Company Update - MM Forgings - ICICI Direct

MM Forgings (MMF) is a forgings player (total capacity 1.1 lakh MT per annum, FY20 production at ~46,000 MT) serving domestic, US and European automotive industry - with CV, PV forming 75%, 18%, respectively, of FY20 sales and off-highway & others contributing the rest. India was ~45% of FY20 sales with exports at ~55% (mainly to Europe, US).

Valuation & Outlook

MMF has come out of a heavy capex cycle (~Rs. 480 crore spent in FY18-20), spent on augmenting tonnage and overall capacity. Expected benefits from demand revival in key markets alongside gradual return to erstwhile margin trajectory makes us turn positive on MMF. Accordingly, we value the company at 15x FY23E EPS of Rs. 35.3/share to arrive at a target price of Rs. 530 (revised from Rs. 330 earlier). We upgrade the stock from HOLD to BUY. We have not included the financials of MMF subsidiary i.e. DVS Industries (FY20 sales, EBITDA, PAT at Rs. 42, Rs. 7, -Rs. 4 crore) in our target price calculation.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_MMForging_CoUpdate_Dec20.pdf

Shares of M.M.FORGINGS LTD. was last trading in BSE at Rs.400 as compared to the previous close of Rs. 396.2. The total number of shares traded during the day was 641 in over 94 trades.

The stock hit an intraday high of Rs. 400.85 and intraday low of 380.7. The net turnover during the day was Rs. 249113.

Source : Equity Bulls

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