Mirza International Ltd
Listed on both NSE: MIRZAINT & BSE: 526642
Currently trading around 91 with a market cap of around 1100 crores.
Promoters hold 73.78% stake.
It has a Total Debt of around 190 crores.
Mirza International Limited is one of India's leading manufacturer and marketer of leather footwear and finished leather.
Incorporated in 1979 as Mirza Tanners Pvt Ltd by 2010 Padma Shri awardee Irshad Mirza & Rashid Mirza. Today the company has grown to almost 1000 crores with established footprint across 30 countries
The company supplies to many international brands and also owns international brands such as "Redtape" and "Oaktrak".
Almost 70% of the business of the company comes from overseas sales and out of that almost 60% of the total overseas sales are from United Kingdom out of which 15% are from own brands.
Apart from United Kingdom and rest of the world, Mirza International is very bullish on USA and has been expanding and growing in the region.
The revenue from USA in FY15 was 84 crores growing at CAGR of 119%. The FY16 detailed presentation is yet to be shared for further information.
The company initially had big plans to sell its brand in India but when exports posed as an attractive opportunity the company did change tracks and started focusing on exports which has helped them rise to this size today. Back in the 2000s Mirza International hired Salman Khan to endorse the brand Red Tape.
The company also says that RedTape is the only Indian brand to sell globally and earn significant revenues. It appears to be true because other companies have only managed to supply to global players and have never really took the risk of brandishing their own label.
Coming to the quality of shoes, I had purchased Red Tape shoes and they look and feel premium compared to the price we pay and it does enjoy good reception overseas and in India. Oaktrak brands reception in overseas market is good too.
The company actively sells its products in India and overseas via retail as well as e-commerce.
The above Amazon UK link shows one particular Oaktrak boot, if you take a look at it you can make out that the products of Oaktrap & Redtape are well priced, great in quality and also liked by people. Do read the customer reviews over there.
The key negative here would be the dependence on UK in particular.
With Brexit becoming a reality and pound coming down crashing, Companies which export to UK don't stand to benefit, But if we use common sense, after Brexit the Brits are not going to stop wearing shoes, infact trade between India-UK can be increased further.
Meanwhile, the pound crash may impact the company's profit margins to some extent if not properly hedged for currency risks at the same time there has been a new development that is the amalgamation of a debt free promoter owned company named Genesisfootwear Enterprises Ltd, with the amalgamation having taken place the company has shown remarkable improvement in bottomline because Genesis is a debt free cash generating company.
Coming to the financials let us take at last 10 years Annual Results of the company :-
Consistent topline growth and consistent. Extreme stress can be seen on the bottomline of the company during the period of Global Recession of 2008-2010 after which the sentiment revived. However, even during that period the company has not dipped into losses.
At current price of 91 the stock is trading at p/e of 12.62 while Bata trades at 45 p/e, Liberty trades at 30 p/e, Relaxo trades at 50 p/e, Lawreshwar trades at 20 p/e.
Looking at the branding, the products, I feel re-rating is possible in this case.
Stock has corrected this year and doesn't look on the expensive side but it is trading near the 52 week low right now.
March quarter results for Mirza was really good with significant increase in bottomline and profit margins after the amalgamation. Should keep eyes on June quarterly results too if similar trend is seen the EPS will be increase further this FY and the Brexit pound crash negative impact would mostly be visible in September quarter.
Next week from Monday, the Monsoon session of Parl will begin and Market expects that GST will sail through this time. GST is positive for the sector at whole.
All in All I feel there is value in Mirza International at CMP.
Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.
Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”
Disclosure: It is safe to assume that i might have Mirza International Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.
