Mayur Uniquoters Limited (522249) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Mayur Uniquoters Limited Q1 FY '27 Earnings Conference Call hosted by Monarch Networth Capital Limited. This conference call may contain forward-looking statements about the company, which are based on this call, beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Dani. Thank you, and over to you, sir.

Yes. Thank you, Anushka. Good afternoon, everyone. On behalf of Monarch Networth Capital, it's our pleasure to host the senior management of Mayur Uniquoters. On the call today, we have Mr. Arun Bagaria, Executive 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 in 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 Q1 FY '27 Conference Call. Mayur Uniquoters Limited, being a market leader in the synthetic leather industry and an organized player, has been able to leverage emerging opportunities and delivered exemplary performance in past years, both in national as well as international business markets. Now I would like to start with financial highlights for Q1 FY '27 under review, and we will also reply to your queries after our review of the financial results for the quarter. The company has achieved the revenue from operations on a standalone basis is INR 247.03 crores, PBT INR 77.79 crores and PAT INR 58.95 crores. In this quarter, the standalone revenue increased by 20% and PBT and PAT, both increased by 41% and 43% on Y-on-Y basis. The revenue from operations on consolidated basis is INR 269.23 crores, PBT INR 74.12 crores and PAT INR 56.12 crores. In this quarter, the consolidated revenue increased by 25% and PBT and PAT, both increased by 35% and 38%, respectively. Further, our endeavor is to make the company as a preferred supplier for the leading OEMs in overseas market, especially the U.S. and European regions. And in this context, we have received some good OEM supply orders from U.S.A., which have already started making good contribution to our export sales revenue and overall business profitability. And this sales growth and increased momentum is expected to continue in the next 2, 3 years. While pursuing our business interest, Mayur Uniquoters has also been endeavoring to fulfill our responses to our society. Under the corporate social responsibility programs, we have contributed towards regular plantations around 50,000 plants already done and have a plan to do it at larger scale 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, et cetera, and most importantly, family planning and family welfare schemes in nearby villages. The state government has also recognized these initiatives on various platforms. I'm thankful to all the investors for their valuable time to those who became the part of this earnings 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 a limited time of 45 minutes for the call, therefore, request to please avoid repeated questions. And I'm also giving you the segment breakup, you may note down. Export general 30.24, export OEM 73.56, total exports is INR 103.80 crores, auto OEM domestic 56.08, replacement, 36.52, footwear 41.16, furnishing 6.08 and other 3.38 and total domestic sale is 143.23. Total is 247.03. Over to you.

[Operator Instructions] We take the first question from the line of Shubham Jain from NV Alpha Fund.

I hope I'm audible. My first question was the growth that we have shown in this quarter of 25%, how much of that was driven by volume and how much of that was driven by realization?

The growth is driven by the volume is around 2% and remaining growth has come from price part.

Okay. And this realization increase is because of raw material price increase? Or is this because of mix change?

It's a mix change.

It's a mix because not only raw material prices, it is because our export business has grown, so it's a higher price item. So that's the reason for the growth.

Understood. Understood. My second question was on, we were going to expand another line in our existing facility, and we were evaluating a greenfield expansion as well. So what's the current plan in terms of expansion? And what is the CapEx plan that we're planning to do over the next 1 to 3 years?

So we have already intimated in the last call also, so we have already ordered the line for our expansion in our current premises. So we should be able to start our production by -- towards the end of this financial year, somewhere between February, March 2027. So we'll have an additional production capacity of 5 lakh meters. So we are looking at 2 more expansions, but that is not finalized till now. One may be outside India. And one may be in India, but that is India will take a longer time because we are already expanding our operations over here. So if we go outside India, we are still evaluating where we want to put. We have not taken a final call on that. Once we take the final call, we'll let you know.

Understood. So just a follow-up on this. We've been speaking about this international expansion for a while.

Sorry to interrupt, Mr. Shubham.

Ma'am, it's a follow-up question on the previous question itself.

Okay. I'll just tell you because, see, there's a lot of volatility in the market. We are still getting business with the current setup right now. We definitely need to put more plants somewhere outside India. But because of all this Trump tariff, the West Asia war or multiple things happening in the last few years, we have not taken a final call where -- which should be the ideal location to put our plant. So it could be in Mexico, it could be in U.S., it could be in some other NAFTA areas. We are still considering various options, but there's so much of volatility in the market. So it's not easy to decide where exactly we should put the plant right now.

Understood. Understood. And based on the expansions that we have already done, what is the peak revenue that we can do as per realizations today?

So the expansion that is by adding one more line?

Yes.

So just simple, like if you just add 5 lakh meters into INR 300 linear meter average price, so it will just give you the -- it's around INR 150 crores more per year annually, then we have some capacity in an additional facility also. So maybe an additional of INR 300 crores to INR 400 crores, but it depends also a lot on the product mix. So like are we expanding more on the export front? Or are we expanding more on the domestic front? But anywhere between INR 250 crores to INR 400 crores could be a figure that you can see depending on the product mix.

We take the next question from the line of Molecule Ventures.

Yes, first of all, congratulations on a good set of numbers yet again. So first, I wanted to ask you regarding the volume mix that we have mentioned, the export mix, sorry. So can you just repeat that, if it's possible? What was the percentage?

All the numbers or only export and domestic?

Yes, export and domestic.

In total, export total was...

Yes, total.

Yes, export is INR 103.80 crores and domestic is INR 143.23 crores.

Okay. Sir, a follow-up regarding exports. So in the last con call, you mentioned that it has -- the margin expansion is primarily because of value-added mix and the growth coming from the export market and a sustainable number would be between 25% to 30%. So what was the reason that sequentially we basically did not continue with the same trend on the margin? And going forward, what is our outlook on the export market?

No. This margin is -- actually, we told you earlier also in our previous con call that margin -- sustainable margin will be 25 plus 1% or 2%. But last quarter, it was abnormally high because of foreign exchange increase in -- abnormally high increase in foreign exchange rates. So that was a onetime increase basically. But this present quarter's margin will be sustainable and expected to continue.

Okay. Sir, any reason for this 2% volume growth? Currently, what is the capacity utilization of our existing capacity?

So we are utilizing somewhere between 75% to 78%.

Okay. And how much would this 5 lakh meter attribute to in terms of capacity addition?

I just told you the figures just 2 minutes back. So basically, so we have an installed capacity of 3.5 million. So it will be like -- for PVC, I'm talking about. So it will be 4 million meters per month basically. But it depends again on the product mix. So if we are making more products based on less thickness, like maybe 0.8 mm, it could be 4.1. And if we are making more thicker products, it could be 3.8. The capacity also depends on whatever product we make, but you can say somewhere between 3.5 million to 4.2 million meters per month.

Why I'm trying to understand this, sir...

Sorry to interrupt, Ms. Saloni.

This is the last question from me, ma'am. So what I'm trying to understand for is because we are already operating at 75%, 80% capacity utilization and the INR 50 crore additional line won't basically move that much. It's just the major CapEx that we've been planning for a long time now, which, again, as you mentioned, we are still evaluating. So I just wanted to understand your perspective on the next leg of growth. So how much time would you think will it take for us to finalize on the time line and start with the major CapEx?

So we have already said that you can expect a top line growth of between 10% to 12% for the next 3 years. This is what we can say currently right now. And this we have mentioned very clearly on this thing. So anywhere between 10% to 15% growth because certain things sometimes you plan and it's not in your hands. So anywhere between 10% to 15% growth, we are not looking very strong growth in the domestic market. But yes, we are looking at a very strong growth in the export market.

[Operator Instructions] We take the next question from the line of Viraj Kacharia from SIMPL.

Congratulations on a good set of numbers. Two questions, sir. One is if you -- when you say 2% volume growth in the quarter, export for us would have seen a higher volume growth. So that would mean that the domestic piece would have degrown. And if you see the market, especially auto, production itself has been upwards of 18%, 20% year-on-year.

Okay. That is not necessarily true, excepting domestic footwear market where we have had a degrowth in the last quarter. I think so we have -- if you compare Y-o-Y from last quarter to this year's quarter, I think so we have grown on the domestic front also. And there's a degrowth in the export OEM market because the business -- the shipments will start going more from this quarter onwards. So it's not that there is a decrease in the domestic market and increase more in the export market. Exactly, you can say how much value you can say.

I mean, if you can just give volume growth for domestic and export.

Volume growth for domestic and export is in total. Export is 9% plus is the growth rate and 1% is domestic growth rate. Overall, 2.77%, around 3%, you can take it.

Yes. So my point is in domestic, we have just had a flat growth when the auto production numbers have seen a very healthy growth.

But again, some markets perform well -- has performed well in the last quarter. Some markets have not performed very well. So specifically, our footwear business, because you have to understand the price of raw material for footwear, not only the PVC prices, the sole prices increased drastically to -- it went up to almost like 2x, 3x last year -- sorry, in the last quarter. So obviously, the market was muted in the footwear segment.

Okay. Second question is, sir, see, if you look at our overall volume growth, which you shared, export has grown by 9%. And typically, that is also where you have the highest margin. But if you look on an EBITDA or a gross margin basis, we have seen some moderation. I understand last quarter is not a true benchmark to look at. But given the increase in mix, one would see -- so was there any under-recovery of raw material, which needs to be passed on to the customer? Just trying to understand.

[Foreign Language] sometimes it takes time. Sometimes for strategic reasons, you don't increase the price for some customers, not for all customers. So obviously, there was an increase in the raw material prices, which started happening in the month of March. And the market has been very volatile since then. The prices went up very sharply, then there was a fall in prices of some raw materials. Then again, the prices went up again. So it's been a very volatile situation. So it's very difficult to predict situations, which is out of our control. So it's something that no one can predict. No one knows what will happen with the West Asia war tomorrow. Things look very stable right now. So obviously, whatever projections we give, we give based on our normal market situations. Certain situations are not in our control, which we cannot predict right now.

No, I completely agree with you, sir. I was just trying to understand if at all there was a under-recovery or not. I understand the environment we are in is very volatile. Last question.

[Foreign Language] last quarter [Foreign Language] we are just giving you a picture on the long-term prospect of the company. We are not commenting what is happening in the next quarter, what will happen -- what happened in the last quarter or what will happen in the quarter after that. Whatever we are talking about right now, we are talking about the long-term perspective of the company. So [Foreign Language] whatever we are saying we should be able to achieve.

Mr. Viraj, I would request you to join back the queue as there are several participants waiting for their turn. We take the next question from the line of [ Kiran ] from TableTree.

A couple of questions. Sir, our export OEM last year same quarter, like Q1 FY '26 was INR 53 crores. This year, we did INR 74 crores, which is a 39%, 40% increase in the export OEM space, which is fantastic growth when I compare to same quarter. [Foreign Language] Is it like -- I mean, even accounting for raw material price increases, is there anything where we are facing pricing pressure on export OEM market?

[Foreign Language] And secondly, because of this war, the shipments cost have also increased. It's 4x higher, the shipment cost was increased.

[Foreign Language] You have to see how the market because, see, the war started, then the war died down also. We initiated requesting for a price increase, the prices started coming down, everyone thought [Foreign Language] which was very unexpected. So obviously, we have not taken a price increase in the export market [Foreign Language] raw material prices went up beyond that also. But we had requested, but we had not pushed because [Foreign Language] prices started coming down also very fast. So we have not taken any increase from my customer in the export market right now, OEM export market at least for the time being.

Got it, sir. That is very helpful. Second question, sir, our other expenses quarter-on-quarter, like March quarter to this quarter, INR 9 crores [Foreign Language]. So is it a combination of ForEx losses and shipping or only shipping?

No, it's mixed reasons. Some shipping cost, I already told you, shipping cost increased in this last quarter, 4x, okay, for the export and some traveling cost and other service cost, legal and professionals, et cetera, which we have incurred on that account. That expenses have increased in this quarter.

Got it. So this will be a recurring expense, because freight cost has been elevated for a substantial number of months.

No, we cannot say that this will be continued. But since the situation -- war situation will be improved, then definitely the freight charges may come down.

Sorry to interrupt, Mr. Kiran. I would request you to join back the queue.

I mean that was just a clarification, but, yes, fine.

Majorly because of this freight increase and remaining is some service providers cost and this troubling and risk coverage cost. That is...

[Operator Instructions] We take the next question from the line of Aman Soni from Seven Alpha Investors Private Limited.

Am I audible?

Yes, yes.

Because of the recent FTA signed by India, how do you see our business from leather segment to shape up over the years? Maybe in next 2 to 3 years, how do you see growth coming in?

I think this is a very positive move for India. Definitely will be more effective in terms of cost. The sentiments of the customers to procure from India will definitely increase. So -- and definitely, especially in the Europe market [Foreign Language] maybe customers might think of buying from India, which they were avoiding because of their derisking policies. So it's a very positive sentiment. Cannot comment just the business [Foreign Language] right now. But yes, a very [Technical Difficulty]

Ladies and gentlemen, the line for the management has been dropped. Please wait till I rejoin the management. Ladies and gentlemen, thank you for waiting patiently. The management's line has been connected. You may proceed. Sir, you may proceed.

Yes, please.

Sir, can you please spend some time on explaining the current competitive landscape in the industry because we are seeing that automotive seating space is getting traction. For example, recently, Uno Minda announced their entry in high-value automotive seating systems. As newer players are entering, demand for synthetic leather will increase. So does the attraction for newer players to enter in this space, are you able to see that happen?

Okay. So [Foreign Language] I told you our main area of degrowth in the domestic market has been footwear only. Definitely we are getting more business from the automotive OEMs also. And the business is not dependent on Uno Minda. The business is dependent by the OEM. So on which business model you get the business. So basically, Tier 1 could be Uno Minda, but Uno Minda is more into 2-wheeler seats right now because they have taken the plant -- they had purchased the plant from Harita, I think, 4 years back or 3 years back. So we are already a supplier to them. They are also entering the 4 segment market, but depends on which platform they get the business and which platform [indiscernible] gets business. So the business is driven by the automotive. Nevertheless, our main 4-wheeler business, which we are lacking right now is volumes from Tata and volumes from Mahindra. So our business from Mahindra will be increasing in the coming years. Tata, we are still in a very initial stage right now. Definitely, we should get some business, but which platform is very difficult to comment at this moment.

The line for the participant has been dropped. We'll just proceed with the next participant. We take the next question from the line of Raman Kerti from Sequent Investments.

Sir, can you hear me?