Target: ₹945

CMP: ₹857.20

MM Forgings Ltd. is the third largest forging company in India with a significant share of forging products for the CV segment in both the domestic and the export markets. The company has been increasing its capacity which is slated to increase to 130,000 tonnes by the end of FY23.

It is focusing more on EV products and adding machined products to its portfolio driving higher margins.

Domestic medium and heavy CV (M&HCV) recovery and strong CV segment growth in US and Europe regions would be key growth drivers in the near to medium term. Increased capacity available from FY24 could also help in boosting revenues and profits. Increasing share of machined products would drive better realisation and margins for the company, while the foray into EV motors could lead to a stronger foothold in the fast growing electric PV segment.

MM Forgings expects its revenue to touch ₹2,000 crore in the next two years supported by a buoyant order outlook on the back of increasing momentum for the China+1 strategy and improving business prospects in the Indian market. We believe investors can buy the stock for a base case fair value of ₹945 and bull case fair value of ₹1007 over the next 2-3 quarters.

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