MM Forgings Limited has informed the Exchange about Credit Rating
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CARE Ratings has re-affirmed MM Forgings' credit rating at CARE A (Stable) for long-term facilities and CARE A1 for short-term facilities. The total rated facilities amount to approximately ₹1,297 crore, though this has been reduced from previous levels (long-term facilities reduced from ₹942 crore to ₹750 crore). The rating affirmation reflects the company's established track record in auto components, healthy business risk profile with stable operating margins at 19.4% in FY25, and adequate liquidity with ₹218 crore in liquid investments. However, the ratings are constrained by moderate capital structure with elevated gearing at 1.33x, high dependence on the cyclical commercial vehicle segment (76% of revenue), and client concentration risk. The company has been in a debt-funded capex cycle of about ₹850 crore over three years, leading to increased leverage.
Re-affirmation of ratings with stable outlook indicates no immediate concern for investors. The reduced facility sizes suggest partial debt repayments, but elevated leverage and declining interest coverage (4.95x from 6.92x) warrant monitoring. The stock should see neutral reaction as the rating action is neutral rather than negative.