MM Forgings Limited, a prominent player in the forging industry, has released its unaudited financial results for the third quarter ended December 31, 2019, showcasing a mixed performance with steady revenue and a decline in profitability.

Standalone Performance

On a standalone basis, MM Forgings reported net sales of ₹241.83 crores for the quarter, demonstrating the company's ability to maintain its revenue stream in a challenging market environment. The net profit for the period stood at ₹11.25 crores, resulting in earnings per share (EPS) of ₹4.66.

Consolidated Results

The consolidated financial results, which include the performance of the company's subsidiary DVS Industries Private Limited, paint a slightly more positive picture:

• Quarterly net sales: ₹246.85 crores
• Quarterly net profit: ₹11.32 crores

Nine-Month Performance

For the nine-month period ending December 31, 2019, MM Forgings showcased the following results:

The consolidated figures indicate a stronger performance, particularly in terms of profitability, when compared to the standalone results.

Financial Analysis

While the company has managed to maintain relatively stable revenue figures, there are signs of pressure on profitability. The quarterly net profit of ₹11.25 crores on a standalone basis suggests a challenging operating environment, possibly due to factors such as increased competition, raw material costs, or market dynamics affecting the forging industry.

The consolidated results show a marginal improvement in both revenue and profit figures compared to the standalone performance, indicating that the subsidiary, DVS Industries Private Limited, has contributed positively to the overall group performance.

Conclusion

MM Forgings' Q3 FY2020 results reflect a company navigating through a complex market landscape. While revenue has remained relatively steady, the pressure on profitability is evident. The company's ability to maintain its sales figures in a challenging environment is noteworthy, but investors and stakeholders will likely be watching closely to see how MM Forgings addresses the profitability concerns in the coming quarters.

The company has stated that these results will be published on its website and stock exchanges, providing transparency for investors and the public.

MM Forgings Limited, a leading forging company, reported a 6% year-on-year decline in total income for the first quarter, amid challenging market conditions and global trade uncertainties.

Financial Performance

The company's total income for Q1 stood at INR 358.00 crores, down from INR 375.00 crores in the same period last year. The earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased to INR 72.00 crores from INR 78.00 crores, while profit after tax (PAT) fell to INR 22.00 crores from INR 32.00 crores year-on-year.

Despite the revenue decline, MM Forgings maintained an EBITDA margin of 18% excluding other income, demonstrating resilience in its operational efficiency.

Operational Highlights

• Production increased to 18,000 tons from 17,300 tons quarter-on-quarter
• Sales volume declined to 17,780 tons from around 20,000 tons in the previous quarter
• The company operates at 60% capacity utilization for both forging and machining

Revenue Breakdown

Of the 40% exports, 13% is to North America, with the remainder split between Europe and South America.

Capex and Debt

MM Forgings has revised its full-year capital expenditure target to INR 150.00-200.00 crores, down from the initial projection of INR 300.00 crores. The company spent INR 55.00 crores on capex during the quarter and aims to consolidate its position while focusing on cost control.

Market Challenges and Outlook

The company faces several challenges, including:

• Headwinds in the US market with declining freight volumes
• Potential 25% US tariffs on imports
• Rising raw material and power costs

Management expects the next 6-9 months to remain at previous year levels, with potential improvement in the following 6-12 months.

Management Commentary

Vidyashankar Krishnan, Chairman and Managing Director of MM Forgings, stated, "We are at a very interesting position today amidst the fast-changing global environment due to tariffs from America. We are very confident that over time, the resilience of the organization and the strength and contribution of its employees, with divine grace, will ensure that we are able to overcome this very clearly and launch ourselves back into a trajectory of growth in sales and profitability."

Future Prospects

Despite the current headwinds, MM Forgings sees opportunities in Europe and the Far East markets. The company is also optimistic about its investments in machining capacity across product lines, including axle beams, crankshafts, and connecting rods.

A new 16,000-ton press is expected to be commissioned by March-April, which should help ease production bottlenecks and potentially open up new market opportunities.

As global markets continue to evolve, MM Forgings remains committed to adapting its strategies and leveraging its strengths to drive long-term growth and profitability.