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Snapshot
MMFL manufactures carbon, alloy, micro alloy and 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 75%.
Key highlights MM Forgings Limited’s (MMFL) reported net sales of Rs. 81.2 crs in Q1 FY12 , up 5.3% QoQ and 41.5% YoY mainly driven by volume growth.
Management has indicated FY 2012E sales to be at around Rs 340-350 crs and expects gross profit to be at Rs 65 crs Management reitereated its earlier guidance of maintaining net profit margin of 8% going forward. Management expects the sales volume to be around 35,000 tonnes in FY12. Approximately 70% of the revenues from Q1 FY12 were from exports. Management expects a marginal impact by the withdrawal of the DEPB benefit.
Valuation & Recommendation
We expect MMFL’s sales in FY12E to grow at 22.5% over FY11 whereas net profit is expected to grow at 19.1% during the same period, on account of better utilization of capacity. We expect that the company will continue to show improved performance in the coming quarters as well.
At the CMP of Rs. 99 per share, MMFL is currently trading a PE of 4.98x FY12E EPS. Based on our EPS of Rs. 19.89 for FY 2012 and a target multiple of 7x we arrive at target of Rs. 139. Consequently, we recommend a HOLD rating on the stock with a target price of Rs. 139.
Performance Analysis
The company reported net sales of Rs. 81.2 crs in Q1 FY12 against Rs. 77.1 crs in Q4 FY11 and Rs 57.4 crs in Q1FY11 representing a QoQ growth of 5.3% and a YoY growth of 41.5% for the quarter.
EBIDTA during Q1 FY12 rose to Rs 14.6 crs from Rs. 15.3 crs in Q4 FY11 and Rs 11 crs in Q1FY11 which was led by increase in total expenditure.
Net Profit grew by 22.2% (YoY) to Rs 6 crs in Q1FY12. However on a QoQ basis, a 61% decline is seen mainly due to a one time exceptional gain in Q4FY11 of Rs 9.5 crs.
MMFL’s adjusted EPS for Q1FY12 was Rs 4.95
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Snapshot
MMFL manufactures carbon, alloy, micro alloy and 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 75%.
Key highlights MM Forgings Limited’s (MMFL) reported net sales of Rs. 81.2 crs in Q1 FY12 , up 5.3% QoQ and 41.5% YoY mainly driven by volume growth.
Management has indicated FY 2012E sales to be at around Rs 340-350 crs and expects gross profit to be at Rs 65 crs Management reitereated its earlier guidance of maintaining net profit margin of 8% going forward. Management expects the sales volume to be around 35,000 tonnes in FY12. Approximately 70% of the revenues from Q1 FY12 were from exports. Management expects a marginal impact by the withdrawal of the DEPB benefit.
Valuation & Recommendation
We expect MMFL’s sales in FY12E to grow at 22.5% over FY11 whereas net profit is expected to grow at 19.1% during the same period, on account of better utilization of capacity. We expect that the company will continue to show improved performance in the coming quarters as well.
At the CMP of Rs. 99 per share, MMFL is currently trading a PE of 4.98x FY12E EPS. Based on our EPS of Rs. 19.89 for FY 2012 and a target multiple of 7x we arrive at target of Rs. 139. Consequently, we recommend a HOLD rating on the stock with a target price of Rs. 139.
Performance Analysis
The company reported net sales of Rs. 81.2 crs in Q1 FY12 against Rs. 77.1 crs in Q4 FY11 and Rs 57.4 crs in Q1FY11 representing a QoQ growth of 5.3% and a YoY growth of 41.5% for the quarter.
EBIDTA during Q1 FY12 rose to Rs 14.6 crs from Rs. 15.3 crs in Q4 FY11 and Rs 11 crs in Q1FY11 which was led by increase in total expenditure.
Net Profit grew by 22.2% (YoY) to Rs 6 crs in Q1FY12. However on a QoQ basis, a 61% decline is seen mainly due to a one time exceptional gain in Q4FY11 of Rs 9.5 crs.
MMFL’s adjusted EPS for Q1FY12 was Rs 4.95
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