MMFL - M.M.Forgings Ltd. Share Price

Management's outlook for MM Forgings Limited anticipates a turnover of Rs. 1,547 crores for FY '25, with an EBITDA margin of 19.4%, demonstrating a slight decline from Rs. 1,585 crores in the previous fiscal year but an improvement in margin from 18.73%. The standalone performance reflects a turnover of Rs. 1,506 crores, down from Rs. 1,553 crores, but EBITDA is up to Rs. 323 crores at 19.91%, compared to Rs. 315 crores and 18.9% the previous year.

Key forward-looking points from management include:

1. Export Performance: Management predicts sluggish export sales of around 10%-15% decline, primarily due to a slowdown in the US and European markets. The expectation is that export sales could be improved by an additional Rs. 100 crores over FY '27 and FY '28 through new customer acquisitions.

2. CAPEX Plans: The company has spent Rs. 340 crores in FY '25 on CAPEX and expects to allocate Rs. 300 crores for FY '26, with Rs. 160 crores allocated for loan repayments. Of this, Rs. 300 crores is expected from internal accruals, with an emphasis on machined components, which currently make up 58% of sales. Management targets an increase to a 65%-70% contribution from machined products in the medium-term.

3. Market Dynamics: The commercial vehicles (CV) market in India is experiencing a pre-buy period due to upcoming new regulations, which could enhance demand. However, the overall sentiment remains cautious, particularly regarding the export environments, influenced by tariffs and geopolitical factors.

4. New Product Development: Management is focused on expanding capabilities, particularly in the automotive and EV sectors, aligning with customer demand, and expects ongoing discussions to result in new orders.

In summary, MM Forgings Limited is navigating challenges while focusing on strategic investments and maintaining a careful outlook on both domestic and export markets.

Question: "In the export side, there was a good positive growth in the first half and then second half, we saw a decline. Just want to understand what led to the decline and how we should look at the growth ahead?"

Answer: "The second half has been tepid for exports overall, attributed to a slowdown in the US and European markets, which caused a dip in numbers. For the coming year, we're cautiously anticipating a sluggish growth of about 10%-15%, especially due to ongoing uncertainties in global trade dynamics."

Question: "On the US part, has the supply normalized or is there still a slower pickup currently?"

Answer: "Since April, we've witnessed a significant backlog of export orders, with many schedules canceled. The flow is subpar compared to earlier expectations, but we hope for stabilization in the coming months."

Question: "Regarding the new 16,500 ton press, how are the orders shaping up and what ramp-up are you seeing? Also, how is the traction for Abhinava Rizel?"

Answer: "The 16,500 ton press is expected to be commissioned by Q4 calendar year. Currently, we're focusing on shifting existing parts to utilize this capacity. As for Abhinava Rizel, while there is customer interest, we have yet to secure significant orders as the product development continues."

Question: "For FY '26, how do you see the CAPEX outlay?"

Answer: "We expect to spend about Rs. 300 crores on CAPEX in FY '26, sourced from internal accruals and fresh term loans. The target is to maintain peak debt by the fiscal year end at around Rs. 970 crores."

Question: "How is the demand sentiment in the CV industry, particularly in export markets?"

Answer: "Demand in the CV market in India has seen a boost owing to upcoming regulations, which has led to pre-buying behavior. However, international demand is still uncertain due to tariff impacts, with a notable decline in American truck movements."

Question: "Can you share the current order book size and expected execution timeline?"

Answer: "Our order book typically extends about five months ahead. While we have secured stable volumes, they fluctuate with customer demand, and we have not lost any significant customers."

Question: "What will be the growth drivers for next 2 years in your focus products?"

Answer: "Our focus remains on the CV market, including discussions for EV products. We anticipate steady growth driven by existing product lines and enhancing our innovation towards EV applications."

Question: "How have your machined components contributed to revenue?"

Answer: "Machined components now account for 58% of our total revenue, up from around 20% a few years back. We aim to increase this to approximately 65% in the near future, reflecting our strategic focus on high-value products."

These responses encapsulate the essence of the questions while offering insights and future projections by the management.