MM Forgings hosted a conference call on May 18, 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 clocked total sales tonnage of 72000 and production tonnage of 76,000 in FY23.

In Q4 FY23, company clocked sales tonnage between 18,000- 19,000.

In FY23, exports contributed 35% to total revenue and domestic contributed 65%. Domestic sales grew by 65% YoY and exports fell 9% YoY.

Company has decided to realign its priorities and concentrate more on the domestic market. Management indicated strong traction in domestic market, which will offset flattish growth in export market.

Management expects to clock 90,000+ sales tonnage in FY24 and revenue between Rs 1800-2000 crore.

Domestic CV market is expected to grow between 5-12% in FY24.

Raw material cost has increased due to change product mix in Q4 FY23. Power cost has also increased due to price hike in Tamil nadu.

In FY24, company expects EBITDA margin to be in line with FY23 levels.

In FY23, CVs contributed 80% to total sales, PV 11% and others 9%. Company is foraying in PV segment in India for next leg of growth.

Going forward, company expects incremental growth on back of launch of new products and increase in wallet share.

In FY23, India contributed 65% to total sales, Europe 15%, USA 15% and South America 5%.

Management highlighted that crankshafts business is performing well. Company is working on whole range of crankshafts from single cylinder to six cylinders.

During FY23, company added new customers in both PV and CV customers, which gives confidence regarding topline growth in FY24.

Company is gaining wallet share in Europe driven by fall in freight rates, making MM forgings competitive compared to domestic players.

Capex planned for next two years is about Rs 500 crore. Of which, majority will be spent in FY24. About Rs 100 crore is set aside for foray into EV segment.

In FY23, capacity utilization was around 65%. Management guided utilization of 80-85% in FY24.

In FY24, company is planning to add about Rs 200 crore of debt. Currently term loan stands around Rs 450 odd crore.

Board has declared an interim dividend of Rs 6 per equity share. The Record Date for payment of Dividend will be 29 May 2023. The Dividend shall be payable on or before 15 June 2023.