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M M Forgings Ltd. (MMFL) No. of shares (m) 24.14 Mkt cap (Rs crs/$m) 946/131.6 Current price (Rs/$) 392/5.5 Price target (Rs/$) 436/6.1 52 W H/L (Rs.) 590/302 Book Value (Rs/$) 197/2.7 Beta 0.7
Daily NSE volume (avg. monthly) 4350
P/BV (FY20e/21e) 2.0/1.8
EV/EBITDA (FY20e/21e) 9.4/8.0
P/E (FY20e/21e) 18.4/15.3
EPS growth (FY19/20e/21e) 18.9/-36.7/20.3 OPM (FY19/20e/21e) 19.2/17.8/19.0 ROE (FY19/20e/21e) 20.2/11.4/12.5 ROCE (FY19/20e/21e) 10.8/6.7/7.6 D/E ratio (FY19/20e/21e) 1.6/1.5/1.4
BSE Code 522241 NSE Code MMFL Bloomberg MMFG IN Reuters MMFO.NS Shareholding Pattern % Promoters 56.3 MFs / Banks /FIs 21.7
Foreign Portfolio Investors 1.7
Govt. Holding -
Public & Others 20.3
Total 100.0 As on December 31, 2019 Recommendation
ACCUMULATE
Phone: + 91 (33) 4488 0055 E- mail: [email protected] Standalone figures in Rs crsIncome from operations Other Income
EBITDA (other income included) PAT after EO
EPS(Rs)*
Pvt Ltd
FY17 FY18 FY19
478.40 620.62 903.92 11.27 12.29 15.87 104.02 136.73 189.12 43.42 68.39 81.33 17.99 28.33 33.69
Company Brief
The Company is a manufacturer of automotive components. It manufactures steel forgings in raw, semi-machined and fully machined stages in various grades of carbon, alloy, micro-alloy and stainless steels.
Quarterly Highlights
• Battered by a nearly unprecedented economic
decade and rising cost of vehicle ownership industry has been witnessing steep drop in sales automobile industry saw its worst ever perfo
dived 13.1% yoy during April-December 2019, with sales passenger vehicles, commercial vehicles and two w
16.4%, 21.1% and 15.8% respectively (Source SIAM). The Association of Indian Forging Industry (AIFI) in November
percent of the forging units will permanently close operatio end of 2020 if the slumping situation prevails.
• Due to dependence on the auto industry, the crisis can also be
validated for MM Forgings as well as its sales nosedived by 28% (yoy) in the third quarter of the current fiscal. Lower raw material cost did little to prevent operating profit from falling by 36% stood at 16.9% in Q3FY20 vs 18.9% a year ago. The stress was visible in post tax earnings too which declined from Rs 23.9
cr in Q3 of the current fiscal.
• The company operates at current capacity of 80000
plans to incur a capex of Rs 140 cr in forging infrastructure and machining in the current year. Capacity is expected to be increased to 110000 MT by FY21. On account of its vast customer base spread across different geographies, stress in volumes has been majorly contained.
• The stock currently trades at 18.4 x FY20e EPS of Rs 21.34 and 15.3
FY21e EPS of Rs 25.67. Since the auto industry is currently under stress, vigorous volume growth is not expected
quarters. However, SIAM expects things to turnaround in 2020 with the upcoming scrappage policy
trigger OPM improvement thereby driving earnings growth of some 20.3% next fiscal. On balance, we assign
stock with a target price of Rs 436 based on
25.67.
February 26, 2020 FY20e FY21e 762.20 851.62 16.20 17.20 151.78 178.83 51.50 61.96 21.34 25.67
is a manufacturer of automotive components. It manufactures machined and fully machined stages in various
less steels.
economic slowdown in the last decade and rising cost of vehicle ownership, the Indian auto g steep drop in sales. The Indian s worst ever performance as production December 2019, with sales of passenger vehicles, commercial vehicles and two wheelers down by % respectively (Source SIAM). The Association in November warned that 20 percent of the forging units will permanently close operations by the end of 2020 if the slumping situation prevails.
dependence on the auto industry, the crisis can also be validated for MM Forgings as well as its sales nosedived by 28% (yoy) in the third quarter of the current fiscal. Lower raw material ost did little to prevent operating profit from falling by 36% - OPM stood at 16.9% in Q3FY20 vs 18.9% a year ago. The stress was visible in post tax earnings too which declined from Rs 23.99 cr to Rs 11.25
urrent capacity of 80000-90000 mt and a capex of Rs 140 cr in forging infrastructure and in the current year. Capacity is expected to be increased 110000 MT by FY21. On account of its vast customer base spread , stress in volumes has been majorly
x FY20e EPS of Rs 21.34 and 15.3x . Since the auto industry is currently under volume growth is not expected over the next few
However, SIAM expects things to turnaround in 2020-21 with the upcoming scrappage policy. Revival in volumes would trigger OPM improvement thereby driving earnings growth of some . On balance, we assign “accumulate” rating on the
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Outlook & Recommendation
The Forging Industry
As per Research for Markets, the global forging market is expected to reach USD in 2017, witnessing a CAGR of more than 6.32% over 2018
growing automotive industry and increasing i
effective method of metal forming. The aerospace and gas industry
According to Association of Indian Forging I
industry. The Indian forging industry primarily ca
70% of the forging production. Meanwhile the remaining 35% exposure comes from other sectors including oil and gas, and
aerospace. On the flip side, the availability of alternate metal forming technique is likely to hamper the market. Asia-Pacific has accounted for the leading share of
industries in the region. Europe is also contributing
and innovation in North American region is also anticipated to exhibit higher growth rate for the forging industry due to large number of global players in the region.
60-65% of the capacity of the Indian forging industry caters to the auto sector which has witnessed a weakening demand of around 25-30% across sectors, with the highest drop bein
of the major threats looming over the forging industry due to the auto sector slowdown are part obsolescence on account of the imminent changeover to BS—VI norms with effect from 1
inventory due to downward commodity price corrections and
interest liabilities and due to reduction in capacity utilization. The slowdown
increase in acquisition cost of vehicles due to legislative change, the impact of which is compounded by high GST rates etc.
This festive season the Indian automobile m Dhanteras. The uptick comes after a double
offered by the OE’s (Original Equipment) to enable liquidation of inventory
the Association of Indian Forging Industry (AIFI) has expressed concern over the lack of demand with respect to fresh orders from the automotive sector. With the ripple down effect of slumping automobile sales, the forging industry is facing the heat with a sharp decline in demand which has resulte
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, the global forging market is expected to reach USD 110.84 bn by 2025, from USD 67.88 billion n 6.32% over 2018-2025. The major drivers of global forging market would be increasing investments in renewable energy, high strength metal components and cost . The aerospace and gas industry would also contribute in boosting the product demand.
rding to Association of Indian Forging Industry (AIFI), the automotive sector is the largest customer of the forging
ndustry primarily caters to the $57 billion Indian automotive industry, which accounts for 60
Meanwhile the remaining 35% exposure comes from other sectors including oil and gas, and
p side, the availability of alternate metal forming technique is likely to hamper the market.
Pacific has accounted for the leading share of global forging market due to rapid rise of construction and automotive
so contributing to a fair share in the global market of forging. Cutting
in North American region is also anticipated to exhibit higher growth rate for the forging industry due to
large number of global players in the region. (Source: Research for Markets)
forging industry caters to the auto sector which has witnessed a weakening demand of 30% across sectors, with the highest drop being experienced in the off take of commercial
of the major threats looming over the forging industry due to the auto sector slowdown are part obsolescence on account of VI norms with effect from 1st April, 2020, drop in the value of currently non
ard commodity price corrections and difficulty in meeting repayment requirements of loans and due to reduction in capacity utilization. The slowdown in automotive sector attributed
increase in acquisition cost of vehicles due to legislative change, the impact of which is compounded by high GST rates etc.
This festive season the Indian automobile manufacturers have reported a rise of 5-7% sales during Navratri, Dusse Dhanteras. The uptick comes after a double-digit drop in sales during April to September driven by higher
offered by the OE’s (Original Equipment) to enable liquidation of inventory. The apex body of the forging industry in India,
ociation of Indian Forging Industry (AIFI) has expressed concern over the lack of demand with respect to fresh orders from the automotive sector. With the ripple down effect of slumping automobile sales, the forging industry is facing
decline in demand which has resulted in substantial production cut.
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110.84 bn by 2025, from USD 67.88 billion ers of global forging market would be high strength metal components and cost in boosting the product demand. the automotive sector is the largest customer of the forging
ndustry, which accounts for
60-Meanwhile the remaining 35% exposure comes from other sectors including oil and gas, and
p side, the availability of alternate metal forming technique is likely to hamper the market.
due to rapid rise of construction and automotive
orging. Cutting edge technology in North American region is also anticipated to exhibit higher growth rate for the forging industry due to
forging industry caters to the auto sector which has witnessed a weakening demand of ommercial vehicle segment. Some of the major threats looming over the forging industry due to the auto sector slowdown are part obsolescence on account of April, 2020, drop in the value of currently non-moving difficulty in meeting repayment requirements of loans and in automotive sector attributed to factors like increase in acquisition cost of vehicles due to legislative change, the impact of which is compounded by high GST rates etc.
7% sales during Navratri, Dussehra and r driven by higher discounts The apex body of the forging industry in India, ociation of Indian Forging Industry (AIFI) has expressed concern over the lack of demand with respect to fresh orders from the automotive sector. With the ripple down effect of slumping automobile sales, the forging industry is facing
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Financials & Valuations
As per ICRA, the volume outlook of the Indian forging industry for the next fiscal remains
headwinds plaguing domestic automobile demand. Demand for cars sharply declined in 2019, forcing automakers to shut down factories several times during the year
aggressive discounts were withdrawn after the festive season
to poor sentiment, liquidity crisis and price increase owing to implementation of BS
With revenues subsiding by 15% in 9MFY20, thanks to the stagnation in the automotive industry, the revenue growth outlook for MM Forgings is not quite impressive. Pummeled by
the first nine months of the current fiscal vs 19.4% a year ago
a displeasing 39.6% to some Rs 50 cr; though its performance compared to its peer in auto sector down by 13.8% in January (SIAM) and the corona virus epidemi China to US based OEM’s might be disrupted, thus partl
the industry to start reviving from the second quarter of the next financial year with the liquidation of BS
The prevailing automobile stress barely escaped casting its shadow on the Indian forging industry as it prompted MM Forgings to defer its capex plan by almost a year To main
overseas, the company plans to incur a capex of some Rs140 cr this fiscal at existing facilities for both forging and machining. Since the automotive industry accounts for 60
performance and policy changes, high reliance on the same might be a bane thereby causing margins to be a victim of fluctuating automobile demand. Yet exports, which accounts for 52% of the overall sales, has helped lessen its business risk with expansion of customer base globally
In light of the current crisis, we expect sales to
a de growth of 36.7% and growth of 20.3% in FY 20&
FY20e EPS of Rs 21.34 and 15.3x FY21e EPS of Rs 25.67. Galvanized by not so modest recovery in the auto sector, we have slashed this fiscal’s earnings by some 40 %( EPS of Rs 21.34 vs Rs 36.01). Yet little chance exists of marked deterioration i automobile demand from here on. On balance, we assign accumulate rating on the stock with revised target of Rs 436 (previous target of Rs 471) based on 17x FY21e EPS of Rs 25.67. For more information refer to our, July 2019 report.
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As per ICRA, the volume outlook of the Indian forging industry for the next fiscal remains muted given the macroeconomic headwinds plaguing domestic automobile demand. Demand for cars sharply declined in 2019, forcing automakers to shut year. Sales spiked in Q3 stimulated by promotional offers, but retraced later as drawn after the festive season. This negative footing is expected to impact MM Forgings due to poor sentiment, liquidity crisis and price increase owing to implementation of BS-VI emission norms.
% in 9MFY20, thanks to the stagnation in the automotive industry, the revenue growth impressive. Pummeled by subdued topline growth, OPM discernibly slid to 18.1% in 19.4% a year ago. Along with gut wrenching rise in interest cost, PBT shrunk by ; though its performance compared to its peers is a tad better
in auto sector down by 13.8% in January (SIAM) and the corona virus epidemic showing no signs of relenting hina to US based OEM’s might be disrupted, thus partly affecting forging supplies from MMFL. SIAM, however
try to start reviving from the second quarter of the next financial year with the liquidation of BS
The prevailing automobile stress barely escaped casting its shadow on the Indian forging industry as it prompted MM to defer its capex plan by almost a year To maintain its competitive advantage in domestic markets as well as plans to incur a capex of some Rs140 cr this fiscal at existing facilities for both forging and machining. Since the automotive industry accounts for 60-70% of the total forging production and is subject to cyclical variations in
changes, high reliance on the same might be a bane thereby causing margins to be a victim of fluctuating automobile demand. Yet exports, which accounts for 52% of the overall sales, has helped lessen its business risk
In light of the current crisis, we expect sales to slide by some 16% this fiscal before recovering 12% and bottomline to witness % in FY 20& FY21 respectively. The stock MM Forging
x FY21e EPS of Rs 25.67. Galvanized by not so modest recovery in the auto sector, we have slashed this fiscal’s earnings by some 40 %( EPS of Rs 21.34 vs Rs 36.01). Yet little chance exists of marked deterioration i
on. On balance, we assign accumulate rating on the stock with revised target of Rs 436 (previous target of Rs 471) based on 17x FY21e EPS of Rs 25.67. For more information refer to our, July 2019 report.
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muted given the macroeconomic headwinds plaguing domestic automobile demand. Demand for cars sharply declined in 2019, forcing automakers to shut . Sales spiked in Q3 stimulated by promotional offers, but retraced later as . This negative footing is expected to impact MM Forgings due
VI emission norms.
% in 9MFY20, thanks to the stagnation in the automotive industry, the revenue growth subdued topline growth, OPM discernibly slid to 18.1% in Along with gut wrenching rise in interest cost, PBT shrunk by tad better so far this fiscal. With sales c showing no signs of relenting, supplies from MMFL. SIAM, however, expects try to start reviving from the second quarter of the next financial year with the liquidation of BS-VI norms.
The prevailing automobile stress barely escaped casting its shadow on the Indian forging industry as it prompted MM in domestic markets as well as plans to incur a capex of some Rs140 cr this fiscal at existing facilities for both forging and machining. 70% of the total forging production and is subject to cyclical variations in changes, high reliance on the same might be a bane thereby causing margins to be a victim of fluctuating automobile demand. Yet exports, which accounts for 52% of the overall sales, has helped lessen its business risk
by some 16% this fiscal before recovering 12% and bottomline to witness 21 respectively. The stock MM Forgings currently trades at 18.4x x FY21e EPS of Rs 25.67. Galvanized by not so modest recovery in the auto sector, we have slashed this fiscal’s earnings by some 40 %( EPS of Rs 21.34 vs Rs 36.01). Yet little chance exists of marked deterioration in on. On balance, we assign accumulate rating on the stock with revised target of Rs 436 (previous target of Rs 471) based on 17x FY21e EPS of Rs 25.67. For more information refer to our, July 2019 report.
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[
Cross Sectional Analysis
Company Equity* CMP Mcap*
Ramkrishna Forgings 33 327 1069
Kalyani Forge 4 133 48
Mahindra CIE 379 145 5501
M M Forgings 24 392 946
*figures in crores; calculations on ttm basis; standalone or consolidated data as available on December 31, 2019.
Trampled by subdued industrial activity and weak consumer sentiment in the Indian automobile industry, Ramkrishna Forgings reported topline de growth of 32.5% (yoy) in the first nine months of the current fiscal. Though raw material prices declined, it could do little to safeguard earnings which led to lower operating profits
suppressing OPM to 17.5% vs 20.2% in the same period last year.
for the company. It has also earmarked a capex of Rs 480 cr approx (for new projects and capacity expansion) of which around Rs 175 cr is attributed to FY20.
Battered by depressed sales volume, mainly owing to the slump in the auto sector, Kalyani Forge posted topline de growth of 30% (yoy) in 9MFY20. Lower finance and depreciation costs could not
1.98 cr compared to earnings of Rs 8.25 cr. The stress was perceptible in OP
50% drop in operating profit. However, development of new products and technology could
Mahindra CIE reported a meager revenue growth of 2.1% during the first nine months of the calendar year mainly due to its integration with Aurangabad Electricals (AEL). Organic sales descended by 5% thus impacting
and OPM – 12.2% in 9MCY19 vs 13.1% a year ago. The production of automotive vehicles also witnessed a lapse by approximately 12%. Mahindra’s target is to invest around 5% of their sales and it has thus incurred a capex of about RS 3.2 billion in the first nine months. Its amalgamation with AEL will assist it to enter into aluminium die casting, thereby expand its presence in two-wheeler market.
Note: Graphs on standalone or consolidated data as applicable; Mahindra CIE
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Mcap* Sales* Profit* OPM
(%) NPM (%) Int cov. ROE (%) 1069 1459 42 17.9 2.9 1.8 4.8 48 220 -0.4 6.5 -0.2 0.9 - 5501 8160 477 12.4 5.9 12.2 40.0 946 804 57 18.2 7.1 3.2 12.6
ores; calculations on ttm basis; standalone or consolidated data as available on December 31, 2019.
Trampled by subdued industrial activity and weak consumer sentiment in the Indian automobile industry, Ramkrishna ine de growth of 32.5% (yoy) in the first nine months of the current fiscal. Though raw material prices declined, it could do little to safeguard earnings which led to lower operating profits- down by
OPM to 17.5% vs 20.2% in the same period last year. However, revival in demand of
It has also earmarked a capex of Rs 480 cr approx (for new projects and capacity expansion) of which around
Battered by depressed sales volume, mainly owing to the slump in the auto sector, Kalyani Forge posted topline de growth of 30% (yoy) in 9MFY20. Lower finance and depreciation costs could not stop a sharp fall in pretax earnings
. The stress was perceptible in OPM too as it fell from 10% to 6.8 %, resulting in over development of new products and technology could goad
Mahindra CIE reported a meager revenue growth of 2.1% during the first nine months of the calendar year mainly due to its integration with Aurangabad Electricals (AEL). Organic sales descended by 5% thus impacting operating Profit (down by 5.1%) 12.2% in 9MCY19 vs 13.1% a year ago. The production of automotive vehicles also witnessed a lapse by approximately 12%. Mahindra’s target is to invest around 5% of their sales and it has thus incurred a capex of about RS 3.2 hs. Its amalgamation with AEL will assist it to enter into aluminium die casting, thereby expand its
applicable; Mahindra CIE changed its financial year to calendar year in 2015.
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ROE Mcap/ sales P/BV P/E 0.7 1.2 25.3 0.2 0.4 - 0.7 5.5 11.5 1.2 2.0 16.5Trampled by subdued industrial activity and weak consumer sentiment in the Indian automobile industry, Ramkrishna ine de growth of 32.5% (yoy) in the first nine months of the current fiscal. Though raw material prices down by nearly 42% (yoy) thus US Class 8 trucks bodes well It has also earmarked a capex of Rs 480 cr approx (for new projects and capacity expansion) of which around
Battered by depressed sales volume, mainly owing to the slump in the auto sector, Kalyani Forge posted topline de growth of stop a sharp fall in pretax earnings- posted a loss of Rs M too as it fell from 10% to 6.8 %, resulting in over
some revival in demand. Mahindra CIE reported a meager revenue growth of 2.1% during the first nine months of the calendar year mainly due to its
perating Profit (down by 5.1%) 12.2% in 9MCY19 vs 13.1% a year ago. The production of automotive vehicles also witnessed a lapse by approximately 12%. Mahindra’s target is to invest around 5% of their sales and it has thus incurred a capex of about RS 3.2 hs. Its amalgamation with AEL will assist it to enter into aluminium die casting, thereby expand its
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Financials
Standalone Quarterly Results
Q3FY20 Q3FY19
Income From Operations 176.15 244.55
Other Income 5.03
Total Income 181.18 250.69
Total Expenditure 146.32 198.21
EBITDA (other income
included) 34.87 52.47 Interest 7.04 Depreciation 13.00 13.75 PBT 14.83 30.24 Tax 3.58 PAT 11.25 23.99 Extraordinary Item -
Adjusted Net Profit 11.25 23.99
EPS (Rs)* 4.66
Standalone Income Statement
FY17
Income From Operations 478.40
Growth (%) -4.8
Other Income 11.27
Total Income 489.66
Total Expenditure 385.65
EBITDA (other income included) 104.02
Interest 9.95 Depreciation 38.93 PBT 55.14 Tax 11.72 PAT 43.42 Extraordinary Item -
Adjusted Net Profit 43.42
EPS (Rs)* 17.99
*adjusted for bonus issue 1:1
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Standalone Quarterly Results
Figures in Rs crs
Q3FY19 % chg 9MFY20 9MFY19 % chg
244.55 -28.0 569.63 669.60 -14.9 6.14 -18.0 12.88 11.25 14.5 250.69 -27.7 582.52 680.85 -14.4 198.21 -26.2 466.79 539.65 -13.5 52.47 -33.6 115.72 141.21 -18.0 8.48 -17.0 25.86 17.37 48.8 13.75 -5.5 40.00 41.25 -3.0 30.24 -51.0 49.87 82.58 -39.6 6.25 -42.7 10.17 18.75 -45.8 23.99 -53.1 39.70 63.83 -37.8 - - - - - 23.99 -53.1 39.70 63.83 -37.8 9.94 -53.1 16.44 26.44 -37.8
Standalone Income Statement
Figures in Rs crs
FY18 FY19 FY20e FY21e
620.62 903.92 762.20 851.62 29.7 45.6 -15.7 11.7 12.29 15.87 16.20 17.20 632.91 919.79 778.40 868.82 496.18 730.67 626.62 689.99 136.73 189.12 151.78 178.83 12.65 26.14 32.77 40.22 42.00 54.41 53.00 56.00 82.08 108.57 66.01 82.61 13.58 27.21 14.50 20.65 68.50 81.35 51.50 61.96 0.11 0.02 - - 68.39 81.33 51.50 61.96 28.33 33.69 21.34 25.67
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Balance Sheet
FY17
Sources of Funds
Share Capital 12.07
Reserves & Surplus 302.53
Total Shareholders' Funds 314.60
Long Term Debt 108.41
Total Liabilities 423.01 Application of Funds Gross Block 667.91 Less: Accumulated Depreciation 347.98 Net Block 319.94
Capital Work in Progress 13.72
Investments 0.17
Current Assets, Loans & Advances
Inventory 65.96
Trade Receivables 17.24
Cash and Bank 133.84
Other current assets 21.38
Total CA & LA 238.43
Current Liabilities 144.50 Provisions-Short term 1.40
Total Current Liabilities 145.91
Net Current Assets 92.52
Net Deferred Tax -16.66
Net long term assets 13.31
Total Assets 423.01
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Figures in Rs crs
FY17 FY18 FY19 FY20e FY21e
12.07 12.07 24.14 24.14 24.14 302.53 357.01 412.11 450.49 500.38 314.60 369.08 436.25 474.63 524.52 108.41 168.27 396.29 424.50 450.00 423.01 537.34 832.53 899.13 974.52 667.91 754.96 1032.12 1111.32 1311.32 347.98 389.84 444.07 497.07 553.07 319.94 365.12 588.06 614.25 758.25 13.72 27.37 39.19 100.00 0.00 0.17 4.30 4.88 4.88 4.88 65.96 125.26 187.50 215.63 237.19 17.24 56.57 79.25 55.00 60.50 133.84 163.98 171.56 148.24 138.35 21.38 30.49 39.51 24.77 29.34 238.43 376.29 477.82 443.64 465.38 144.50 275.08 339.70 344.70 332.73 1.40 7.01 7.09 0.00 6.04 145.91 282.09 346.79 344.70 338.76 92.52 94.20 131.03 98.93 126.61 16.66 -13.42 -18.64 -22.64 -26.64 13.31 59.77 88.01 103.71 111.41 423.01 537.34 832.53 899.13 974.52
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Key Financial Ratios
FY17 Growth Ratios(%) Revenue -4.8 EBITDA -8.3 Net Profit -13.3 EPS -13.3 Margins (%)
Operating Profit Margin 19.4 Gross profit Margin 19.7 Net Profit Margin 9.1
Return (%)
ROCE 9.9
ROE 14.6
Valuations
Market Cap/ Sales 1.4
EV/EBITDA 7.1 P/E 15.0 P/BV 2.1 Other Ratios Interest Coverage 6.5 Debt Equity 0.7 Current Ratio 1.6 Turnover Ratios
Fixed Asset Turnover 1.6 Total Asset Turnover 1.2 Debtors Turnover 29.7 Inventory Turnover 5.5 Creditor Turnover 13.1 WC Ratios Debtor Days 12.3 Inventory Days 65.9 Creditor Days 27.8
Cash Conversion Cycle 50.4
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FY18 FY19 FY20e FY21e
29.7 45.6 -15.7 11.7 31.3 38.4 -19.7 17.8 57.5 18.9 -36.7 20.3 57.5 18.9 -36.7 20.3 20.1 19.2 17.8 19.0 20.0 18.0 15.6 16.3 11.0 9.0 6.8 7.3 12.3 10.8 6.7 7.6 20.0 20.2 11.4 12.5 2.0 1.5 1.2 1.1 10.8 9.7 9.4 8.0 18.4 16.2 18.4 15.3 3.4 3.0 2.0 1.8 7.5 5.2 3.0 3.1 1.0 1.6 1.5 1.4 1.3 1.4 1.3 1.4 1.8 1.9 1.3 1.2 1.3 1.3 0.9 0.9 16.8 13.3 11.4 14.7 5.2 4.7 3.1 3.0 11.0 13.4 12.5 12.5 21.7 27.4 32.1 24.8 70.3 78.1 117.4 119.8 33.3 27.3 29.2 29.1 58.8 78.2 120.4 115.4
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Cumulative Financial Data
Rs crs FY10-13 FY14
Income from operations 1142 1895
Operating profit 195 391 EBIT 126 265 PBT 101 230 PAT 78 172 Dividends 15 31 Sales growth (%) 54.5 65.9 PAT growth (%) - 120.0 OPM (%) 17.0 20.6 GPM (%) 15.5 19.9 NPM (%) 6.9 9.1 Interest coverage 5.0 7.6 ROE (%) 14.6 17.7 ROCE (%) 9.4 11.6 Debt-Equity ratio* 0.8 0.7
Fixed asset turnover 1.9 1.8
Total asset turnover 1.5 1.5
Debtors turnover 11.2 18.5 Creditors turnover 13.5 12.8 Inventory turnover 4.2 5.5 Debtor days 32.4 19.8 Creditor days 27.1 28.5 Inventory days 86.2 66.6
Cash conversion cycle 91.6 57.8 Dividend payout ratio (%) 16.2 17.8 FY 10-13 implies four year period ending fiscal 13;*as on terminal year
Due to its diversified client base and significant presence in the overseas market, MM Forgings has reported a topline growth of 66% in FY14-17 period as against FY10
growth would curtail to nearly 1.5x in the cumulative period FY18 Mellowing operating expenditure in FY20 and 21,
period FY18-21e vs 20.6% in FY14-17, all thanks to subdued volumes in domestic market accentuated by pronounced stress in CV industry- MHCV sales tumbled 36.7% in April
Little buoyancy in earnings coupled with underutilization of existing forging capacity circumvent prevailing automobile stress in India
decline to 15.7% in FY18-21e vs 17.7% in FY14
next. A decent hike in interest cost (higher borrowings to fund forging capacity expansion) w coverage falling to 4.0 during FY18-21e period
debt-equity (1.4 vs 0.7) is justified. Faster payment to creditors along with higher inventory improve cash conversion cycle which is estimated to r
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FY14-17 FY18-21e 1895 3138 391 595 265 451 230 339 172 263 31 53 65.9 65.6 120.0 52.8 20.6 19.0 19.9 17.4 9.1 8.4 7.6 4.0 17.7 15.7 11.6 9.8 0.7 1.4 1.8 1.5 1.5 1.1 18.5 20.2 12.8 14.7 5.5 4.2 19.8 18.1 28.5 24.9 66.6 87.0 57.8 80.2 17.8 20.3 terminal yearDue to its diversified client base and significant presence in the overseas market, MM Forgings has reported a topline 17 period as against FY10-13. Driven by barely robust revenue growth in FY
in the cumulative period FY18-21e vs 2.2x in FY4-17; though on a larger base Mellowing operating expenditure in FY20 and 21, could not harbor OPM from falling to 19.0% in the cumulative four year
, all thanks to subdued volumes in domestic market accentuated by pronounced stress MHCV sales tumbled 36.7% in April-December period.
Little buoyancy in earnings coupled with underutilization of existing forging capacity - steadier exports failing to circumvent prevailing automobile stress in India- could stymie return on equity as the same is estimated to strikingly
in FY14-17 mainly attributed to muted earnings growth expected this (higher borrowings to fund forging capacity expansion) w
riod (see table). To fund its capacity expansion, a temporary deterioration in Faster payment to creditors along with higher inventory
cle which is estimated to rise from 57.8 in FY14-17 to 80.2 in FY18-21e.
CD Equisearch Pvt Ltd
Due to its diversified client base and significant presence in the overseas market, MM Forgings has reported a topline ely robust revenue growth in FY20 and FY21, PAT ; though on a larger base. % in the cumulative four year , all thanks to subdued volumes in domestic market accentuated by pronounced stress
steadier exports failing to could stymie return on equity as the same is estimated to strikingly 17 mainly attributed to muted earnings growth expected this fiscal and the (higher borrowings to fund forging capacity expansion) would explain interest a temporary deterioration in Faster payment to creditors along with higher inventory days would do little to
CD Equisearch Pvt Ltd
Financial Summary- US Dollar denominated
million $ FY17
Equity capital 1.9
Shareholders funds 48.5
Total debt 34.5
Net fixed assets (including CWIP) 51.5
Investments 0.0
Net current assets 14.3
Total assets 65.2 Revenues 71.3 EBITDA 15.5 EBDT 14.0 PBT 8.2 PAT 6.5 EPS($) 0.27 Book value ($) 2.01
Income statement figures translated at average rates; balance sheet All dollar denominated figures are adjusted for extraordinary items.
CD Equisearch Pvt Ltd
US Dollar denominated
FY18 FY19 FY20e FY21e
1.9 3.5 3.4 3.4 48.5 56.7 63.1 65.2 73.0 34.5 58.6 99.4 99.7 100.8 51.5 60.3 90.7 99.4 105.5 0.7 0.7 0.7 0.7 14.3 14.5 18.9 12.9 17.6 65.2 82.6 120.4 124.3 135.6 71.3 96.3 129.3 106.1 118.5 15.5 21.2 27.1 21.1 24.9 14.0 19.2 23.3 16.6 19.3 12.7 15.5 9.2 11.5 10.6 11.6 7.2 8.6 0.27 0.44 0.48 0.30 0.36 2.01 2.35 2.61 2.74 3.02
tes; balance sheet at year end rates; projections at current rates (Rs 71. All dollar denominated figures are adjusted for extraordinary items.
CD Equisearch Pvt Ltd
CD Equisearch Pvt Ltd
Disclosure & Disclaimer
CD Equisearch Private Limited (hereinafter referred to as
Limited, Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited (Formerly known as MCX Stock Exchange Limited). CD Equi is also registered as Depository Participant
CD Equi are engaged in activities relating to NBFC-ND
CD Equi is registered under SEBI (Research Analysts) Regulations hereby declares that –
• No disciplinary action has been taken against CD Equi by any of the regulatory authorities. • CD Equi/its associates/research analysts do not have any financial interest/
conflict of interest in the subject company(s)
• CD Equi/its associates/research analysts have not received any compensation from the subject company(s) during the past tw months.
• CD Equi/its research analysts has not served as an officer, director or employee of company covered by analysts and has not b engaged in market making activity of the company covered by analysts
This document is solely for the personal information of the recipient and must not be singularly used as the basis of any inv decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document s such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the c referred to in this document (including the merits and risks involved) and should consult their own advisors to
risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positio trading volume, as opposed to focusing on a company's fundamentals
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other rel
believed to be true but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. CD Equi or any of its affiliates/group companies shall not be in any way responsible for any loss or d
may arise to any person from any inadvertent error in the information contained in this report. CD Equi has not independently verified all the information contained within this document. Accordingly, we cannot testify nor make any representation or warranty, expre implied, to the accuracy, contents or data contained within this document.
While, CD Equi endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Neither, CD Equi nor its directors, employees or affiliates shall be liab
damage that may arise from or in connection with the use of this information. CD Equisearch Private Limited (CIN: U67120WB1995PTC071521)
Registered Office: 37, Shakespeare Sarani, 3rd Floor, Kolkata
10, Vasawani Mansion, 5th Floor, Dinshaw Wachha Road, Churchgate, Mumbai 2283, 2276 Website: www.cdequi.com; Email: [email protected]
buy: >20% accumulate: >10% to ≤20% hold: Exchange Rates Used- Indicative
Rs/$ FY16 FY17
Average 65.46 67.09 Year end 66.33 64.84
All $ values mentioned in the write-up translated at the average
current exchange rate. Cumulative dollar figure is the sum of respective yearly dollar value
CD Equisearch Pvt Ltd
CD Equisearch Private Limited (hereinafter referred to as ‘CD Equi’) is a Member registered with National Stock Exchange of India Limited, Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited (Formerly known as MCX Stock Exchange Limited). CD Equi is also registered as Depository Participant with CDSL and AMFI registered Mutual Fund Advisor. The associates of
ND - Financing and Investment, Commodity Broking, Real Estate, etc.
CD Equi is registered under SEBI (Research Analysts) Regulations, 2014 with SEBI Registration no INH300002274. Further, CD Equi No disciplinary action has been taken against CD Equi by any of the regulatory authorities.
CD Equi/its associates/research analysts do not have any financial interest/beneficial interest of more than one percent/material conflict of interest in the subject company(s) (kindly disclose if otherwise).
CD Equi/its associates/research analysts have not received any compensation from the subject company(s) during the past tw CD Equi/its research analysts has not served as an officer, director or employee of company covered by analysts and has not b engaged in market making activity of the company covered by analysts.
This document is solely for the personal information of the recipient and must not be singularly used as the basis of any inv decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document s such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the c referred to in this document (including the merits and risks involved) and should consult their own advisors to
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positio trading volume, as opposed to focusing on a company's fundamentals and as such, may not match with a report on a company's
The information in this document has been printed on the basis of publicly available information, internal data and other rel
hat it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. CD Equi or any of its affiliates/group companies shall not be in any way responsible for any loss or d
rom any inadvertent error in the information contained in this report. CD Equi has not independently verified all the information contained within this document. Accordingly, we cannot testify nor make any representation or warranty, expre
the accuracy, contents or data contained within this document.
While, CD Equi endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory
document is being supplied to you solely for your information and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Neither, CD Equi nor its directors, employees or affiliates shall be liab
damage that may arise from or in connection with the use of this information. CD Equisearch Private Limited (CIN: U67120WB1995PTC071521)
Floor, Kolkata – 700 017; Phone: +91(33) 4488 0000; Fax: +91(33) 2289 2557 Corporate Office: Floor, Dinshaw Wachha Road, Churchgate, Mumbai – 400 020. Phone: +91(22) 2283 0652/0653; Fax: +91(22) 2283, 2276 Website: www.cdequi.com; Email: [email protected]
hold: ≥-10% to ≤10% reduce: ≥-20% to <-10% sell: <
FY18 FY19
64.45 69.89 65.04 69.17
up translated at the average rate of the respective quarter/ year as applicable. Projections converted at current exchange rate. Cumulative dollar figure is the sum of respective yearly dollar value.
CD Equisearch Pvt Ltd
) is a Member registered with National Stock Exchange of India Limited, Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited (Formerly known as MCX Stock Exchange with CDSL and AMFI registered Mutual Fund Advisor. The associates of Financing and Investment, Commodity Broking, Real Estate, etc.
, 2014 with SEBI Registration no INH300002274. Further, CD Equi
beneficial interest of more than one percent/material CD Equi/its associates/research analysts have not received any compensation from the subject company(s) during the past twelve CD Equi/its research analysts has not served as an officer, director or employee of company covered by analysts and has not been
This document is solely for the personal information of the recipient and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved) and should consult their own advisors to determine the merits and
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and and as such, may not match with a report on a company's
The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources hat it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. CD Equi or any of its affiliates/group companies shall not be in any way responsible for any loss or damage that rom any inadvertent error in the information contained in this report. CD Equi has not independently verified all the information contained within this document. Accordingly, we cannot testify nor make any representation or warranty, express or
While, CD Equi endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory compliance
document is being supplied to you solely for your information and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Neither, CD Equi nor its directors, employees or affiliates shall be liable for any loss or
33) 2289 2557 Corporate Office: 400 020. Phone: +91(22) 2283 0652/0653; Fax: +91(22)
-20%