MM Forgings Gets 'Buy' From Anand Rathi On Attractive Valuations

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Anand Rathi Report

Lower our Rs 819 million estimate due to less-than-expected revenues, MM Forgings Ltd.’s Q4 Ebitda slipped 4% y/y to Rs 724 million. Growth would be supported by the domestic medium and heavy commercial vehicles volume upswing, which would come at a 5% CAGR over FY25-27 on economic activity and replacement demand.

Growth would be driven by new products (gear blanks, long shafts, larger crankshafts) and market-share gains. The overseas CV sector may be muted in the near term, but export revenue would outstrip that of the industry due to new orders.

With a higher wallet-share and sharper focus on EV-specific components, its outperformance would persist.

The stock quotes at attractive valuations of 13x/11x FY26e/FY27e EPS. We expect 9/11/11% revenue/Ebitda/PAT CAGRs over FY25-27.

We retain a Buy, with a lower 12-month target price of Rs 480, 14 times (past mean) FY27e EPS (earlier Rs 720, 16x FY26e EPS).

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