Any current/future new fundraising through debt or equity?

The company expects debt levels to increase in FY2024 and FY2025, with the peak debt occurring in FY2025. Debt levels are anticipated to rise by around Rs. 200 Crores each year during this period. Around Rs. 300 Crores of the current gross debt (approx. Rs. 430 Crores) is expected to be repaid over the next three years (2024-2026). New loans will likely be taken in rupees without swapping to forex due to high current foreign interest rates. Capex of about Rs. 300 Crores is planned for FY2024, similar to FY2023, some of which may be funded by the increased debt. No mention of any immediate equi

Any current/future capex/capital investment/strategic investment?

FY2024 Capex guidance: Approximately Rs. 300 Crores. Q1 FY2024 Capex spend: Around Rs. 50 Crores. Additional capex for EV business next 12 months: Rs. 75 to 100 Crores, possibly an extra Rs. 50 Crores depending on off take. Ongoing investments in state-of-the-art forging lines with customer approval. Plans to increase crankshaft machining capacity from 32K to 50K units with utilization rise to around 40%. Developing new products like EV controllers and PMSM motors with expected production and revenue growth over the next 1-2 years. Focused investment in EV powertrain components (motor, gearbox

Future growth expectations in sales/revenue/volumes?

Targeting Rs. 1000 to Rs. 2000 Crores in turnover from the controller business and related products over a 7-10 year horizon. Expect to cross Rs. 2000 Crores in total revenue by FY2025 or within the next 1-2 years. Sales and production volume targets for FY2024 are between 85,000 to 90,000 tonnes, with domestic sales around 60,000 tonnes. Long-term ambition to reach about Rs. 3000 Crores turnover in 7-10 years. EBITDA margins expected to be stable around Rs. 35,000 per tonne with potential to improve through operating leverage and value-added products. Growth driven mainly by domestic auto mar

Future growth expectations in earnings/operating earnings/profits/EPS?

MM Forgings aims to achieve revenue between Rs.1000 Crores to Rs.2000 Crores over a 7-10 year horizon. The company targets crossing the Rs.2000 Crores revenue mark by FY2025. EBITDA margins currently at ~17-18%, with a target of reaching around 19% over time. EBITDA per tonne expected to stay around Rs.35,000, with potential to inch higher through operating leverage and value-added products. Profitability impacted recently by raw material and power cost inflation but expected to improve as prices soften. Capex of around Rs.300 Crores annually for FY2024 and FY2025, supporting growth

Current/ Expected Orderbook/ Pending Orders?

Specific details on current or expected order book/pending orders were not explicitly disclosed in the call. For gear blanks and passenger cars, production is slightly delayed but expected to start by end of Q2 FY2024, following a six-month delay. Crankshaft development is reasonably on track. The company is adding newer parts but does not disclose detailed product portfolio or order book specifics. The focus remains on powertrains with plans to become a full-service provider over the next 12-15 months. Next year, turnover from new parts in testing and fitment trials, such as PMSM motors, is e

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M M Forgings LtdQ2 FY23Auto Components

M M Forgings Ltd Q2 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹461P/E: 24.9Market Cap: ₹2.2K CrSector: Auto Components

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Targeting Rs. 1000 to Rs. 2000 Crores in turnover from the controller business and related products over a 7-10 year horizon.
→Expect to cross Rs. 2000 Crores in total revenue by FY2025 or within the next 1-2 years.
→Sales and production volume targets for FY2024 are between 85,000 to 90,000 tonnes, with domestic sales around 60,000 tonnes.
→Long-term ambition to reach about Rs. 3000 Crores turnover in 7-10 years.
→EBITDA margins expected to be stable around Rs. 35,000 per tonne with potential to improve through operating leverage and value-added products.
→Growth driven mainly by domestic auto market, EV powertrain components (motor, gearbox, controller), and selective export market expansion.
→Focus remains on forging and auto sectors, with EV segment set to contribute more significantly from FY2025 onward.

Margin guidance

Category 3

→MM Forgings aims to achieve revenue between Rs.1000 Crores to Rs.2000 Crores over a 7-10 year horizon.
→The company targets crossing the Rs.2000 Crores revenue mark by FY2025.
→EBITDA margins currently at ~17-18%, with a target of reaching around 19% over time.
→EBITDA per tonne expected to stay around Rs.35,000, with potential to inch higher through operating leverage and value-added products.
→Profitability impacted recently by raw material and power cost inflation but expected to improve as prices soften.
→Capex of around Rs.300 Crores annually for FY2024 and FY2025, supporting growth and margin expansion.
→Focus remains primarily on automotive forging and EV powertrain components, expected to drive growth.
→Company expects positive volume growth, aiming for 85,000 to 90,000 tonnes production in FY2024.
→Export markets remain sluggish but domestic growth and new product launches will bolster earnings.

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Fundraise plans

Yes

→The company expects debt levels to increase in FY2024 and FY2025, with the peak debt occurring in FY2025.
→Debt levels are anticipated to rise by around Rs. 200 Crores each year during this period.
→Around Rs. 300 Crores of the current gross debt (approx. Rs. 430 Crores) is expected to be repaid over the next three years (2024-2026).
→New loans will likely be taken in rupees without swapping to forex due to high current foreign interest rates.
→Capex of about Rs. 300 Crores is planned for FY2024, similar to FY2023, some of which may be funded by the increased debt.
→No mention of any immediate equity fundraising; focus remains on managing and servicing debt while investing in growth.

Order book

→Specific details on current or expected order book/pending orders were not explicitly disclosed in the call.
→For gear blanks and passenger cars, production is slightly delayed but expected to start by end of Q2 FY2024, following a six-month delay.
→Crankshaft development is reasonably on track.
→The company is adding newer parts but does not disclose detailed product portfolio or order book specifics.
→The focus remains on powertrains with plans to become a full-service provider over the next 12-15 months.
→Next year, turnover from new parts in testing and fitment trials, such as PMSM motors, is expected to be in the range of Rs. 15 to 50 Crores.
→Overall, growth in volumes targeted around 85,000 to 90,000 tonnes in FY2024 with sales volumes expected to be close to production.

Capex plans

Yes

→FY2024 Capex guidance: Approximately Rs. 300 Crores.
→Q1 FY2024 Capex spend: Around Rs. 50 Crores.
→Additional capex for EV business next 12 months: Rs. 75 to 100 Crores, possibly an extra Rs. 50 Crores depending on off take.
→Ongoing investments in state-of-the-art forging lines with customer approval.
→Plans to increase crankshaft machining capacity from 32K to 50K units with utilization rise to around 40%.
→Developing new products like EV controllers and PMSM motors with expected production and revenue growth over the next 1-2 years.
→Focused investment in EV powertrain components (motor, gearbox, controllers) with prototypes expected by Q1 FY2025.
→Long-term turnover target includes strategic investments in controller business projecting Rs. 1,000 to 2,000 Crores over 7-10 years.

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