Becoming A Preferred Supplier Will Expand US And European Automotive Exports

Key Takeaways

• Focus on becoming a preferred supplier for OEMs in the U.S. and Europe aims to boost revenue, especially in the automotive sector.
  
• Establishing a subsidiary in Lithuania and potential setup in Mexico may expand market reach and enhance production capabilities, supporting future earnings growth.
  
• Uncertainties in tariffs, competition, and Capex decisions could hinder Mayur Uniquoters' revenue growth and strain margins, especially in key segments and markets.

Catalysts

Engages in the manufacture and sale of coated textile fabrics in India and internationally.

• The plan to become a preferred supplier for leading OEMs in the U.S. and Europe suggests an increase in export orders, which is expected to boost revenue significantly in the coming years, particularly in the automotive segment.
  
• The establishment of a subsidiary in Lithuania to start business in general and furnishing segments in Europe indicates potential for revenue growth and market expansion in European markets.
  
• The ongoing CapEx discussions and potential setup in Mexico—or another favorable location—could enhance production capabilities and expand market reach, positively impacting future earnings.
  
• An increase in automotive exports to regions such as South Africa and the U.S. with new model orders, despite existing global competition, indicates potential for substantial growth in export revenue and market share.
  
• Strategic initiatives focusing on corporate social responsibility and community engagement may improve brand image and stakeholder relations, potentially supporting long-term revenue growth and stability.

Mayur Uniquoters Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Mayur Uniquoters's revenue will grow by 9.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 16.5% today to 17.5% in 3 years time.
• Analysts expect earnings to reach ₹1.9 billion (and earnings per share of ₹44.55) by about March 2028, up from ₹1.4 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 24.6x on those 2028 earnings, up from 14.6x today. This future PE is greater than the current PE for the IN Chemicals industry at 23.9x.
• Analysts expect the number of shares outstanding to decline by 1.35% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.51%, as per the Simply Wall St company report.

Mayur Uniquoters Future Earnings Per Share Growth

Risks

• The imposition of tariffs on Mexico and Canada could create uncertainty and affect the company's decisions on capital expenditures, impacting potential future earnings growth.
  
• The competition from Chinese manufacturers in the automotive export market, especially to the EU and U.S., poses a risk to revenue if Mayur Uniquoters is unable to maintain or grow its market share in these regions.
  
• The ongoing uncertainty in decisions around Capex, such as the establishment of a plant in Mexico or elsewhere, could delay expansion plans and negatively impact projected revenue growth.
  
• The negative PBT (Profit Before Tax) in the PU (Polyurethane) segment, despite increased sales, could strain overall net margins if the segment does not turn profitable in the near future.
  
• Delays in ramping up export orders for new models in the U.S. automotive market due to political and economic uncertainties, including factors like tariffs and holidays, could lead to fluctuating earnings.

Valuation

• The analysts have a consensus price target of ₹791.333 for Mayur Uniquoters based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹11.1 billion, earnings will come to ₹1.9 billion, and it would be trading on a PE ratio of 24.6x, assuming you use a discount rate of 13.5%.
• Given the current share price of ₹468.9, the analyst price target of ₹791.33 is 40.7% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.