MM Forgings Limited has received credit rating reaffirmation from CARE Ratings Limited for its bank facilities, maintaining stable outlook across all rated instruments. The Chennai-based auto components manufacturer announced the rating action on April 11, 2026, in compliance with SEBI listing regulations.

Credit Rating Details

CARE Ratings reaffirmed ratings for MM Forgings' bank facilities totaling ₹1,297.22 crore across multiple categories:

The ratings reflect reductions in facility amounts compared to previous assessments, indicating the company's debt optimization efforts.

Financial Performance Analysis

MM Forgings demonstrated resilient financial performance despite challenging market conditions. The company's total operating income remained relatively stable at ₹1,525 crore in FY25 compared to ₹1,563 crore in the previous year, reflecting muted demand in the domestic commercial vehicle sector.

The PBILDT margin improved to 19.41% in FY25 from 18.73% in FY24, driven by cost rationalization and favorable product mix with better machining coverage.

Business Strengths and Market Position

MM Forgings maintains a strong market position with several key advantages:

• Established Track Record: Operating in forging business since 1974 with over 25 years of client relationships
• Diverse Geographic Presence: FY25 sales comprised 61% domestic, 16% US, 12% Europe, and 11% other countries
• Manufacturing Capacity: Combined capacity of 130,000 MT as of December 31, 2025, increased from 110,000 MT in 2024
• Product Range: Supplies closed-die hot forgings in various steel grades with part weights ranging from 0.10 kg to 120 kg

Rating Constraints and Risk Factors

CARE Ratings identified several constraining factors affecting the company's credit profile:

Capital Structure Concerns

The company's overall gearing increased to 1.33x as of March 31, 2025, from 1.18x in FY24, reflecting debt-funded capacity expansion. The multi-year capex cycle involved investments of approximately ₹850 crore over three years, with ₹610 crore funded through debt.

Industry and Client Dependencies

• High dependence on cyclical automotive industry with 76% revenue from commercial vehicle segment
• Client concentration risk with top 10 customers contributing 62% of total operating income in 9MFY26
• Exposure to raw material price volatility, with steel billets comprising 45%-50% of production costs

Recent Performance Challenges

The 9MFY26 period presented operational challenges due to elevated geopolitical tensions and tariff-related uncertainties in the US market. These factors led to moderation in US volumes during Q2 and Q3, though the impact was partially offset by improved order inflows from Europe and other regions.

Outlook and Rating Sensitivities

CARE Ratings maintained a stable outlook, expecting MM Forgings to sustain a healthy business risk profile in the medium term. The rating agency outlined specific factors that could influence future rating actions:

Positive Rating Drivers:

• Significant increase in total operating income with sustained ROCE improvement above 15%
• Overall gearing improvement below 0.80x and total debt/PBILDT below 3x

Negative Rating Drivers:

• Sharp sales volume decline resulting in capacity under-utilization
• Deterioration in overall gearing beyond 1.5x on gross debt basis
• Significant reduction in liquid investments

The company maintains adequate liquidity with ₹218 crore in liquid investments and cash as of March 31, 2025, supporting its debt servicing capabilities and operational requirements.

MM Forgings has completed a significant leadership transition with R. Raghunathan officially taking over as Chief Financial Officer and Key Managerial Personnel on April 1, 2026. The appointment follows the resignation of R. Venkatakrishnan, who served as CFO since April 1, 2014, and continued for four years post his retirement in May 2022.

Board Meeting and Regulatory Compliance

The board meeting held on April 1, 2026, formalized both the resignation of the outgoing CFO and the appointment of his successor. The company filed the necessary intimation under Regulation 30 of SEBI (LODR) Regulations, 2015, with both NSE and BSE exchanges. R. Venkatakrishnan cited age, health concerns, and desire to spend more time with family as reasons for his resignation, effective April 1, 2026.

CFO Transition Details

The transition was recommended by the Nomination and Remuneration Committee and approved by the board. R. Venkatakrishnan had attained superannuation during May 2022 but continued serving as CFO for approximately four years post-retirement, considering his rich experience and valuable contributions to the company. In his formal resignation letter, Venkatakrishnan expressed gratitude for the opportunity to serve and specifically mentioned the identification of R. Raghunathan as his meritorious successor.

New CFO Profile and Expertise

R. Raghunathan brings over 30 years of rich and diverse experience across manufacturing, engineering, healthcare, and service industries, including exposure to international operations. As a qualified Chartered Accountant and Cost Accountant, he possesses strong expertise in financial planning and analysis, treasury management, capital structuring, budgeting, and corporate governance.

His professional background includes successful leadership of several strategic initiatives including IPOs, mergers and acquisitions, divestments, and business restructuring. Raghunathan has extensive experience in handling large-scale debt and fund management exceeding ₹1,200.00 crore.

Previous Leadership Positions

Raghunathan has held senior leadership positions across multiple organizations, serving as Chief Financial Officer at Chettinad Cement Corporation Limited and Wheels India Limited. He also served as Group CFO at Archean Chemical Industries Limited and Trivitron Healthcare Private Limited, where he played pivotal roles in IPO execution, investor relations, and capital raising activities.

Board Confidence and Future Outlook

The Nomination and Remuneration Committee and the Board expressed confidence that R. Raghunathan possesses the requisite qualifications, experience, and competence to discharge CFO responsibilities effectively. Known for his analytical mindset, strategic thinking, and integrity, he brings significant value in driving financial performance and supporting business decision-making at the highest level. The board placed on record its deep appreciation for R. Venkatakrishnan's valuable services and significant contributions to the company throughout his tenure.