MM Forgings hosted a conference call on Nov 14, 2022. In the conference call, the company was represented by Mr Vidyasankar Krishnan – Vice Chairman and Managing Director and Mr Venkatakrishnan – Chief Financial Officer.

Key takeaways of the call

Company crossed total sales tonnage of 36000 in H1 FY23, and is on track to cross 70,000 sales tonnage for FY23.

In Q2 FY23, export sales represented around 45% of total sales and domestic sales 55%.

Management expects to clock revenue of Rs 1400 crore in FY23 and around Rs 1800 crore in FY24.

In Q2 FY23, Europe represented 17% of total revenue, India 52%, USA 21% and South America 10%.

Capacity utilization stands around 57% in Q2 FY23.

The medium to long-term domestic outlook looks promising, with a pickup in economic activities. The MHCV segment is expected to lead the recovery in coming months, with demand getting support from core activities such as construction, mining and infrastructure.

In FY23, management expects similar revenue per tonnage in line with FY22.

Management indicated energy prices could significantly increase in Europe due to the war situation, which can reduce demand in that region.

Rupee depreciation is benefit for the company as most of company's contracts are denominated in dollars.

Freight cost is also coming down, which is a benefit for the company.

In next 18-24 months, company will largely be investing on EV front. Initially company plans the setup on leasehold property.

Company has already started working on EV gearboxes, which has received orders from customers.

Revenue growth in FY24 will largely be driven by India's good prospects and increase in wallet share.

Capex guidance for next 18-24 months is about Rs 450 crore.