Buy MM Forgings; target of Rs 797: Angel Broking

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26 Aug, 2025 12:21

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For 1QFY2016, MM Forgings (MMFL)’ numbers have come in below our estimates. The top-line for the quarter declined marginally by 0.3% yoy to Rs 124cr. The same was below our estimate of Rs 144cr. The EBITDA during the quarter declined by 3.0% yoy to Rs 27cr and the EBITDA margin witnessed a decline of 59bp yoy to 21.6%, which is below our estimate of 22.7%. Although the raw material cost declined by 546bp yoy to 39.3% of sales, the benefits were offset by an increase in employee cost, power costs and other expenses. Employee costs, power costs and other expenses rose by 275bp yoy, 154bp yoy and 176bp yoy to 11.4%, 11.0% and 16.8% of sales, respectively. Consequently, the net profit declined by 2.4% yoy to Rs 13cr vis-à-vis our expectation of Rs 16cr.

Outlook and valuation: "We expect MMFL to register a revenue CAGR of 15.5% over FY2015-17E to Rs 671cr with an EBITDA margin of 22.9% in FY2017E. The profit is expected to improve to Rs 80cr in FY2017E. At the current market price, the stock is trading at a P/E of 9.9x its FY2017E earnings. We have a Buy rating on the stock with a revised target price of Rs 797 based on target P/E of 12.0x for FY2017E", says Angel Broking research report.

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