to understand you, they buy first a few material, they see what is the result, then they keep on moving. So wherever we have sold the material, we are getting the repeated one. And gradually, it will increase.

The next question is from the line of Dhruvesh Sanghvi from Prospero Tree Asset Management.

Sir, [Foreign Language].

[Foreign Language]

We always talked about 3 years plus -- 3 to 4 years.

The next question is from the line of Rachna from SiMPL.

Sir, can you tell me the total volume sold for this quarter? And also, can you give me a breakup of volume as for each and every segment versus this quarter and same quarter last year?

We can tell you the total volume, 72.15 lakh meters, but we cannot give you segment-wise back up...

Contribution of export volume to total, what would that be?

Yes, yes, export is around the 20%.

We have our next question from the line of Viraj from SiMPL Innovative Brands.

I just have one question. Last 2, 3 quarters, we've seen a good improvement in our gross margin. So how much of that is because of lower raw material prices? And how much of the improvement is due to favorable mix?

Hello?

Yes, can you hear me?

Yes, I can hear you. Please.

Yes. Question is on gross margin. We've seen a good increase in our gross margin in last 2, 3 quarters. So much of the improvement is due to lower raw material prices and how much is due to favorable mix?

Yes. You see the increasing in gross profit includes everything, not only one thing, but that because of one thing, it has been increased. It is because of your good productivity, because of your good sales in exports, we are doing good. Their margin is good. There are so many reasons...

Product mix...

It's not that it is something specific has been done because of that it is. It is the mix of everything. It's not that because the prices have gone down, profit has increased, it's not like that. Yes. Of course, a little bit raw material prices have gone down. But with that, it is not that big effect. It's a contribution of all the areas.

Second question is in export, in the opening comment, you said that we have got -- we have commenced new orders in U.S., and you also mentioned something on Europe. So can you give a more deeper color? I mean, are we -- is this new customers or new model, which we have commenced or it's a ramp-up of existing models?

No. In the U.S. and South Africa, we have got and started supplying the material again for the new models, okay? We already received the orders in last year and already started. And then we are doing that supply. So just we are updating on that, the sale is happening on the new model...

See models orders are always changing. Old models are closing. New models are coming up and in some models, sales are less, and in some, more. So it is very difficult to say about the models. Only thing we can say whether our sales will increase or decrease. So in any case, the sales are increasing in export OEM. That much I can tell you.

The next question is from the line of Ritika, a shareholder.

And sir, I wanted to know what the outlook for the domestic OEM and replacement market going forward?

Next year domestic...

Because there's been not much growth in this segment in domestic OEM.

Domestic OEM, you see there is -- market is increasing, no doubt. I think it should be better than this year what indication we get. But I can't tell you exactly how much it will happen, but it seems very good...

Okay. And what kind of contribution in terms of revenue do we expect from the new Lithuania subsidiary in FY '26?

European, this we have started just now, just a few weeks back...

It's a retail business.

The material will go from here, it will reach in 1.5 months to 2 months' time. So the result will start getting after -- from April.

Correct. So in FY '26, what type of -- in next year, what type of revenue contribution can we expect from the subsidiary?

[Foreign Language].

You see, it is very difficult to say specifically [Foreign Language]. I can say and continuously from last 4 years, export general is increasing, and it will keep on increasing. Now we are participating in Dubai fare. There also we are going to get good response. So it is very difficult to say that exactly from there, but we know, we have appointed the person there. He is well known and this was a company. And that sales manager we have picked up, and they were doing good business. So we hope that we will be able to do good in European market. European market, whatever we are doing today with that, it will definitely increase 10% to 15%, 15% minimum. I'm talking about European market.

We have our next question from the line of Pulkit Singhal from Dalmus Capital Management.

Sir, my question is on the auto export segment. We have been doing well over the last 2, 3 years in this segment. Can you touch upon some of the reasons that have enabled us to have -- to win or get a higher number of win rate in the RFQs? And do you see that getting better with the kind of global situation of tariffs on these various other countries for us because we would be favorably positioned, I would think.

What would be our future outlook for the auto OEM?

No, no, auto OEM future is very good. You see we are now established supplier in South Africa and this U.S.A. also. And whenever any new requirement, new models are coming, we have been given the RFQ. So it depends on the market. Market is good, and I'm 100% sure that export OEM will increase every year in a good way, minimum 15% to 30%.

Sir, so these tariffs, if they continue, even if at lesser level, I mean, not the current levels, but that benefits us, right? Is my understanding correct?

No. In current scenario, we are talking about the outlook. But what will happen in the future and what will be the tariff, we can't say right now.

You see today, our situation is very difficult. Nobody in a position to commit anything. It depends how the world situation moves. Every day, from America, there is new directions are coming. Everybody is confused. Nobody knows. We can only say that whatever business we are doing and whoever is our competitor in that kind of business, we are there in good portion. This much I can tell you. Because predicting future, at this moment, I think it is very difficult. But overall, I can say that in export OEM because our presence is not that big. So that if something happens, we will be affected too much, it will not happen. We will increase. But I can't say exactly how much it will increase. Because if everything goes normal, 15% to 20% increase will be definitely. This much I can say.

We'll take our last question for the day from the line of Alisha Mahajan (sic) [ Mahawla ] from Envision Capital.

[Foreign Language]. I was just trying to understand that while the Q3 automotive export was impacted because of elections and holiday season. Q4, can we do at least similar to what we did in Q4, just...

Your voice is not clear. We are not getting your clear voice.

Am I audible now?

Yes, it's a little better.

Okay. Sir, I was just trying to understand like while Q3 was impacted because of the holiday season and election in the U.S. , in Q4 can we at least [Foreign Language] because the way exports are ramping up, at least INR 60 crores we can do in automotive export?

We can expect. We can expect better than this quarter, but we can't tell you the clearcut numbers, what would be the revenues from export market in this quarter.

I don't want the exact numbers, and if...

It will be definitely better. Better than Q3.

Because [Foreign Language] that our export orders should start...

It depends on the various factors also. Likewise, in the last quarter, there were some different situations in U.S.A. and holidays were there for almost 3 weeks, 2 to 3 weeks. So that was the reason. Third quarter [Foreign Language]. Actually, basically, our Q2 and Q4 is always better quarter in terms of revenue.

Thank you, sir. That was the last question for today. And I now hand the conference over to the management for closing comments. Over to you, sir.

Yes. I thank you for all the investors for participating in this call. And we will say that we are doing, and we'll be making all our efforts to do better and better. And definitely, we assure you that we will be achieving the good results in coming quarters and years also, and Q4 will be better than Q3. And overall, our performance will be better than last year. And I expect our support from all the investors as we have seen in last years. Thank you very much.

On behalf of Monarch Networth Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.