Buy MM Forgings; target Rs 100: Sunidhi Securities
Sunidhi Securities is bullish on MM Forgings and has recommended buy rating on the stock with a price target of Rs 100 in its August 19, 2013 research report.
Sunidhi Securities' report on MM Forgings
"MM Forgings derives close to 60 percent of its total revenue from exports primarily catering to the large auto manufacturers in the US and Europe. With the US economy improving over the last few quarters and recession in Eurozone coming to an end, the demand is expected to remain firm going forward. MMFL is one of the largest exporters of quality forgings and the company is well poised for significant growth and can increase its market share, going forward. With the global outlook for the automobile industry improving, and more than 475 components under its portfolio MMFL is expected to get huge growth opportunities."
"The demand for forging is on the upward move as the auto manufacturers continue to expand the capacity to meet the ever increasing demand after the recovery in the domestic and global economy. This apart, MMFL has strong relationships with its customers and has not lost any customer during the slowdown which should enable the company to easily ramp up the utilization rates and record strong top-line growth."
Valuation & Recommendation
"MMFL has manufacturing plants in three locations. All the three locations are well connected by road to the nearest sea port. MMFL has the strategic advantage of being able to ship from two major ports (Chennai and Tuticorin). Both these ports are equidistant from its plants. MMFL has long standing contracts and association with major shipping lines. Founded on the tradition and philosophy of steadfast commitment to achieving "Total Customer Satisfaction" through excellent quality, on time deliveries and competitive pricing, MMFL has grown steadily in strength and stature to attain its present recognition of being one of the largest exporters of forgings in India in its product range and has created a niche in the international market."
"With the global outlook for the automobile industry improving and more than 475 components under its portfolio, MMFL is expected to get huge growth opportunities. At the CMP of Rs 72, the share is trading at a P/E of 3.2x on FY14E and 2.6x on FY15E. We recommend BUY with a target price of Rs 100 in the medium term," says Sunidhi Securities research report.
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