M M Forgings Q4 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 1
Fundraise
Yes
Order
Yes
Capex
Yes
4 of 5 growth signals are positive — a strong management growth story.
Full analysisRevenue guidance
Category 3- FY24 production achieved around 85,000 tons; sales at 77,000 tons.
- FY25 production target: 92,000 to 95,000 tons.
- Sales growth expectation for FY25: around 10%-12%.
- Export volume growth expected at about 10% for the coming year.
- Domestic market growth projected at 5%-7%, with an additional 3% market share gain, primarily in the second half.
- Anticipated sales turnover growth: aiming for double-digit percentage growth (~10%).
- Investment of INR 500 crores planned over next 12-14 months to support capacity expansion and growth.
- Inventory reduction target: INR 50 crores to 100 crores aimed to improve working capital and sales.
- Margin expansion expected to cross 20% by Q3/Q4 calendar year, supporting healthy profitability with volume growth.
See what M M Forgings management said on margin guidance — free account, 30 seconds.
Fundraise plans
Yes- MM Forgings plans a total capital expenditure of INR 500 crores over the next 12 to 24 months.
- Of this, approximately INR 300 crores will be funded through internal accruals (equity).
- The remaining INR 200 crores will be financed by additional borrowings (debt).
- No mention of fresh equity fundraising beyond utilizing internal accruals.
- The company aims to maintain a dividend payout policy of around 15%-20% of profits, subject to board approval and urgent requirements.
- This funding mix supports capacity expansion, including investments in forging, machining, and electrical/EV components.
See what M M Forgings management said on order book — free account, 30 seconds.
Capex plans
Yes- MM Forgings plans a capex of around INR 500 crores over the next 12 to 24 months.
- INR 425 crores allocated to core forging: about INR 250 crores for machining and INR 100-150 crores for forging capacity expansion.
- INR 75 crores is targeted towards electrical segment (Abhinava Rizel).
- INR 400 crores of the capex expected to be spent within FY25, mainly on machining, forging, and EV motor facilities.
- About INR 75 crores spent so far in FY24 for Abhinava Rizel, mainly on infra and testing facilities for PMSM motors.
- Revenue potential from Abhinava Rizel capex is around INR 100 crores initially, aiming for higher growth later.
- Funding mix: INR 300 crores from internal accruals and INR 200 crores via additional borrowings.
- Plans to invest in green power (wind and solar) in the near future to mitigate rising power costs.
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Margin guidance
Category 1- MM Forgings expects a 10%-12% overall growth in sales for the current year, driven by both domestic and export markets.
- EBITDA margins improved to 19.4% in FY24; management targets crossing the 20% mark by Q3/Q4 of the current fiscal year and maintaining early 20s margins thereafter.
- Operating efficiencies and cost compression (in cutting tools, manpower, electricity) alongside value-added products expansion are expected to enhance margins further.
- Export growth remains strong, supported by global customers shifting away from China, fueling order upticks especially in Europe and the Americas.
- Investments totaling around INR500 crores planned over next 12-14 months will expand capacity and support higher growth, targeting tonnage increase from ~85,000 tons in FY24 to 92,000-95,000 tons in FY25.
- Management aims to scale the EV powertrain business to INR1,000-2,000 crores turnover over the next decade, contributing to future profit growth.
- Interest costs will rise moderately but margin outlook remains positive despite this headwind.
Order book
Yes- MM Forgings has reported new orders across its three major export geographies (North America, Europe, South America), contributing to growth.
- There is strong order inflow driven by customers' China-plus-one strategy, especially from European customers looking to diversify away from China.
- Export growth of 10-15% is expected, supported by new orders despite some industry slowdown.
- Domestic market growth is projected around 10%, with 3% estimated market share gains in various product categories.
- Production targets for FY25 are between 92,000 to 95,000 tons, up from 85,000 tons produced in FY24.
- Sales volume for FY24 was around 77,000 tons; volume growth of approximately 10% is anticipated for the coming year.
- The company is actively working on launching new products in segments like heavy presses, beams, knuckles, and crankshafts to boost order book and presence.
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