Any current/future new fundraising through debt or equity?

MM Forgings plans a capex of around ₹550 Crores over the next 24 months, with ₹90 Crores already spent. To fund this, the company anticipates raising approximately ₹250 Crores through debt. The remaining ₹300 Crores is expected to be funded from internal accruals. The company plans incremental debt of around ₹350 Crores according to discussions on swaps and interest cost management. The incremental borrowing is likely to be Euro-denominated bonds, with interest rate swaps utilized to manage floating to fixed rate risk. Management indicates that floating-to-fixed interest rate swaps should be u

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

MM Forgings is planning a total capex of approximately ₹550 Crores over the next 24 months, with ₹90 Crores already spent. Out of the ₹550 Crores, around ₹100 Crores is earmarked for a new acquisition related to the EV (Electric Vehicle) powertrain business. The remaining ₹450 Crores will be invested in the core forging and machining business. Additionally, ₹25 Crores is planned for a subsidiary, SVPL, which operates in the alternator business. Near-term capex for the current fiscal year is expected to be around ₹275 Crores to ₹300 Crores, with about ₹200 Crores planned for the next 6 months.

Future growth expectations in sales/revenue/volumes?

Targeting approximately 75,000 tonnes production for the current year, up from about 36,000 tonnes in H1 FY2023. Expecting to cross 90,000+ tonnes in the next fiscal year. Revenue expected to reach around Rs.1,400 Crores for the current year and targeting Rs.1,800 to 2,000 Crores for FY2024. Revenue guidance is based on static raw material prices; softer commodity prices may impact revenues modestly (5-10% reduction expected to impact 40-50% of revenue). Growth driven mainly by strong domestic market expansion, wallet share gains, and new product launches. Increase in machined produc

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

Revenue is expected to grow sharply, targeting about Rs.1800 Crores to Rs.2000 Crores in FY2024, driven mainly by strong domestic demand, wallet share gains, and new product launches. EBITDA margins are expected to remain steady or improve slightly, supported by higher realization per tonne due to value-added machining products. The share of machined products is set to increase from about 50% currently to approximately 65% by FY2024, aiding margin expansion. EV business is projected to contribute modestly with around Rs.25 Crores revenue in FY2024, increasing to over Rs.100 Crores in FY2

Current/ Expected Orderbook/ Pending Orders?

The transcript does not explicitly mention the current or expected order book or pending orders in exact figures. However, there are indications of strong order inflows, especially from the "China plus one" opportunity, with new orders won from North American customers seeking alternatives to China. The company expects positive growth in exports and domestic markets, driven by factors such as wallet share gains and new product launches. Demand from Europe faces some uncertainty, with some order cancellations, but overall opportunities remain due to supply disruptions and energy price impact. T

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M M Forgings LtdQ3 FY22Auto Components

M M Forgings Ltd Q3 FY22 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 2

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→Targeting approximately 75,000 tonnes production for the current year, up from about 36,000 tonnes in H1 FY2023.
→Expecting to cross 90,000+ tonnes in the next fiscal year.
→Revenue expected to reach around Rs.1,400 Crores for the current year and targeting Rs.1,800 to 2,000 Crores for FY2024.
→Revenue guidance is based on static raw material prices; softer commodity prices may impact revenues modestly (5-10% reduction expected to impact 40-50% of revenue).
→Growth driven mainly by strong domestic market expansion, wallet share gains, and new product launches.
→Increase in machined product share expected from 50% to 65% by FY2024, contributing to higher realizations.
→EV segment revenue projected to grow from under Rs.25 Crores in FY2024 to Rs.100+ Crores in FY2025.
→Export markets, especially Europe and North America, present opportunities amid shifts from China plus one strategy and energy cost advantages in India.

Margin guidance

Category 3

→Revenue is expected to grow sharply, targeting about Rs.1800 Crores to Rs.2000 Crores in FY2024, driven mainly by strong domestic demand, wallet share gains, and new product launches.
→EBITDA margins are expected to remain steady or improve slightly, supported by higher realization per tonne due to value-added machining products.
→The share of machined products is set to increase from about 50% currently to approximately 65% by FY2024, aiding margin expansion.
→EV business is projected to contribute modestly with around Rs.25 Crores revenue in FY2024, increasing to over Rs.100 Crores in FY2025.
→Operating costs may see some inflationary pressure in the near term, but overall profitability should improve with sales growth.
→Capacity utilization is expected to increase towards 75,000 tonnes by year-end, supporting volume-driven earnings growth.
→Realization per tonne is anticipated to remain around Rs.190,000, viewed as sustainable barring major commodity price changes.

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Fundraise plans

Yes

→MM Forgings plans a capex of around ₹550 Crores over the next 24 months, with ₹90 Crores already spent.
→To fund this, the company anticipates raising approximately ₹250 Crores through debt.
→The remaining ₹300 Crores is expected to be funded from internal accruals.
→The company plans incremental debt of around ₹350 Crores according to discussions on swaps and interest cost management.
→The incremental borrowing is likely to be Euro-denominated bonds, with interest rate swaps utilized to manage floating to fixed rate risk.
→Management indicates that floating-to-fixed interest rate swaps should be used judiciously based on market conditions.
→There is no indication of any immediate equity fundraising in the transcript.

Order book

→The transcript does not explicitly mention the current or expected order book or pending orders in exact figures.
→However, there are indications of strong order inflows, especially from the "China plus one" opportunity, with new orders won from North American customers seeking alternatives to China.
→The company expects positive growth in exports and domestic markets, driven by factors such as wallet share gains and new product launches.
→Demand from Europe faces some uncertainty, with some order cancellations, but overall opportunities remain due to supply disruptions and energy price impact.
→There's also an ongoing development in the EV space, with expected revenues of Rs. 25 Crores in FY2023-24 and over Rs. 100 Crores in FY2025, indicating active orders under development.
→Overall, the outlook suggests a healthy pipeline of orders and sustained demand despite global challenges.

Capex plans

Yes

→MM Forgings is planning a total capex of approximately ₹550 Crores over the next 24 months, with ₹90 Crores already spent.
→Out of the ₹550 Crores, around ₹100 Crores is earmarked for a new acquisition related to the EV (Electric Vehicle) powertrain business.
→The remaining ₹450 Crores will be invested in the core forging and machining business.
→Additionally, ₹25 Crores is planned for a subsidiary, SVPL, which operates in the alternator business.
→Near-term capex for the current fiscal year is expected to be around ₹275 Crores to ₹300 Crores, with about ₹200 Crores planned for the next 6 months.
→In the EV space, an investment of ₹100 Crores is planned for testing, prototyping, batch, and serial production facilities, initially in leased property before moving to owned facilities.

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