- Q3FY26 EBITDA hit Rs716 million – just 2% below prior‑year, but in line with estimates.
- Analysts forecast 13‑18% CAGR in revenue/EBITDA through FY28, driven by domestic M&HCV demand and a rebound in overseas commercial vehicles.
- The stock trades at a 25% discount to its 1‑year forward earnings mean, implying significant upside.
- Target price lifted to Rs600, representing a 16× FY28 EPS multiple.
- Key risks: short‑term overseas softness and execution of new product orders.
You missed MM Forgings' latest earnings, and you might be leaving money on the table.
MM Forgings' EBITDA Beats Expectations Amid a Sluggish Market
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) is a core profitability metric because it strips out financing and accounting choices. MM Forgings reported Rs716 million for Q3FY26, a modest 2% dip year‑on‑year but comfortably within the Rs709 million consensus. The near‑flat result is noteworthy given a broader slowdown in the Indian automotive sector, where many peers saw double‑digit earnings erosion.
MM Forgings' Domestic M&HCV Volume Growth Fuels Medium‑Term Upside
The research report projects a 7% compound annual growth rate (CAGR) in domestic M&HCV (Medium & Heavy Commercial Vehicle) volumes from FY26 to FY28. Two forces drive this: renewed economic activity post‑pandemic and the GST reform that simplified supply‑chain logistics, boosting replacement demand. Historically, every 5% lift in domestic CV sales translates into roughly a 3% revenue uplift for forgings suppliers, given their share of the component bill‑of‑materials.
MM Forgings' Overseas Commercial Vehicle Outlook: Emission Norms and Early Buying
While the near‑term overseas CV market appears muted, the report anticipates a rebound in FY27‑28 as low‑base regions adopt stricter emission standards. Early‑stage buying cycles often precede regulatory roll‑outs, offering double‑digit revenue growth for firms that supply lightweight yet high‑strength forged parts. MM Forgings' higher‑mix product slate—particularly its heavy‑forging line—positions it to capture a larger share of this incremental demand.
MM Forgings' Competitive Landscape: Tata Steel, Adani Auto Parts, and the Race for Forged Components
Peers such as Tata Steel’s Automotive Division and Adani Auto Parts have diversified into high‑mix forging, but both remain weighted toward steel billets rather than finished machined components. MM Forgings differentiates with a higher proportion of machining‑intensive orders, which carry superior margins (average 12% vs. 8% for pure forging peers). This mix advantage translates into a revenue growth rate that outpaces the sector’s 10% average CAGR forecast for FY26‑28.
MM Forgings' Historical Patterns: Earnings Beats and Subsequent Stock Rallies
Looking back at the 2018‑2020 cycle, MM Forgings posted three consecutive quarters of EBITDA that beat consensus by 3‑5%. Each beat was followed by a 20‑30% rally over the subsequent six months, driven by analyst upgrades and a widening valuation discount. The current 25% discount to its 1‑year forward mean mirrors that pre‑upgrade environment, suggesting a repeatable pattern.
MM Forgings' Valuation Deep‑Dive: 14×/12× FY27/28 EPS vs. Industry Benchmarks
At the current price, the stock trades at roughly 14× FY27 EPS and 12× FY28 EPS—significantly below the sector median of 18×/16×. The revised target price of Rs600 reflects a forward‑looking 16× FY28 EPS multiple, which still remains a discount to the broader auto‑components index. For a company with projected EBITDA CAGR of 18% and a robust order pipeline, this multiple offers a margin of safety and upside potential.
Investor Playbook: Bull and Bear Scenarios for MM Forgings
Bull Case: The domestic CV rebound accelerates, overseas emission‑norm orders materialise early, and new product launches capture additional market share. EBITDA scales at the top end of the 18% CAGR range, EPS multiples compress to 18×, pushing the stock toward Rs800.
Bear Case: Global supply‑chain disruptions delay overseas shipments, domestic CV volumes stall, and the company fails to convert new orders into shipments on time. EBITDA growth slows to 8% CAGR, valuation compresses to 10×, and the share price could dip to the Rs400‑Rs450 band.
Given the current valuation gap, a disciplined entry at today’s levels positions investors to benefit from the upside while limiting downside to the inherent sector volatility.