Buy MM Forgings; target of Rs 480: Anand Rathi

Anand Rathi's research report on MM Forgings

Lower our Rs819m estimate due to less-than-expected revenues, MM Forgings’ Q4 EBITDA slipped 4% y/y to Rs724m. Growth would be supported by the domestic M&H CV 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 oversea 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.

Outlook

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-mth TP of Rs480, 14x (past mean) FY27e EPS (earlier Rs720, 16x FY26e EPS).