Buy MM Forgings; target of Rs 530: ICICI Direct

ICICI Direct's research report on MM Forgings

MM Forgings (MMF) is a forgings player (total capacity 1.1 lakh MT per annum, FY20 production at ~46,000 MT) serving domestic, US and European automotive industry - with CV, PV forming 75%, 18%, respectively, of FY20 sales and off-highway & others contributing the rest. India was ~45% of FY20 sales with exports at ~55% (mainly to Europe, US).

Outlook

We upgrade the stock from HOLD to BUY. We have not included the financials of MMF subsidiary i.e. DVS Industries (FY20 sales, EBITDA, PAT at Rs 42, Rs 7, -Rs 4 crore) in our target price calculation.