MM Forgings
MM Forgings, a Tamil Nadu based company posted a very robust set of numbers for Q2FY15. The company posted an exuberant 86% (YoY) jump in net profit at Rs.13 crore and this was on a 24% rise in net sales at Rs.122 crore. Sequentially though the topline and bottomline are flat, clearly reflecting the lower base effect for YoY numbers. The most enthusing part- its net profit for H1FY15 stood at Rs.26 crore and with two more quarters to go, it is already at FY14 net profit of Rs.29 crore. Surely it will end the current fiscal on a much higher note.
The company, in 1946 started operations as ‘ The Madras Motors Ltd’, importing and distributing products of Royal Enfield Motors from UK. It started manufacture of forgings in 1974, stopping the Royal Enfield dealership. It caters to auto , engineering and oil industries; is amongst the largest forgings exporters with more than 70% of its income coming from exports. A consistent performer, the company is liberal when it comes to bonus (two bonuses in 9 years) and dividends. Improvement in demand from US and Europe will boost earnings and so will demand uptick from domestic market. Promoters as at 30th Sept 2014, hold 59.29% stake and FIIs, for the first time have bought into the stock, with a stake at 0.49%. Domestic institutions hold 7.37% stake. Annualised EPS stands at Rs.44, discounting the current price by around 11 times.