Hope you are doing well.
Recently, I came across a stock by the name of M M Forgings (MMF). The 10 years numbers of the company looked interesting and therefore I decided to dig deeper.
The company manufactures forged components for automobiles (CVs and PVs), and off-highway equipment, catering to both the domestic and international markets.
What's interesting is that promoters sounded very bullish on account of twin factors of China + 1 and high energy prices in Europe and have even guided for 20% + growth in sales in FY 24 over FY 23.
Below, we have shared notes from the Q3 FY 23 con-call of the company. Hope you find the details useful in your search of investment opportunities.
Before that, a few days back we released our New Stock Recommendation for Alpha and Alpha + Members
It's a minerals processing company, largest in its segment, has captive raw material sources, grown PAT by ~300% in the last few years, de-leveraging balance sheet, 2nd generation promoters and available at only ~6 times post-tax earnings.
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M M Forgings - Notes from Q3 FY 23 con-call
- We have achieved a turnover of INR 1,040 crores stand-alone and INR 1,080 crore on consolidated basis
- Production tonnage stands at about 55,000 tons for the nine months. We expect to end this year close to 72,000 tons
- Outlook remains positive, very bullish across the Indian market -- with CV and PV sales expected to be rocking
- Share of business gains with customers in Europe means that our European sales also will be reasonably bullish
- The impact of the energy crisis in Europe is playing out in terms of better procurement from us
- We expect the Indian market also to go strong, particularly the CV market and stronger numbers are expected in the months to come
- Tonnage for Q3 - About 18,000 tons
- Sales - 78% is CV, 13% is PV and about 8% is non-auto for Q3
- Say we end the year at about 75,000 tons. On 110,000 tons capacity, this represents around 65%-70% capacity utilization
- We are at 45% forged, 55% machined...MM Forging has made a transition from being a forging supplier to being a component supplier
- Earlier, our machining percentage was hardly 20%-25%. Now it has gone up to 60% of sales. This is a significant shift
- In 55,000 tons volume (9M), how much is the export versus domestic - Domestic stands at 65% and export at 35%. 15% each between Europe and US and South America the balance
- Our EV foray, Abhinava Rizel is also developing parts pretty fast
- We are seriously working there to not just work with motor, but also add the entire powertrain, which comprises the controller, motor and gear box to our portfolio
- One year from now Abhinava Rizel will be well into manufacturing and offering entire powertrains to EV customers
- In the next 10 to 12 months, we would have our manufacturing capacities capable to produce around 50,000 to 60,000 motors
- Up to 9 months spent around 200 crore
- Q4 would be about 60-70 crore
- We have embarked on a INR 500 crores capex from this year onwards
- Much of the investment of INR 500 crores, INR 300 crores goes towards the machining side alone. INR 100 crores towards forging and INR 100 crores on the EV side or the electrical side
- We expect the next year to be around 20%-25% growth and achieve close to INR 1,800 crores to INR 2,000 crores
Disclaimer: This is not a recommendation to buy/sell M M Forgings. These notes are as announced by the companies on exchanges and only for the purpose of information and education.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.
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