CD Equisearch recommended accumulate rating on M M Forgings with a target price of Rs 719 in its research report dated December 27, 2018.
CD Equisearch's research report on M M Forgings
According to Business Wire, a Berkshire Hathaway Co, global forging market, which accounted for $67.9 bn in 2017, is expected to grow at an average annual rate of ~6%, and reach $110.6 bn by 2026, driven by growing demand for ferrous metals, high-strength metal components and cost effective method of metal forming. In the backdrop of development in infrastructure, improvement in automotive and construction industries in the developing economies and recognition of the emerging country such as India as the manufacturing hub, Asia Pacific region is expected to register the highest market share during the estimated period. Increasing usage of casting or stamping process, rising demand for plastics as a substitute and tightening environmental regulations would hamper market growth.
Weighing odds, we have marginally cut our EPS estimate by 8.1% to Rs 32.95 in FY19 (earlier estimate of Rs 35.85) and by 12.7% to Rs 39.93 in FY20 (earlier estimate of Rs 45.72). On balance, we recommend ‘accumulate’ rating on the stock with target price of Rs 719 (previous target Rs 777) based on 18x FY20e EPS of Rs 39.93 over a period of 9-12 months.
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