MM Forgings - Q1FY21 Company Update - ICICI Securities

MM Forgings (MMF) reported weak Q1FY21 results in line with large volume declines both domestically and globally in key user industries i.e. CV & PV during the Covid impacted quarter. Net standalone sales were down 64.4% YoY to Rs. 73 crore. Margins fell ~510 bps QoQ to 9.1%, impacted by inventory adjustment. MMF posted loss at PAT level at Rs. 5 crore for Q1FY21.

Valuation & Outlook

We estimate sales, EBITDA, PAT will grow at -1.2%, 3.8%, 1.2% CAGR, respectively, in FY20-22E. Bottoming out of the CV cycle in India and global markets would hold the key to MMF's change in fortunes. With peak capex spends and debt levels now behind it, the company is expected to slowly return to a healthy return ratio trajectory once volume support kicks in. We value the company at 17x FY22E EPS of Rs. 19.6/share to arrive at a target price of Rs. 330. We assign a HOLD rating to the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_MMForging_Aug20.pdf

Shares of M.M.FORGINGS LTD. was last trading in BSE at Rs.298 as compared to the previous close of Rs. 295.9. The total number of shares traded during the day was 2271 in over 182 trades.

The stock hit an intraday high of Rs. 298.25 and intraday low of 292. The net turnover during the day was Rs. 670915.

Source : Equity Bulls

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