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Snapshot
MMFL manufactures carbon and alloy steel forgings with product
range including forging pieces weighing between 15‐60 kgs. The
company caters to the automotive, earth moving, engineering and oil
industries. The company’s facilities are located at Singampunari,
Viralimalia, Guindy and Karan in Chennai. The company’s capacity as
of now stands at approximately 45,000 metric tonnes per annum.
Key highlights
• MM Forgings Limited’s (MMFL) Net Sales grew by 12% QoQ
in Q4 FY11 to Rs 77.1 Crs indicating a YoY growth of 53.6%.
For the year FY11 the net sales were at Rs 272.12 crs, an
increase of 65% (YoY) which was broadly in line with our
expectations.
• Management has indicated FY 2012 sales to be at around Rs
300 crs. While the Management expects the Gross profit to
be at Rs 57 crs and net profit at Rs 24 crs for the same period.
• Management also intend to maintain the net profit margin of
8% going forward.
• Management expects the sales volume to be around Rs
32,000‐33,000 tonnes in FY12.
• Approximately 65%‐70% of the revenues from Q4 FY11 were
from exports.
Valuation & Recommendation
We expect MMFL’s sales to grow at 9.6% in FY12 whereas net profit
is expected to grow at 14.1% during the same period, on account of
better utilization of capacity. At the CMP of Rs. 136 per share, MMFL
is currently trading a PE of 7.2x FY12E EPS. Based on our EPS of Rs.
19.7 for FY 2012 and a target multiple of 8.5x we arrive at target of
Rs. 162. Consequently, we recommend a HOLD rating on the stock
with a target price of Rs. 162.
Performance Analysis
• The company reported net sales of Rs. 77.1 crs in Q4 FY11 against Rs.
68.9 crs in Q3 FY11 representing a QoQ growth of 12% and a YoY
growth of 53.6% for the quarter. For the year FY11 the net sales were
at Rs 272.12 crs, an increase of 65% (YoY)
• EBIDTA for Q4 FY11 rose to Rs.15.3 crs from Rs. 13.9 crs in Q3 FY11.
However the EBITDA margins declined by 38 bps in Q4 FY11. For
FY11, EBITDA increased 89% on a YoY basis to Rs 53.3 crs and EBITDA
margins stood at 19.6%.
• NPAT grew by 8% (QoQ) and 29.6% (YoY) in Q4 FY11 to Rs 5.9 Crs. For
FY 11, NPAT grew by 94% to Rs 20.2 Crs.
• The company earned Rs 9.52 crs on account of sale of land.
• MMFL’s adjusted EPS for Q4FY11 was Rs 4.88 as compared to 3.77
for Q4FY10.
• The board has declared an interim dividend of Rs 3/share
Demand expected to increase
We are incorporating sales of approximately 26,800 tonnes for FY 2012. On
the margin front we expect the company to achieve an EBIDTA margin of
19.3% & PAT margin of 7.7% in FY 2012.
Valuation & Recommendation
We expect MMFL’s sales to grow at 9.6% over FY12 whereas net profit is
expected to grow at 14.1% during the same period, on account of better
utilization of capacity. At the CMP of Rs. 136 per share, MMFL is currently
trading a PE of 7.2x FY12E EPS. Based on our EPS of Rs. 19.7 for FY 2012 and
a target multiple of 8.5x we arrive at target of Rs. 162. Consequently, we
recommend a HOLD rating on the stock with a target price of Rs. 162.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Snapshot
MMFL manufactures carbon and alloy steel forgings with product
range including forging pieces weighing between 15‐60 kgs. The
company caters to the automotive, earth moving, engineering and oil
industries. The company’s facilities are located at Singampunari,
Viralimalia, Guindy and Karan in Chennai. The company’s capacity as
of now stands at approximately 45,000 metric tonnes per annum.
Key highlights
• MM Forgings Limited’s (MMFL) Net Sales grew by 12% QoQ
in Q4 FY11 to Rs 77.1 Crs indicating a YoY growth of 53.6%.
For the year FY11 the net sales were at Rs 272.12 crs, an
increase of 65% (YoY) which was broadly in line with our
expectations.
• Management has indicated FY 2012 sales to be at around Rs
300 crs. While the Management expects the Gross profit to
be at Rs 57 crs and net profit at Rs 24 crs for the same period.
• Management also intend to maintain the net profit margin of
8% going forward.
• Management expects the sales volume to be around Rs
32,000‐33,000 tonnes in FY12.
• Approximately 65%‐70% of the revenues from Q4 FY11 were
from exports.
Valuation & Recommendation
We expect MMFL’s sales to grow at 9.6% in FY12 whereas net profit
is expected to grow at 14.1% during the same period, on account of
better utilization of capacity. At the CMP of Rs. 136 per share, MMFL
is currently trading a PE of 7.2x FY12E EPS. Based on our EPS of Rs.
19.7 for FY 2012 and a target multiple of 8.5x we arrive at target of
Rs. 162. Consequently, we recommend a HOLD rating on the stock
with a target price of Rs. 162.
Performance Analysis
• The company reported net sales of Rs. 77.1 crs in Q4 FY11 against Rs.
68.9 crs in Q3 FY11 representing a QoQ growth of 12% and a YoY
growth of 53.6% for the quarter. For the year FY11 the net sales were
at Rs 272.12 crs, an increase of 65% (YoY)
• EBIDTA for Q4 FY11 rose to Rs.15.3 crs from Rs. 13.9 crs in Q3 FY11.
However the EBITDA margins declined by 38 bps in Q4 FY11. For
FY11, EBITDA increased 89% on a YoY basis to Rs 53.3 crs and EBITDA
margins stood at 19.6%.
• NPAT grew by 8% (QoQ) and 29.6% (YoY) in Q4 FY11 to Rs 5.9 Crs. For
FY 11, NPAT grew by 94% to Rs 20.2 Crs.
• The company earned Rs 9.52 crs on account of sale of land.
• MMFL’s adjusted EPS for Q4FY11 was Rs 4.88 as compared to 3.77
for Q4FY10.
• The board has declared an interim dividend of Rs 3/share
Demand expected to increase
We are incorporating sales of approximately 26,800 tonnes for FY 2012. On
the margin front we expect the company to achieve an EBIDTA margin of
19.3% & PAT margin of 7.7% in FY 2012.
Valuation & Recommendation
We expect MMFL’s sales to grow at 9.6% over FY12 whereas net profit is
expected to grow at 14.1% during the same period, on account of better
utilization of capacity. At the CMP of Rs. 136 per share, MMFL is currently
trading a PE of 7.2x FY12E EPS. Based on our EPS of Rs. 19.7 for FY 2012 and
a target multiple of 8.5x we arrive at target of Rs. 162. Consequently, we
recommend a HOLD rating on the stock with a target price of Rs. 162.
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