Mayur Uniquoters Limited (522249) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Mayur Uniquoters Limited Q2 FY '26 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 Limited. Thank you. And over to you, sir.

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

Thank you, Rahul. Good afternoon, dear investors and analysts. It is 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 Quarter 2 FY '26 conference call. Mayur Uniquoters Limited, being a 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 as well as international business markets. Now, I would like to start with financial highlights for quarter 2 FY '26 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 a standalone basis is INR 237.76 crores, PBT INR 64.63 crores and PAT INR 48.10 crores. In the quarter, standalone revenue increased by 15%, and PBT and PAT both increased by 17% on a quarter-on-quarter basis. The revenue from operations on a consolidated basis is INR 240.31 crores, PBT INR 55.61 crores and PAT INR 40.84 crores. In the quarter, the consolidated revenue increased by 8% and PBT increased by 1%. Further, our endeavor is to make the company a preferred supplier for the leading OEMs, especially in overseas markets, U.S. and European regions. And in addition of this, we have already received some good export orders from U.S.A. and OEM supplies, which is resulting in a good contribution in our top line as well as bottom line. And this 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 towards society. Under the Corporate Social Responsibility programs, we have contributed towards the regular plantations and 45,000 plants we have already planted and completed and have a plan to do it at a 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 underprivileged children, various health care initiatives, especially child skill development, water for all, sanitation at the 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 earning call. With this positive note, I'd like to conclude and request you all to open the forum for question and answers. Since we have limited time of 40 minutes for call, therefore, please avoid repeated questions. Over to Rahul.

[Operator Instructions] The first question is from the line of Awanish Chandra from SMIFS.

Congratulations on a strong set of standalone performance. Sir, my first question is related to standalone consol PAT. So, sir, the PAT at standalone looks pretty high as compared to consol PAT. And we understand the reason because it happened before as well because of the inventory creation and all. But can you sir explain why this is such a huge difference? Are we not able to give the delivery to the client or any other issue we are facing? Or is it just a normal business operation?

In current scenario, where the demand is increasing for the automotive supplies in U.S., especially in U.S. where they provide us the 3 months or 4 months the requirement in advance, so we dispatch the material from India to U.S. And that's why in the quarter, we have dispatched the material, which resulted into increase in our bottom line and top line, both in standalone. But the material is -- some of the material is still in transit and some have already reached to the destination, which is still in warehouse. So till the material is in warehouse, the actual realization will not reflect in consolidated results, where that material will be ultimately sold from the warehouse, then it will reflect in our consolidated results. That's why the material -- the impact of this gap in consolidated and standalone bottom line is because of inventory increased in warehouse.

So, this will get shifted in subsequent quarter in consol? So...

Yes. The result will be reflected in next quarter, but it is a continuous business process. It will be continued in next coming quarters. Sometimes the dispatch from the India is higher than the actual sale from the overseas. Sometimes the actual sale from overseas, our subsidiary companies is higher than the dispatch -- actual dispatch from India. At that time, when it is higher in overseas companies, then our consolidated top line and bottom line will be more than the standalone.

Okay, sir. And sir, in your opening remarks, you talked about more orders on the export side. So, could you give us some details how it will change our run rate in subsequent quarter or in coming years in terms of volume or value, whatever you want to give?

In coming quarters, as per the requirement, we will dispatch and plan -- dispatch from the warehouse. And if the requirement comes to us for more quantity, then definitely, if it is not available in warehouse, then we will plan to dispatch from India. So, that will be adjusted in coming quarters.

Okay. And sir, order increase, the run rate what we have today in quarter 2, this will be maintained or this sales run rate or export side will increase in coming quarters?

Yes, yes, yes. As you've seen in last quarter, June quarter, it was 38% to 40%. Now it is 42%. So it will be keeping increased.

Okay. And sir, any update on the PU side of the business?

PU also increasing gradually. In last quarter, we have increased around -- let me tell you -- we have increased volume around 12.5% and value 48%.

So, absolute figure would be around INR 7 crores, INR 8 crores in this quarter as well.

Yes, yes, yes. Total volume, we have touched INR 7.80 crores.

Okay. And sir, last question on the margin side.

I'm sorry to interrupt Mr. Awanish. I request you to rejoin the queue. [Operator Instructions] The next question is from the line of Vaidik from Monarch Networth Capital Limited.

Congratulations, sir, on good numbers. Sir, my first question is related to the gross margin. As we can see that the PVC prices have started to correct, but our gross margins are not getting improved on a Y-o-Y basis. So, any reason behind that? What has impacted our gross margins despite the PVC prices declining?

Gross margin is also increasing. If you see in this quarter, our gross margin has increased 2%. And if we compare then in last quarter to this quarter, our gross margin has increased around 4%, 5%.

I'm talking about on a consol basis, the gross margin have contracted by 238 bps in the first quarter on a Y-o-Y basis.

Consolidated basis also increased 2% on Y-o-Y basis. 2% because we are keeping some provisions for old inventories also. Therefore, it is not getting full reflection. But yes, it is increasing, gross margin is also increasing on a consolidated basis. But because of that provisions for old inventories, this impact is coming.

So it is because of the provisions which we've taken, the gross margins have been impacted?

Yes, yes, because ultimately, provision will affect the inventory value.

The next question is from the line of Dhaval Shah from Girik Capital.

Sir, my question is how much of the tariff burden you had to share in this quarter?

Tariff burden? So far, we have not impacted with tariff because we are supplying through Mexico, our warehouse. And the customers who are taking material from us all are located in Mexico-U.S. border. They are taking the material in Mexico and making the seat covers and supplying to their customers in U.S. So, this tariff is not impacting us so far.

Okay. Okay. And sir, what is the reason for difference in EBITDA margin between standalone and consol?

I already told you, because of this inventory, the material which we are dispatching from India to the U.S. companies, that material initially goes to the warehouse. But till that time, it is the material in transit or warehouse, actual reflection will not come in consol basis. It will reflect in standalone, but consol basis, then it will be actually realized on actual size to the customers from the warehouse. So, this is a continuous process and stock transfer to foreign companies.

Okay. But isn't there any way out for this because the difference in margins is very large. So is this the only way of accounting this or...

Simple accounting. Suppose I'm dispatching the material of 1 lakh meter from India. And it is going to the warehouse of the U.S. and the actual dispatch from warehouse to customer in the U.S., if it is lesser than 1 lakh meter, which has dispatched from India, then consol will be -- results will be down. And if the actual sell is higher than the material dispatched from India, then consol results will be higher than the standalone. This is a simple theory or simple formula, the consol and standalone results difference.

Okay. Okay. And sir, what is our current capacity utilization?

75%. More than 75%.

75% to 77%.

75% plus, okay?

75% plus.

The next question is from the line of Arnav Sakhuja from Ambit Capital.

So, could you please give the breakup between export and domestic sales, both for OEM and others?

I request you all to note down because this question will come in to us frequently. So, you all please note down the breakup. Export general, INR 29 crores; export OEM, INR 71 crores. Total exports is INR 100 crores. Auto OEM domestic, INR 49 crores; replacement, INR 36 crores; footwear, INR 43 crores; furnishing, INR 8 crores and remaining is others, which comes to INR 138 crores and total is INR 238 crores.

And just wanted to ask one question about the guidance. So are we sticking to our earlier mentioned guidance of around 12% to 15% revenue growth and 15% to 20% profit growth for FY '26?

Yes. We are sticking to our earlier guidance, I think. So more or less, things will be around that figure only.

The next question is from the line of [ Jaimin ] from [ Yaha Dekho Asset Management ].

In the earlier call, you also mentioned ongoing discussion with Ford in South Africa. And also you were doing pilot trials with international brands like H&M and adidas. So has there any further progress on a tie-up or a trial commitment with this client or any other global brands for the domestic or South Africa region?

I think so maybe there is some mistake. Ford, we were talking about the American market, not just the South Africa market. So, maybe there was some misunderstanding in the past, I don't know. So obviously, there is a lot of improvement in that direction. Regarding the 2 brands for India like for sports shoes that you mentioned and H&M, still talks are going on. Samples are submitted, but no agreement has come to effect till now.

Okay. And can you just give us the volume and volume number for the quarter?

We can tell you the total numbers, not...

Yes. Total number, sir.

Yes. 8 million meters for the quarter.

The next question is from the line of [ Siddharth Kumar ] from iThought PMS.

I just want to know like I missed some of the numbers that you gave. Auto domestic was INR 48 crores, right? And after that, you said something like INR 75 crores.

No, auto replacement, INR 36 crores.

Okay. Replacement is INR 36 crores and then?

Footwear.

Footwear is how much?

INR 43 crores.

INR 43 crores. That's all.

Yes. No then, furnishing...

Then furnishing is also there. If you have noted down, if not, then you can note down again. Furnishing is INR 8 crores.

INR 8 crores. Okay. So how is the export auto market in terms of how is the sentiment? And do you think you can exceed the earlier guidance that you gave?

So the export automotive market is growing because of additional business. And we expect that the business will grow this year also and in the coming 2 years also.

Okay. Any new deals or any new models, which are coming online in the next, let's say, 1 or 2 years?

See, the business is increasing.

So, yes, obviously, new models also has been added. And as we have told before also, some business with Ford is also increasing.

Sorry?

With the current customers, new models has also been added. And with Ford also new business has also been added.

Okay. So I just want a clarification. So currently, you are supplying for Benz and BMW?

All part of it. So, Benz and BMW is in the South Africa market. Our major export is to the U.S. market with Stellantis Group and Ford, and the business is increasing with -- mostly with Stellantis and Ford and some portion with Daimler also.

Okay. Understood. I just want to know what will it take for, let's say, Mercedes and BMW to give you guys approval for their U.S. operations?

So, they are currently not looking and maybe putting up a plant over there might help us getting business over there, but there's a lot of confusion in the market right now. So we are -- that facility is on hold right now. They are selling to other markets also, but like strategically, they would like us to invest over there.

The next question is from the line of Nikhil from SIMPL.

Congrats on good set of numbers. My question was on the new capacity, which we were talking of putting in South India and earlier call, it was in Mexico. So, can you give some more clarity on what is the need for the capacity in India? Between India and Mexico, where would you prefer capacities?

So, okay, like we are already running with 75% capacity, and we are expecting a top line growth also. So definitely, capacity will be required. Now, South India strategically because we have a lot of footwear customers over there, there are lot of automotive customers over there. So it will be an added advantage if we have a capacity over there. Mexico because, as I told earlier, a lot of our customers want us to be there, but the business case scenario is on hold for the time being because of strategic reasons.

Okay. And the South India capacity, like any plan we have further in terms of land acquisition and by when we want to...

Can you be louder? Your voice is not clear.

I was trying to ask is that when are the plans for South India capacity final? Like when are we starting the groundbreaking and when do we expect commercialization? Any plans you may have for that?

We have not taken a definitive plan, but we can say very soon. I cannot give you a number [Foreign Language]. We are discussing about it. [Foreign Language] We will take a decision soon. We have not decided on the time exactly right now.

Okay. It's still on the board then?

Yes.

Okay. And how many -- how large will this capacity be whenever we plan to launch, like how many units kind of, similar to what we have in Jaipur or like a smaller?

No, no, no, not in Jaipur. So, like our first aim would be to put somewhere outside Jaipur and most probably in South India. And for Mexico, we told you because of strategic reasons, we have put the plan on hold for the time being. But definitely, definitely, that will not stop us from getting business from our current customers. And the capacity obviously will increase if we put in South India also.

The next question is from the line of [ Manoj Dua ] from [ Jio ].

Can you tell me -- just give me a little color on every division, how -- what is the outlook and present situation of the divisions we are like export, domestic, leather, footwear and furnishing, just small outlook?

So, as we have said before, like our export business will grow much faster than the domestic business. So overall business plan, the domestic business should grow between 8% to 10%. The export business will grow 15% or somewhere more than that.

Footwear. And domestic including domestic auto, footwear all into it?

Domestic is like -- it's a number of the total volume of domestic business basically, yes.

Okay. I couldn't get the PU sale number and what loss we made this quarter And earlier, we were mentioning about some -- we are trying to increase the production by talking with Zara, et cetera. Any big breakthrough we expect or something where we are -- I know we are trying for that. Can you give some color on PU forward?

Ladies and gentlemen, management line has been dropped. Please stay connected while we connect with the management. Ladies and gentlemen, we have connected with the management line.