MM Forgings - Strong CV Growth In U.S., Europe The Key Growth Drivers: HDFC Securities Initiates Coverage

HDFC Securities Retail Equities

MM Forgings Ltd. is the third largest forging company in India with a significant share of forging products for the commercial vehicle segment in both the domestic and the export markets.

The company has been increasing its capacity which is slated to increase to 130,000 tonnes by the end of FY23. It is focusing more on electric vehicle products and adding machined products to its portfolio driving higher margins.

Medium and heavy commercial vehicle demand had remained muted for the past few years due to the global slowdown and the Covid pandemic. FY22 witnessed a revival in M&HCV sales and the momentum is expected to continue in FY23 as well driven by the huge capex envisaged by the Government for National infrastructure pipeline, improving economic demand and implementation of scrappage policy.

Diversification in other high margin products for EV and consolidating its position for crankshafts would aid in margin expansion for MM Forgings.

Exports have also remained strong despite increasing interest rates in North America and Europe.

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