Broker’s Call: MM Forgings (Buy)

Why It Matters

The upbeat revenue outlook and attractive valuation suggest upside potential for investors as MM Forgings capitalises on domestic replacement demand and export recovery.

Key Takeaways

• EBITDA marginally down, but revenue beats estimates.
• Domestic M&HCV volume expected 7% CAGR FY26‑28.
• Export revenue rises, supporting overall growth.
• Gross margin compressed 440 bps to 52.9%.
• Buy rating retained with ₹600 target price.

Pulse Analysis

MM Forgings, a key player in the automotive components sector, reported mixed Q3FY26 results that underscore a transition phase. While EBITDA slipped marginally, revenue surged to ₹405 crore, driven by a 14% rise in domestic sales and a 7% increase in export earnings. The company’s gross margin contraction to 52.9% reflects an adverse product mix, yet the top‑line beat signals resilient demand amid broader industry challenges.

Looking ahead, the broker’s research highlights several growth catalysts. Domestic M&HCV (medium and heavy commercial vehicle) volumes are projected to expand at a 7% compound annual growth rate through FY28, buoyed by improved economic activity and GST‑driven replacement cycles. On the export front, a low‑base rebound is expected in FY27‑28 as early procurement accelerates ahead of stricter emission norms. These factors, combined with a higher‑than‑industry revenue mix from new orders and advanced forging products, underpin an anticipated 13% revenue and 18% EBITDA CAGR over the FY26‑28 horizon.

From an investment perspective, the analyst retains a BUY stance, lifting the target price to ₹600 and applying a 16× FY28E earnings multiple. The revised EPS forecasts reflect higher depreciation and financing costs in FY26, but anticipate a 12‑16% uplift in FY27‑28 as margins improve and interest expenses fall. For investors, the stock offers a compelling blend of growth momentum, export diversification, and a valuation that remains attractive relative to peers in the auto component space.

Broker’s Call: MM Forgings (Buy)

Anand Rathi Research · Updated · February 18, 2026 at 05:44 PM

Target: ₹600

CMP: ₹472.50

MM Forgings reported ₹71.6 crore EBITDA in Q3FY26 (down 2 percent year‑on‑year), broadly in line with our estimate of ₹70.6 crore. We expect its revenue/EBITDA to clock 13 percent/18 percent CAGR over FY26‑28E, led by:

• Expected 7 percent CAGR in domestic M&HCV volume over FY26‑28E on improved economic activities and better replacement demand on GST reforms;

• Likely rebound in overseas CV sector in FY27/28E on low base and early buying before emission norms (FY27 double‑digit), despite muted performance in the near term; and

• Higher‑than‑industry revenue growth due to new orders, products and higher machining/heavy‑forging mix.

Standalone revenue grew 11 percent to ₹405 crore (vs our estimate of ₹376 crore) due to higher export revenue. Domestic grew 14 percent to ₹256 crore. Exports grew 7 percent to ₹148 crore. EBITDA fell 2 percent to ₹71.6 crore vs. our estimate of ₹70.6 crore, due to lower‑than‑expected gross margin owing to adverse mix. Gross margin contracted 440 bps to 52.9 percent. PAT fell 19 percent to ₹25.8 crore, broadly in‑line with our estimate of ₹24.9 crore.

We trim our FY26E EPS estimate by 8 percent, due to higher depreciation/interest/tax and lower other income, but raise it by 12‑16 percent for FY27/28E, due to higher revenue and lower interest cost. Thus, we retain BUY rating on the stock with a revised TP of ₹600, valuing it at 16× FY28E EPS.

Published on February 18, 2026