Mehabe score: 5 G Factor: 3 Piotski Score: 5 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 5.
Description
MM Forgings is engaged in the manufacture of Steel Forgings.Site:MMFLMain Symbol:MMFL
Stock trades at 706.0, above its 50dma 697.2. It also trades above its 200dma 538.61. The stock remains bullish on techicals
The 52 week high is at 808.00 and the 52week low is at 251.50
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
– has been maintaining a healthy dividend payout of 22.28%
Weakness
– Stock is trading at 3.41 times its book value
-The company has delivered a poor sales growth of 7.64% over past five years.
– has a low return on equity of 13.01% for last 3 years.
– might be capitalizing the interest cost
-Debtor days have increased from 33.15 to 61.20 days.
Competition
– The industry trades at a mean P/E of 21.3x. Sona BLW Precis. trades at the industry’s max P/E of 136.13x. MMFL trades at a P/E of 22.5x
– Industry’s mean G-Factor is 2.7 while the mean Piotski score is 8.0. MMFL has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is -0.3%. The max 1- month return was given by Ramkrishna Forg.: a return of 13.04 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 239.0 cr compared to Rs 76.0 cr for period ended Jun 2020, a rise of 214.5%
Operating Profits reported at Rs 43.0 cr for period ended Jun 2021 vis-vis 7.0 for period ended Jun 2020 .
Operating Margins expanded 878.1 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 9.88 compared to Rs 12.49 for previous quarter ended Mar 2021 and Rs -2.05 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 889.0 cr for period ended TTM vis-vis sales of Rs 726.0 cr for the period ended Mar 2021, a healthy growth of 18.3%. The 3 year sales cagr stood at -0.6%.
Operating margins expanded to 18.0% for period ended TTM vis-vis 17.0% for period ended Mar 2021, expansion of 100.0 bps.
Net Profit reported at Rs 76.0 cr for period ended TTM vis-vis sales of Rs 47.0 cr for the period ended Mar 2021, rising 38.2%.
Company reported a poor Net Profit CAGR of -2.1% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The stock has given a return of 131% on a 1 Year basis vis-vis a return of 5% over the last 3 Years. – The compounded sales growth on a TTM bassis is 51% vis-vis a compounded sales growth of 5% over the last 3 Years. – The compounded profit growth on a TTM basis is 203% vis-vis a compounded profit growth of -12% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.13% vis-vis 0.89% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 21.77% vis-vis 21.73% for Mar 2021
Conclusion
– is expected to give good quarter
– has been maintaining a healthy dividend payout of 22.28% – Stock is trading at 3.41 times its book value
-The company has delivered a poor sales growth of 7.64% over past five years.
– has a low return on equity of 13.01% for last 3 years.
– might be capitalizing the interest cost
-Debtor days have increased from 33.15 to 61.20 days.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 697.2 and is trading at 706.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
