MM Forgings zooms 19%, nears record high on strong Q4 results

In Q4FY21, the company's standalone PAT nearly doubled at Rs 30.14 crore, against Rs 15.34 crore in Q3FY21, on the back of healthy income

Shares of MM Forging zoomed 19 per cent to hit a 52-week high of Rs 720 on the BSE in intra-day trade on Tuesday after the company reported a strong set of numbers for the quarter ended March 2021 (Q4FY21). The stock was trading close to its all-time high level of Rs 743, touched on June 18, 2018.

In Q4FY21, the company's standalone profit after tax (PAT) nearly doubled at Rs 30.14 crore, against Rs 15.34 crore in Q3FY21, on the back of healthy income. It had posted PAT of Rs 6.54 crore in Q4FY20.

Net standalone sales for Q4FY21 jumped 81.3 per cent YoY, 32 per cent quarter on quarter (QoQ) to Rs 286 crore. Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins rose 450 basis point (bps) QoQ to an 11-quarter high of 19.8 per cent.

However, for full year FY21, sales were flattish YoY at Rs 726 crore, with margins down around 40 bps YoY to 16.8 per cent and PAT flattish YoY at Rs 47 crore.

The company declared interim dividend of Rs 5 per share for the financial year 2021-22 (FY22), with record date set as July 2, 2021.

According to ICICI Securities, MM Forging’s performance was strong on the profit and loss front, likely led by robust demand improvement in India as well as international markets. The magnitude of sequential margin increase was a surprise especially as gross margins expanded 64 bps QoQ despite a sharp spike in prices of all key input commodities over the past few months. The company realized substantial operating leverage benefits.

On the balance sheet front, however, MM Forgings experienced a steep deterioration in working capital cycle primarily tracking increase in debtors and inventories. Net debt to equity at ~0.8x as of FY21 is reasonable, the brokerage firm said in a note.

At 01:56 pm, MM Forgings was up 14 per cent at Rs 687 on the BSE, as compared to 0.38 per cent gain in the S&P BSE Sensex. A combined 286,000 shares have changed hands on the counter on the NSE and BSE, so far.