MM Forgings - Attractive Valuation; Retaining A 'Buy': Anand Rathi

Anand Rathi Report

Broadly in line with our Rs 774 million estimate, MM Forgings Ltd.’s Q2 Ebitda grew a healthy 7% YoY to Rs 769 million. We reckon the domestic medium and heavy commercial vehicle volume uptrend would hold at a 5% compound annual growth rate over FY24-27, on economic activity and replacement demand.

Growth would be driven by new products (gear blanks, long shafts, larger crankshafts) and market-share gains. The stock quotes at attractive valuations of 13 times /11x FY26e/FY27e EPS (a huge discount to peers Bharat Forge Ltd.’s and Ramkrishna Forgins Ltd.’s).

With a higher wallet share and sharper focus on EV-specific components, its outperformance would persist. The stock is among our preferred picks in ancillaries. We introduce FY27e, with 14%/15%/21% growth in revenue/ Ebida/PAT.

We retain a Buy, with a lower 12-month target price of Rs 720, 16 times FY27e EPS (earlier Rs 750, 18 times FY26e EPS).

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