Mayur Uniquoters (NSE:MAYURUNIQ) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Q2 FY 'twenty seven Earnings Call of Mayur Uniquoters Ltd. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Dhani. Thank you, and over to you, sir. Yes. Thank you, Abhidat. Good morning, everyone. On behalf of Monarch, Net Worth Capital, it's our pleasure to host the senior management of Major Uniquoters. On the call today, we have Mr. Vinod Kumar Sharma, CFO of the company. We will start the call with opening remarks from Vinod Kumar, sir, and then we move to Q and A. Thank you, and over to you, sir.

0:49 Thank you, Rahul. Good morning, dear investors and analysts. It's a really great pleasure to address you as we reflect in the past years 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 Ltd. Q2 FY 'twenty seven conference call. Mayur Uniquoters Ltd. 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 the past years, both in national and international business market.

1:38 Now I would like to start with financial highlights for Q2 FY twenty twenty seven 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 operation on consolidated basis is INR 282.95 crores, PBT INR 79.31 crores and PAT INR 57.99 crores. In the quarter, the consolidated revenue increased by 18, PBT and PAT both increased by 4342% on a Y o Y basis. The revenue from operation on a stand alone basis is INR $2,529.09 crore and PBT INR 70.46 crores and PAT, INR 51.27 crores.

2:25 In this quarter, the stand alone revenue increased by 6% and PBT and PAT increased by 97%, respectively. Further, our endeavor is to make the company a preferred supplier for the leading OEMs in overseas market, especially U. S. And European regions. And in this context, we have we already informed you also that we have some good OEM supply orders in our hands from The U. S, which we have already started making good contribution to our export sales and revenue and overall business profitability. And this sales growth and increased momentum is expected to continue in next two, three years. While pursuing our business interest, Mayur Uniquoters has also been endeavoring to fulfill our responsibilities to our society.

3:16 Under the corporate social responsibility programs, we have contributed towards the regular plantations, around 45,000 plants we already done and they 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 healthcare initiatives, especially childish school development, water and sanitation at the school area, distribution of school bags and books, cloths 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 earning call.

4:05 With this question note, I would like to conclude and request you all to open the phone for questions and answer. Since we have limited time, therefore, request you to please avoid repeated questions. And the segment results, I'm telling you in advance so that you can note down and we can avoid the repeated questions on this. The export general is 33 crores, export OEM, 57.46 crores, total export is INR 90.46 crores, auto OM, INR 62.80 crores, replacement INR 45.02 crores, footwear INR 45.34 crores and furnishing INR $7.19 crores and others, 2.18.

4:53 Domestic total is INR 162.153 crores and total INR $2.52.99 crores. Our total quantity was 77.51 lakhs meters, and we have booked the PU revenue INR 6.28 crores in this quarter. And I would like also inform you that due to casualty happened in the family of Arun G, Arun Bagdhi as our Executive Director, he is not available today to answer your questions. Therefore, I'll try to answer your all questions to the best of my knowledge and I have the information with me.

5:39 Thank you. Over to you. Thank you very much. We will now begin the question and answer session. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Rajna Kupreja from Simple. Please go ahead. Sorry to interrupt, mister... Miss. Your voice is not that audible.

6:26 Hello. Is it better now? No. Little bit better. Okay. Thank you. Good morning. And I have few questions. First is on the volumes growth. If you could give us a breakup of export auto OEM volume for this quarter as well as domestic auto OEM volume growth for this quarter? Growth over previous quarter or Y on Y basis, you want to know? Y on Y both. Y on Okay. Y and Q Q on Q is the volume growth is around I'll be telling you growth. For export auto OEM and domestic auto OEM.

7:12 Okay. Around domestic auto OEM, auto replacement volume growth is around 11%. This is year on year? No, it's Q on Q. And year on year? Year on year, it's around 5%. The total volume OEM? And OEM, 13.5% Y on Y and 5% on Q on Q basis. Okay. And export Y on Y, in fact, it is not a positive growth volume because of certain reasons of U. S. Market.

8:12 What was the reason, if you could please provide some color on that? Basically, market is not responding well in U. S. For last two quarters and the customers are not going for buying the new cars. Therefore, the automotive companies have revised their projections. And accordingly, we are dispatching the material. And this quarter, we tried to reduce our dispatches to U. S. And forced our warehouse to clear their own stock. So the sale which increased is because of clearance of the stock from warehouse and in comparison to dispatch from India.

8:59 That's why the consolidated revenue has increased. Okay. So if you could give some outlook on the company what would export OEM business look like? Yes, definitely, because orders are already in our hands and gradually it now improving. So in coming quarters, definitely it will improve. It will also reflect it in coming quarters. Okay. Second would be on employee costs. Our employee costs have reduced sequentially and on so if you could give reasons for the same? Employee cost, basically it is not reduced because you are comparing from Q1 to Q2, correct? And in Q1, we have booked some extra provisions on account of the change in labor costs.

9:52 And that extra provision we reversed in Q2. That's why you are seeing the lower employee cost. Otherwise, total cost is same, 12.5% yield, 0.5 crores per quarter. Second would be on other income. Other income also has reduced sequentially and on year So on year if you could provide some color on that? No, no. Year on year basis, other income is increasing. But on quarter to quarter, if you see, then it is because of market. You have seen market is not doing well. And the impact is just because of fair valuation of our treasury investment or nothing extra because the income which is we have booked is actually received, but extra income, which is not reflected in that is because of loss in fair valuation.

10:51 Your Sorry to interrupt. May be request to return to the question queue for a follow-up question. Thank you. The next question is from the line of Rahul Picha from MultiAct PMS. Please go ahead. Hello. Thanks for the question. Thanks for the opportunity. Mayur, a question export revenue car, $75.80 crore car. And this quarter were 57 crore, $57.58 export OEM. So next quarter $75.80 crore. Definitely. It it will improve. So improve from current levels and go back to earlier levels, right?

11:38 Improve from current level, yes. And enough order visibility to take it to INR 75 crores, 80 crores, right? Yes, yes, yes. We have already ordered from our U. S. Automotive companies. South Africa is doing well. Only U. S. Is there. So that is also improving. Okay. Thank you. Thank you. The next question is from the line of Anubhav Mukherjee from Persian Capital. Please go ahead. Sir, am I audible? Yes. Yes, you are audible. Sir, can you give some color on your gross margins because they have fluctuated quite a bit over last two, three quarters.

12:26 This quarter, there has been a significant improvement. But again, like Q4 was even better. So what is the sustainable kind of gross margin you see going forward? Sustainable margin, we have already informed you that little bit it is varying because of raw material prices and crude oil prices. So that's why it is sometimes it is going up and sometimes it's going down. Otherwise, gross margin would be similar to what we are showing in last two, three quarters. But for last two, three quarters also it has varied a lot because Q1 was 52%, this quarter it has come around 57%, which is a significant jump sequentially.

13:18 So which is our sustainable margin, yes? Up, up, you can take it around 55%, 56%. Okay. Thanks. That's all the question I had. Thank you. The next question is from the line of Arunachal Chandra from Smiths. Please go ahead. Sir, congratulations on continued good performance. Sir, if you could give some color on your footwear business, how it is going? Since we already discussed in previous quarters that we are more focusing on automotive and especially on export automotive market.

14:04 The domestic market because of high price competition, all we are less focusing. And but we have also told this thing, footwear will be remains same. But in last quarter, it is we are trying to improve footwear market also. And you have seen in this quarter, footwear also improved. So definitely, now it going up. So what would be your ballpark number for volume in footwear business, the proximity number? Yes. I can tell you the range, not exact number because market is very precise. We cannot Yes, Range will work. That will be nearly 5% to 10% on yearly basis.

14:55 Okay. Okay, sir. And what is happening on the PU side, if you can talk about that? PU, we are trying to, in fact, improve the performance of PU and following with the big, big PU customers, chew makers and all, and supplied very huge quantity of samples and waiting for their final conclusion and orders once the discussions and dialogues concluded to the issue of purchase order, definitely, it will start to cleaned up. Sir, one last Utilization is same. Capacity utilization is same. And sir, one last quick question. Since the stand alone growth was less and console growth was very high comparatively, so we can assume that quarter three, quarter four, we will have higher growth in the stand alone when we start dispatch share?

15:54 You have seen in past also. Sometimes stand alone growth, you've seen very higher than the consolidated. And it's just because of higher dispatch quantity from the location, whether it is India or from warehouse. This time, we have reduced our dispatch from India and increased dispatches or sales from warehouse. That's why consolidated margins you have seen improved and better than extended loan. So 10%, 15% overall growth will be continued in both extended and controlled? Correct. Thank you, sir. All the best. Thank you. Thank you. The next question is from the line of Rishabh Pothra from Systematics Group. Please go ahead.

16:47 Hello, sir. Good Good morning. Firstly, has the business in the footwear business shrink from the customers and volume wise? Or is it only volume value wise? No. It has increased the value and volume both. Both. But the traction remains slow. Because our more focus is not on footwear. That's why the where the prices are good, margin is good, we definitely accept the orders and the supply. And we are doing business with selected customers only. Secondly, two, three quarters back, we have stated that we are in talks with some leather accessories companies in Kolkata or Kanpur Bank.

17:38 Any update on that sense? How has it been progressing? Any large quantum of orders available to us from that customer? That's the decisions on deal is going on and we are supplying the samples and their requirement quantity as per their requirement. So that is doing gradually improving the dispatch quantity. Okay. So ramp up is there. I mean, we are sort of in their vendor list now. Possibly there. Lastly, sir, you talk something more about any more color on the furnishing business, how that is shaping up? What is the number of reach we have done in India? Which geography are we more concentrated?

18:32 The furnishing business, textures and views, I'm talking about. Actually, to improve on furnishing business, we already started our retail business. And retail business also doing well. But in the last five, six months, some domestic market on retail segment is not doing well because of price competition. But definitely, we have a very big scope in furnishing market. And for that purpose, we have appointed around seven fifty to 800 sub dealers or dealers and eight to 10 distributors and trying to improve on that also. And definitely, it will also improve.

19:23 But this will remain asset light business. There will be no store year, because of the rates and all. No, no. I'm saying this could be asset light model. We will not deploy funds for setting up of our company owned stores. It will be all dealerdistributor. Not now, but in future when our volume will be up to the desired level and definitely we'll plan. But now at this time, we are not planning. Thank you. I'll come back in queue. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant.

20:08 The next question is from the line of Panu Batra from Ants and Bees Investments. Please go ahead. Hi, sir. Am I audible? Yes. Yes. You are audible. Yes. So two questions, sir. So one is, sir, the price of PVC is increasing and has increased due to the West Asia Crisis and also the shipping costs. So is it consistent as of now because you said it will be continued if the West Asia crisis exists? And are you planning to pass on the increased cost to customers in export market? Because increase in freight cost is because of that war and crude oil prices and all. But now it had gone to a very peak level, which we have seen during COVID and all.

21:11 But now it getting down. And hopefully, in next two, three months, it will be, I think, attached to the normal level. So this is not sustainable. Yes, please. But sir, in the previous call, you said that due to some normalization in between for some period, so you didn't pass on the cost, but if it persists, so you will. So is there any discussion between the customers and you so Same for the price thing I told you. The increase is continued and stable, then we can talk to the customers.

21:57 But if it is short term basis and now you can see it is getting down and a little bit every month. And now I think 20%, 25%, they have already reduced come down from the peak level. That's why we are not even in this position, how much impact will be there to talk with the customers pass on. That's why when the cost is stable and increase is permanent, then we can talk. But right now, we Got it. So sir, one more question. So we have a strong cash flow, right, and almost no debt.

22:45 So I just wanted to know what is the management's capital allocation priority over the next one to two years. So the capacity expansion also that we have been talking about for the Mexico plant basically. So is there any plan for that, a confirmation plan? And if it is there, then are there enough orders to bring up the capacity utilization up to that level after the investment. We'll move on to the next question. The next question is from the line of Shreyash Pattani from SG Securities.

23:35 I had a couple of questions. So first one was on the new order wins. So last that we discussed was like the South Africa and The U. S. Wins. Anything big ticket that we've done after that or like in the last quarters or any potential wins, if you could give some color on that? From South Africa, we are doing business with Mercedes Benz and BMW that is known to you. And in U. S, obviously, Chrysler and Ford is major customers. Other than those, are also talking and trying to get them is WV, VW, okay, Volkswagen. Okay.

24:22 Hopefully, because when the decision starts and getting the orders, it takes two, three years. Okay. It's a big test and sampling and all sharing everything, what it into the final issue of purchase order or agreement stage, it takes time. So definitely, we are hopeful, quite hopeful to get it in our bucket incoming time. But still take time, and I'm not in position to tell you the exact time. But doing our best to get more customers in our hand in The U. S. As well as Europe market.

25:11 Okay. Okay. That's helpful. And the second question is I'm trying to understand how the transfer pricing works between the Indian entity and The U. S. Warehouse exports. So at what margin do we sell to the warehouse? If I look at the stand alone and then that is passed, let's say, it happened to the subsidiary, what is the margins? So I'm just trying to understand that. Basically, whatever expenses we need to incur in warehouse company locally, we used to keep that margin over there and remaining margin we in bill into our billing price.

25:58 Suppose I have the margin of 10%, I'll try to keep 8% margin with me in India and 2% margin with The U. S. Subsidiary companies. So based on the pricing we are doing in margin base. Okay. Because like right now we saw like a big jump in the consolidated numbers, like the consolidated margin jump was also there. So I was just trying to figure that out Definitely. Right Whenever the console revenue is higher than the standalone revenue, definitely your margin will be higher because margin percentage will also add in our stand alone. So that will be improved. And the position changes opposite when our standalone revenue is higher than the consolidated revenue.

26:52 Got it. And that margin which we have booked in standalone will be nullified in consolidation. Got it. Understood. Last question on the additional line that we were thinking of putting, so any update on that one? Yes. The machinery and equipment part is expected in November end of December and we'll try to start installation in March quarter. And hopefully it will start in Q1. Got it. All right. That's helpful. Thank you. That's all from my end. Thank you. The next question is from the line of Nirali Gopani from Uniquity PMS. Please go ahead.

27:38 Yeah. Hi. Thanks for the opportunity. Also, two questions. One is on the CapEx. So until we decide some CapEx on Mexico or anything outside India, any plans to increase capacity in India, maybe a new plant, which we were earlier thinking, any thoughts there? Definitely, we are thinking and have plan in mind for setting up the new plant in India, especially in South Region. And we go outside India, then definitely Mexico. And that is in pipeline and not yet concluded. So once it is decided where we are going, then definitely we'll let you know an update.

28:26 Right. And second question is on succession planning. So are there any further discussions on that side, even in the light of the recent AGM resolution, which was not passed? Any thoughts, internal discussion on the Board level, anything there? Yes. That was also taken up in the Board meeting and discussed for the future. This resolution, we will put up for the approval of the shareholders again with the revised structure because that was not passed on the basis of remuneration part and percussion. So we'll revise and put up again for the approval. And also working on profitizing the entire organization and the structure and third generation also joined six months back.

29:22 So they are also getting some management knowledge and updates and working ideas. So definitely, the management is working on that. Right. Just one small clarification. When you say that the third generation has joined in, is Manu Poddar also handling some part of the business or he's not a part of the business at the moment? He's not directly handling the business. He's not directly handling, in fact, right now. But in future, I can't say anything for the future. Thank you. The next question is from the line of Kavy Jariwala, an individual investor. Please go ahead.

30:13 Hello. Yes. Hello. Sorry, you audible? Yes, yes, audible. Sir, I want to know that the case I would like to understand company's growth outlook for next three, five years. And what was the what is the revenue growth EBITDA margin target company management expected over three, five years? Or and what is current order book and new automotive OEM customers from outside and Your voice is not much clear. Can you repeat your one by one question so that we can hear properly and answer your queries? The current participant has left the queue. The next question is from the line of Rajna Kukreja from Simple. In your opening remarks, you had mentioned about order book from U. S. And they will be good contributors in the business. So if you could provide more color on the same, is it new customers or existing customers or new models?

31:28 Actually, our margin is measly improving because of increase our growth in export automotive market. Because we have a good margin percentage in export. And majorly that is contributing to our overall margin. In The U. S, we have received the very good amount of orders or quantity, majorly Ford and Chrysler. And customers are same, but they have increased their requirement on other models also. Suppose earlier, we were supplying metal for two models, now they have given us orders for five models.

32:19 Okay. Understood. And similarly, on the auto OEM business, that has seen a good growth. So if you could provide some color on that as well? BMW and Mercedes Benz, they are taking material as per their requirement and they have touched almost full projections. So we are expecting that, that will be continued and little bit increase. Okay. And is it now profitable at EBITDA level? Sorry? PU business. If you could provide some profitability of the PU business?

33:10 PU is not in fact generating profit, just but we are managing because of some tax benefits and all. But still, we are operating at 25%, the capsid utilization. And to get the breakeven, we need to operate at 40%. So any particular time Sorry to interrupt, Ms. Kukerija. May we request you return to the question queue for a follow-up question? Hello. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your question to one per participant. The next question is from the line of Pulkit Singhal from Dalmas Capital Management.

34:03 Congrats on a good set of numbers. So my first question is around export OEM itself. This financial year, have we won orders for any new models? And if so, how many would they be? No. The orders which we have received from the automotive companies are same, which we have received in last year, but they have given the projection when to start for which model. That's why it is increasing and showing the increased trend in quarter to quarter or year to year. So orders we have already executed. So if you could yes. So on a consolidated basis, export OEM was how much last year in terms of sales?

34:50 And what is it expected to be in two years? Export OEM last year, it was around 200 CR, okay? And this year Correct. And this year, we are expecting around two fifty to 300. And next two years beyond that? It will further improve 10% to 15%. And export general Sorry to interrupt, Mr. Singh. Maybe we should return to the question queue for a follow-up question. Thank you. The next question is from the line of Manu Bhatra from Ants and Bees Investments. Please go ahead.

35:40 Hi, sir. So one small question. What is the strategic rationale and expected payback from the investment in the Badla Mini grid solar? Yes. It's payback period is two years only, maximum two years. Okay. Yes. Thank you, sir. Thank you. The next question is from the line of Manoj Sa from Laxgur Investments. Please go ahead. Yes. Hi. Good afternoon. Thank you for the opportunity. Just wanted to check about the second half growth. You've dropped the top line of around 21% and the bottom line of around 40%.

36:28 What's the guidance for the second half and for the FY Second half and FY 2027? Yes. Nothing can be said because market conditions cannot be projected in the certainty. Definitely, uncertain market is there. But with this uncertainty, I can tell you, we've always trying to do better and better. And hopefully, will be the current margin will be sustained and it should not come down. It should do better. Top line will remain at around this growth of you will be able to maintain 30% growth?

37:19 It should remain continued and we are also expecting better than. In coming quarters, we will see even better than this. And for the next year as far as Definitely. 20 to quarter, year to year, definitely. And we can see the comparison, majorly, it should be seen on year to year basis, not on quarter to quarter. Sorry to interrupt, Mr. Shah. May we request you return to the question queue for a follow-up question? Sure. All done, mister. Thank you. The next question is from the line of from. Please go ahead. Good afternoon. I hope I'm audible. Yeah. Yeah. Audible. Yes. One clarification I wanted.

38:05 Sir, you say volume 77.5% retail, does it also include the volume dispatches which you have done from the warehouse? Or is it only decided from the some stand alone business, India? It is a stand. We always inform you the stand alone basis volume growth, okay? Okay. And so overall, if if we we include the consolidated number of dispatches and the domestic dispatches, we have at a run rate of INR 90 crores in export only as well. Yeah. What what is your So what is your question? Card, breakup, they are 57.

38:56 Correct. Or console minus standalone Definitely, definitely, definitely. You can add further to this number so that we can get approximate console numbers of automotive export. But ultimately, major portion is automotive in consolidation. Okay. Thanks. That's clear. Thanks. Thank you. The next question is from the line of Pulkit Singhal from Dallas Capital Management. Please go ahead. Yes. Just to follow-up previously, sir, export general also seems to be increasing.

39:42 I think can you talk about some of the areas that are working out for you? What are I mean, why are customers giving you orders on the export general side? Just what overview, if you can give. Actually, of the most of part of this world, we are supplying and trying to catch new customers also to get the new orders. That's why from the existing customers, we are since they are satisfied and they give us repeat orders. So based on that, it is improving. And we have also started some retail company in Europe. So that is also started doing well. So based on that, it is improving and further we are expecting it will continue to improve in double digit.

40:37 Okay. And margins are better or similar than export OEM or is it lesser? No, no, no. Export OEM, retail, but little bit lower than that, but has good margin or domestic margin. The next question is from the line of Mayur from AMPL Asset Management. Sir, auto exports, how much you said last year? Auto export? Yes. What do you want to know? I thought, sir, did you say INR 200 crore auto exports in FY 'twenty six? Last year, last year, no? So last year is FY 'twenty six, right? Yes, yes. Correct.

41:26 No. So I thought the range of INR $2.85 crores to INR $2.90 crores in FY twenty six. You just want to confirm that number, please? I'll check it again because export OEM is basically happening from U. S. And South Africa, correct? And INR 100 crores and nearly INR $2.50 crores around. Yes, correct. Last year, it was INR $2.60 crores. And this year, we are expecting 300 crores of Bhaskar. So, Mahser, again, coming because I have quarterly numbers, the numbers that you were disclosing quarterly compound, that number is up to $290,000,000 Again, there cannot be a discrepancy like you are now saying $250,000,000 $260,000,000 it was $290,000,000 Let me check again and confirm you, okay?

42:23 75 and INR 100 and INR 200 crores. Sir, how did you say INR 200 crores then, sir? Sir, you are considering the consolidated numbers for automotive? Yes. So that consolidated numbers is okay. Okay. Meaning how much? You are correct. That is nearly $2.80. So initially, you said 200 and now you are saying $2.80, is it? $2.80, yes. Okay. Thank you. Ladies and gentlemen, we take that as the last question of the day. And now I would like to hand over the conference to the management for closing comments.

43:16 Yes. Thank you, all the participants and investors and analysts for spending your time for this Q2 conference call. And we will again say that our management company is doing definitely well and management is trying to do further well in all aspects of the business. And we are definitely, we more focusing on automotive exports and automotive business. Therefore, we'll try to do some better and give the better results in coming time and quarters. Thank you. And who's over left to ask questions, they may directly contact to us and we'll try to reply to their satisfaction.

44:04 Thank you very much. Thank you. On behalf of Mayur Uniquoters Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.