M M Forgings Ltd

- For the current fiscal year, MM Forgings added INR30 crores of debt in the recent quarter. - Management expects no significant increase in borrowings for the rest of the year; net term loans are planned to remain around INR550 crores. - Peak debt is likely reached unless significant and highly lucrative opportunities arise, in which case debt may increase. - Capital expenditure for the year is being scaled back from the earlier projection of INR300 crores to around INR150-200 crores due to cash flow considerations, aiming to avoid further debt increase. - No explicit mention of equity fundraising was made during the call. - Overall, the company intends to manage debt prudently without major new fundraising via debt or equity in the near term unless exceptional opportunities present themselves.

- INR 55 crores capex spent in the current quarter. - Planned capex for the full year trimmed down to INR 150-200 crores, down from earlier projection of INR 300 crores due to cash flow considerations. - Major ongoing capex includes setup of a 16,000-ton press expected to be commissioned during the year and producing from FY 2026 Q1. - The 16,000-ton press will help ease production bottlenecks by shifting some parts from the current 8,000-ton press. - Management states the next 2 years will be a consolidation phase focusing on cost control, sales growth, and controlled spending. - No significant increase in borrowings planned; term loans expected to remain around INR 550 crores. - New capacity-related revenues are expected to start flowing in Q4 FY 2025-26 to Q1 FY 2026-27. - Future debt addition only if significant, lucrative opportunities arise.

- Company expects improvement in sales after next 6 to 12 months, with the next 6 to 9 months likely at previous year levels +/- small variance. - New capacity additions expected to start generating revenue from Q4 of the current fiscal to Q1 of next fiscal. - There is a backlog of delayed customer projects; once resumed, these will boost incremental revenue. - Production capacity utilization is currently 50%-60%, with plans to better utilize installed equipment. - New products developed and customer projects underway across global markets, aiming for growth over 12-18 months. - The company aims to leverage rising scale and product mix improvements to reclaim costs and improve EBITDA margins. - Domestic commercial vehicle market outlook is mixed but expected to hold levels throughout the year. - Expansion into machining, axle beams, crankshafts, and large press commissioning in FY2026 expected to support growth.

- The management acknowledges near-term challenges due to global tariff impacts and market volatility, leading to current softness in sales and profitability. - EBITDA for Q1 FY26 was INR72 crores down from INR78 crores YoY; PAT declined from INR32 crores to INR22 crores. - They expect a consolidation phase over the next 2 years focusing on cost control and sales growth. - Management anticipates improvements in EBITDA and margins over the next 12-18 months through operational efficiencies and new product launches. - New capacities are expected to start contributing revenue from Q4 FY26 to Q1 FY27. - Despite current issues, the management remains confident of resuming growth in sales and profits post this period. - They aim to stabilize debt levels and possibly grow debt only if lucrative opportunities arise. - Forecasted margin improvement remains cautious, with a potential 100 to 200 basis points uplift full year, depending on volumes and product mix.

- Current incremental order book is approximately INR 100-110 crores per month, valid till at least October. - Actual overall order book includes a baseline and incremental streams; baseline order book numbers are uncertain. - Some customer projects have been delayed (e.g., a significant PV domestic project delayed by over a year) but are expected to resume revenue flow from Q4 FY 2025 onward. - New capacity added over the last 2-3 years, totaling around INR 1000 crores, is backed by orders. - The recently commissioned capacities are expected to start contributing from Q4 FY 2025 to Q1 FY 2026. - No loss of customers or order books despite delays; order execution timelines are impacted by external factors like tariffs and market conditions. - Overall, the sales outlook for the next 6-9 months is steady, with potential growth expected after this period.