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Monday, November 28, 2011

M M Forgings Ltd:-Buy/sell/growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:M M Forgings Ltd

Story:M.M. Forgings Limited engages in the manufacture and sale of steel forgings in India. It provides steel forgings in raw, semi-machined, and fully machined stages in various grades of carbon, alloy, micro alloy, and stainless steels in the weight of 0.20 Kg to 60 Kg. The company was formerly known as The Madras Motors Ltd. and changed its name to M.M. Forgings Limited in 1993.MM Forgings Limited’s (MMFL) reported net sales of Rs. 86.09 crs in Q2 FY12 , up 6.0% QoQ and 25.2% YoY mainly driven by volume growth. Management expects the sales volume to be around 28,000 tonnes in FY12E. Management has indicated FY 2012E sales to be at around Rs 320 crs which is lower than the previous guidance of Rs 340-350 crs. This is primarily due to the slowdown witnessed in the European regions which will impact the sales in FY12E. Management has signalled that Q3FY12 may see a dip in sales owing to the seasonality impact. Management expects net profit margin to be at 7% for FY12E.Approximately 70% of the revenues from Q2 FY12 were from exports. With the withdrawal of the DEPB benefit and implementation of duty drawback scheme, the company will be impacted by approximately 1-1.5%.MM Forgings plans to invest ~Rs 65 crs in FY12E for capacity building at its manufacturing plants and wind farm out of which approximately Rs 40 crs will be utilized at its forging plants in Chennai, Tiruchi and Madurai. With this, the company’s total production is expected to exceed 30,000 tonnes (approximately 28,000 in FY11).At the CMP of Rs. 95 per share, MMFL is currently trading a PE of 6.x FY12E EPS.Its fairly valued at present levels.

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