MM Forgings Limited — Q3 FY26 earnings call

Call held 5 Mar 2026

Management summary

M M Forgings reported a strong recovery in Q3 FY26, with management optimistic about 20% revenue growth in FY27 driven by robust US and Indian markets. The company is set to benefit from new capacity commissioning and significant cost savings from green power and reduced interest expenses. While past domestic underperformance and US market share decline are being addressed, the Abhinava Rize subsidiary continues to incur losses, and tariff uncertainty for US exports remains a concern.

Highlights

  • Strong recovery observed in Q3 and Q4, with management anticipating 20% revenue growth in the next fiscal year (FY27).

  • The company expects to save ₹15 crores annually (100 basis points on EBITDA) by transitioning to 100% green power, effective January 2026.

  • Interest cost savings of ₹30-35 crores annually are projected, positively impacting PAT.

  • New 16500-ton and 4000-ton presses are being commissioned, increasing total capacity to 150,000 tons, with a target utilization of 90,000 to 110,000 tons in FY27.

  • The US export market is experiencing a strong recovery, with Class 8 truck orders significantly increasing in February 2026, auguring well for M M Forgings.

Concerns

  • The US market's contribution to sales declined from 16-17% to 9% in FY26, impacting overall growth.

  • Uncertainty persists regarding US export tariffs, with potential rates of 18% versus the previous 25% plus 2.7%.

  • The Abhinava Rize subsidiary continues to incur a burn rate of ₹1 crore per month, with profitability dependent on securing new customers.

  • Challenges related to manpower costs, productivity, and potential fuel availability issues due to geopolitical tensions (Hormuz Strait blockade) were noted.

What they filed

Q1 FY27: revenue up 20.3%, net profit up 59.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue389 364 355 349 378 −3%405 +11%413 +16%420 +20%
EBITDA77 73 72 63 63 −18%72 −1%78 +8%75 +19%
Net profit36 32 36 22 18 −50%26 −19%48 +33%35 +59%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹160 Cr New plan — FY27 plan for completing ongoing projects and machining side investments · Internal accruals, with potential to increase to 200 crores if new customer interests arise
    • Completing 16,500-ton press and 4,000-ton press
    • Machining side investments
    next, fiscal, FY27, we see about 160 crores of capex. Basically, completing the 16,500-ton press and also, the 4,000 ton whatever remains of that and a little bit on the machining side. About 160 crores. If there are new customer interests, there is, internal accruals to support it. We would go take it up to 200 crores also.
  • Debt Gross ₹1,200 Cr
    • Ratio maintain Debt levels will remain static and will not go up for the next two years.
    almost 1200 crores of debt as per September.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY27 · High confidence 20%
    I think we should be able to easily do 20% growth in the next coming year.

    — Vidyashankar Krishnan

  • Revenue from 16500-ton press Revenue · Future · Medium confidence ₹300 crores
    Overall, overall, we expect turnover from that line to go to about 300 crores.

    — Vidyashankar Krishnan

Capacity Utilization

  • Tons of Utilization Capacity Utilization · FY27 · High confidence 90,000 to 110,000 tons
    And next year, we are expected to cross 90,000 tons of utilization, possibly challenging 1 lakh, 1,10,000 tons internally. That's our goal.

    — Vidyashankar Krishnan

Capex

  • Capex Spend Capex · FY27 · High confidence ₹160-200 crores
    next, fiscal, FY27, we see about 160 crores of capex... We would go take it up to 200 crores also.

    — Vidyashankar Krishnan

Debt

  • Debt Levels Debt · Next two years · High confidence Static
    The next two years, as things stand, Kush, debt levels will remain static. Okay. It will not go up. That is the internal plan.

    — Vidyashankar Krishnan

Product Mix

  • Machining Mix Product Mix · Ongoing · High confidence Improve
    Yes, machining mix will improve.

    — Vidyashankar Krishnan

  • Future Product Mix Product Mix · Over a period of time · Medium confidence 15% non-automotive, 15% PV, 70% CV
    We see, over a period of time, our mix will be something like about 15% of non-automotive of highway, PV is at about 12, so I would say, again, another 15% of PV. 70% should be CV.

    — Vidyashankar Krishnan

Profitability

  • Margins Profitability · Year on year · High confidence Stable or improving
    Yes, absolutely.

    — Vidyashankar Krishnan

EBITDA Margin

  • EBITDA Margin Improvement from Green Power EBITDA Margin · Annual · High confidence 100 bps (₹15 crores annually)
    about 15 crores of savings per annum. Almost at current levels, that's 100 basis points on EBITDA.

    — Vidyashankar Krishnan

PAT

  • Interest Cost Savings PAT · Annual · High confidence ₹30-35 crores
    we expect to save at least about 30 to 35 crores on the interest side, relative to the previous year.

    — Vidyashankar Krishnan

Gross Margin

  • Gross Margin Recovery Gross Margin · Future · High confidence 57-58%
    Yes.

    — Vidyashankar Krishnan

Tonnage

  • Tonnage Front Tonnage · FY28 · Medium confidence Six-figure level
    So, with the current orders itself. should see, our tonnage going into the six-figure level.

    — Vidyashankar Krishnan

What to watch in Q4 FY26

FY27 Capex Spend

Next quarter / FY27
Current ₹160-200 crores planned
Target Actual spend and progress on 16500-ton and 4000-ton presses

Why it matters

Tracking capex execution is crucial for capacity expansion and future revenue generation.

next, fiscal, FY27, we see about 160 crores of capex. Basically, completing the 16,500-ton press and also, the 4,000 ton whatever remains of that and a little bit on the machining side. About 160 crores. If there are new customer interests, there is, internal accruals to support it. We would go take it up to 200 crores also.

Risks & concerns

  • Geopolitical tensions and fuel availability

    medium

    Hormuz Strait blockade could impact gas and furnace oil availability, though Indian oil companies are expected to switch sources.

    Management acknowledged

  • Manpower costs and productivity

    medium

    Manpower continues to be a huge challenge, impacting productivity, with ongoing efforts at engineering and HR levels.

    Management acknowledged

  • US export tariff uncertainty

    medium

    Uncertainty regarding the final US tariff rate (18% vs 25% + 2.7%) under Section 232, awaiting fine print and customer confirmation.

    Management acknowledged

  • Abhinava Rize subsidiary burn rate

    medium

    The Abhinava Rize subsidiary currently has a burn rate of ₹1 crore per month, with profitability dependent on securing new customers.

    Management acknowledged

Q&A highlights

7 direct
FY27 Capex Plans Direct
next, fiscal, FY27, we see about 160 crores of capex. Basically, completing the 16,500-ton press and also, the 4,000 ton whatever remains of that and a little bit on the machining side. About 160 crores. If there are new customer interests, there is, internal accruals to support it. We would go take it up to 200 crores also.

Management provided specific capex guidance for the upcoming fiscal year, detailing the allocation towards ongoing capacity expansion projects.

Asked by Khush Gosrani

Debt Repayment and Levels Direct
The next two years, as things stand, Kush, debt levels will remain static. Okay. It will not go up. That is the internal plan.

Management clarified their strategy for debt management, indicating stability in debt levels despite ongoing investments, which is a positive signal for financial health.

Asked by Khush Gosrani

US Export Tariffs Partial
So, as it is, we come under Section 232. So, tariff would be 25% over and above 2.7% that existed prior. Taking the total to about 27.2%. But where we would be, tariff would come down to 18% or so. Again, fine print is not yet out.

The response highlighted the uncertainty surrounding US export tariffs, with a potential reduction to 18% from a higher rate, but noted that the 'fine print' is still awaited, impacting export cost structures.

Asked by Abhishek

Margin Recovery Drivers Direct
First of all, the new jobs that we're adding are all largely, machined, so machining mix will go up, Abhishek. Second question is power costs, we have, I can, happily say that M M Forgings has gone totally green with effect from, 18th of January, from Sankranthi onwards, effectively. So, we have contracted to buy green power. And in the process, we have saved something, so that should result about 15 crores of savings per annum. Almost at current levels, that's 100 basis points on EBITDA.

Management detailed specific initiatives for margin recovery, including an improving machining mix and significant cost savings from the adoption of green power, providing clear drivers for future profitability.

Asked by Abhishek

Domestic Underperformance vs. CV Industry Growth Direct
First is, largely we have lost out last year in terms of growth because of customer-side delays in terms of launches. And in a few cases, we have had delays in the internal side also, for the CV market. So, both these together have resulted in the delays. The customer-side delays are now behind us. Customers have started coming in. And that's really good news. Second is that at our end, we have ramped up execution considerably, and gone beyond the delay framework.

Management candidly addressed the reasons for past domestic underperformance, attributing it to customer and internal delays, and confirmed that these issues have been resolved, signaling a potential turnaround.

Asked by Jaymin Shah

Possibility of Equity Infusion Direct
We are considering. I'm not saying we're totally open, but we are considering.

Management acknowledged that an equity infusion is under consideration, indicating a potential future capital raise depending on business requirements, which could impact shareholder structure.

Asked by Jaymin Shah

Strategy for 16500-ton Press Direct
Largely, we are planning crankshafts and higher weight front axle beams... Overall, overall, we expect turnover from that line to go to about 300 crores. That will require some more investment in the machining side as well, but all that is not factored in in these numbers. Largely for the export market.

Management outlined the specific products (crankshafts, heavy front axle beams) and target market (exports) for the new large press, providing clarity on its strategic contribution and revenue potential.

Asked by Akash Vora

Percentage of Potential Utilization Direct
I would say we are at about we are 50% of our potential. Okay, the capability to do double. Or at the worst, we are at 60% of our potential, we can do 40% more.

Management provided a self-assessment of their current operational potential, indicating significant headroom for growth and efficiency improvements, which is crucial for future expansion.

Asked by Lakshminarayanan K G

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance & FY27 Outlook

M M Forgings reported a strong recovery in the third quarter, with the fourth quarter also expected to be robust. Management anticipates achieving a similar turnover to the previous year, with a slight growth of one or two percentage points. Looking ahead to FY27, the company projects a significant 20% revenue growth, driven by strong performance in both the US and Indian truck markets. Past growth was impacted by customer project delays and macroeconomic conditions.

Capacity Expansion & Utilization Strategy

The company is actively commissioning a 16500-ton press and a 4000-ton press, which will collectively increase its total capacity to 150,000 tons. For FY27, the internal goal is to achieve a utilization rate of 90,000 to 110,000 tons. The 16500-ton press is specifically designed for crankshafts and higher-weight front axle beams, primarily targeting the export market, and is expected to contribute approximately ₹300 crores in turnover.

Cost Optimization & Margin Improvement

M M Forgings has implemented several cost-saving initiatives. Effective January 18, 2026, the company transitioned to 100% green power, which is projected to save ₹15 crores annually and improve EBITDA by 100 basis points. Additionally, efforts to reduce interest costs are expected to yield savings of ₹30-35 crores annually, positively impacting PAT. Management is confident that gross margins will recover to the 57-58% range, supported by an improving machining mix from new job additions.

Market Dynamics: US Exports & Domestic Performance

The US market, which previously accounted for 16-17% of sales, had declined to 9% but is now showing a strong recovery, evidenced by a surge in Class 8 truck orders in February 2026. Domestically, the company addressed past underperformance relative to the CV industry, which was attributed to customer-side delays and internal execution issues. These issues have been resolved, and M M Forgings expects to improve its market share going forward.

Strategic Investment: Abhinava Rize

The company has invested ₹70 crores in its subsidiary, Abhinava Rize, which currently operates with a burn rate of ₹1 crore per month. Abhinava Rize specializes in motors ranging from 3kW to 300kW, primarily serving the three-wheeler market. The subsidiary is actively working to secure customers for four-wheeler applications and expand its product portfolio to offer end-to-end solutions, including controllers and gearboxes, by collaborating with Chinese companies.

Capital Allocation & Debt Management

For FY27, M M Forgings plans a capex of ₹160-200 crores, primarily for completing the new presses and machining side investments, which will be funded through internal accruals. The company's internal plan is to maintain static debt levels for the next two years, ensuring they do not increase from the approximate ₹1200 crores reported as of September. Management also indicated that an equity infusion is under consideration, depending on future business requirements.

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