Trending today: Shares of this small cap forging company rally upon announcing a strategic acquisition

The acquiree company is engaged in the electric vehicle (EV) powertrain components business.

The shares of MM Forgings Ltd are buzzing on the bourses today. As of 10.57 am, while the frontline index S&P BSE Sensex is down by 0.63%, the shares of MM Forgings Ltd are trading at Rs 976.05 apiece, higher by 5.78% over the previous close.

This surge has come on the back of an announcement made by the company today. As per the exchange filing, MM Forgings Limited has agreed to make a strategic investment in Abhinava Rizel Private Limited. The latter is a start-up company engaged in the business of Research & Development and manufacturing of parts/components or systems including but not limited to electric power train/drivetrain systems, electric motors, motor controllers/drives, gearboxes and ADAS systems for various industries.

MM Forgings has secured 26.4 lakh freshly issued fully paid-up equity shares in Abhinava Rizel Pvt Ltd, representing 88% of the equity capital and voting rights on a fully diluted basis. With this acquisition, MM Forgings ventures into the electric vehicle (EV) powertrain components business.

The investee company was incorporated in May 2022. It should be noted that this transaction does not fall within the purview of Related Party Transaction. Further, the acquisition is expected to be completed on or prior to 30th September 2022.

Post this announcement, the company’s shares are witnessing an increase in trading activity. The company reported a spurt in trading volume of more than 1.92 times.

MM Forgings, an S&P BSE SmallCap company, is engaged in the manufacturing of Steel Forgings. The company has expertise in forging a wide variety of components.

The company is currently trading at a TTM PE of 19.77x as against the industry PE of 35.47x. In FY22, the company delivered an ROE & ROCE of 17.39% and 13.37%, respectively.

Today, the scrip opened at Rs 930 and has touched a high and low of Rs 995 and Rs 926, respectively. So far 6,454 shares have been traded on the bourses. The stock has a 52-week high & low of Rs 1,057.20 and Rs 646, respectively on BSE.