37% Gain in 50 Days: Auto stock can climb 21% more? Brokerage bullish with Rs 600 target

37% Gain in 50 Days: Shares of an auto components maker rose sharply in Thursday’s session after brokerage firm Anand Rathi reiterated a bullish outlook and raised its target price, citing improving demand in the commercial vehicle (CV) segment and attractive valuation.

The auto stock gained as much as 5.17 per cent during the day to hit a fresh 52-week high of Rs 497.80 on the NSE. It opened at Rs 474.20 and traded in a range of Rs 468.05 to Rs 497.80. At the time of writing, the stock was trading at Rs 496.10, up Rs 24.40 or 5.17 per cent.

The rally pushed the company’s market capitalisation to about Rs 2.40K crore. The stock has risen significantly from its 52-week low of Rs 288.10.

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The stock is up 14.76 per cent in one month and 37.25 per cent on a year-to-date basis, which reflects gains in about 50 days.

MM Forgings share price gains after Anand Rathi bullish view

The stock in focus is MM Forgings Ltd, which came under buying interest after Anand Rathi retained its ‘Buy’ rating and raised the target price to Rs 600 from Rs 430 earlier.

The revised target implies an upside potential of about 21 per cent from the current market price of Rs 496.10.

The brokerage said the company’s outlook remains healthy due to expected recovery in domestic and overseas commercial vehicle demand and stronger order flow.

It noted that the stock is trading at attractive valuations, about 25 per cent below its past one-year forward average valuation multiples.

Strong growth outlook driven by CV demand recovery

Anand Rathi expects MM Forgings’ revenue and EBITDA to grow at a compound annual growth rate (CAGR) of 13 per cent and 18 per cent respectively between FY26 and FY28.

The growth is likely to be driven by:

- Expected 7 per cent CAGR in domestic medium and heavy commercial vehicle volumes

- Recovery in overseas CV demand from FY27 onwards

- New orders and higher contribution from machining and heavy forging products

- Better product mix and operating efficiency

The brokerage also expects early buying ahead of new emission norms to support CV demand globally.

Q3 results show steady revenue growth but profit declines year-on-year

MM Forgings reported total income of Rs 416.87 crore in Q3FY26, up 10.40 per cent from Rs 377.64 crore in the same quarter last year.

Profit before tax stood at Rs 26.07 crore, down 32.38 per cent year-on-year, while net profit came in at Rs 17.57 crore, down 33.83 per cent from Rs 26.55 crore a year ago.

However, profitability improved sequentially, with net profit rising 6.04 per cent compared to Rs 16.57 crore in Q2FY26.

The brokerage said earnings estimates for FY27 and FY28 have been raised by about 12–16 per cent due to higher expected revenue and lower interest costs.

Valuation and key risks

Anand Rathi said the company’s improving demand outlook, strong order pipeline and better product mix support its long-term growth prospects.

However, it flagged risks including slower-than-expected CV demand recovery, delays in order execution, higher raw material costs and adverse currency movements.

The brokerage valued the stock at 16 times FY28 estimated earnings, in line with its long-term average valuation multiple.