Buy M M Forgings, target price Rs 790: ICICI Direct

ICICI Direct has buy call on M M Forgings with a target price of Rs 790. The current market price of M M Forgings Ltd. is Rs 673.8. Time period given by analyst is one year when M M Forgings Ltd. price can reach defined target.
M M Forgings Ltd., incorporated in the year 1946, is a Small Cap company (having a market cap of Rs 1606.57 Crore) operating in Auto Ancillaries sector.

M M Forgings Ltd. key Products/Revenue Segments include Steel Forgings and Power Generation for the year ending 31-Mar-2019.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 294.92 Crore, up 28.55 % from last quarter Total Income of Rs 229.43 Crore and up 69.30 % from last year same quarter Total Income of Rs 174.20 Crore. Company reported net profit after tax of Rs 34.12 Crore in latest quarter.

Investment Rationale
For MMF, standalone PAT is expected to grow at 51.4% CAGR in FY21-23E, albeit on a low base. With peak of capex cycle behind it, expected increase in utilisation levels via improvement in demand scenario as well as healthier margin performance keep the outlook healthy, in our view. The brokerage stays positive on the stock and retains BUY rating, valuing it at 18x FY23E EPS to arrive at a revised target price of Rs 790 (earlier Rs 530).

Promoter/FII Holdings
Promoters held 56.3 per cent stake in the company as of June 30, 2020, while FIIs held 0.3 per cent, DIIs 21.9 per cent and public and others 21.5 per cent.