Happy Forgings Limited — PPTs, 17-05-2025: Investor Presentation

1. Financial Highlights:

Happy Forgings posted record full-year profitability with a 58.0% Gross Profit margin, 28.9% EBITDA margin, and 18.6% PAT margin. Revenue rose 4.7% YoY to Rs. 1,409 Cr despite a steel price drop. Adjusted EBITDA and PAT grew 7.4% and 11.2%, respectively. Q4 revenue increased 2.5% YoY to Rs. 352 Cr, supported by margin improvements. The balance sheet remains healthy with Rs. 356 Cr liquidity, a low 0.1x debt-to-equity ratio, and strong operating cash flow of Rs. 290 Cr, allowing self-funded capex. A dividend of Rs. 3/share (~11% payout) was declared.

2. Strategic Initiatives & Growth Drivers:

A Rs. 650 Cr capex over 2-3 years is underway to build advanced forging capacity for heavyweight components (>250 kg), targeting power generation, marine, mining, and oil & gas sectors, with commissioning by FY27. This is expected to add Rs. 600-800 Cr in annual revenue and boost margins and exports. An additional Rs. 80 Cr capex will scale the passenger vehicle segment. Focus remains on product diversification, lean operations, and capital-efficient expansion.

3. Business Developments:

The company secured Rs. 1,600 Cr of new orders from passenger vehicle and industrial segments, to be executed over 5-8 years, potentially adding Rs. 250 Cr in peak annual sales. Forging capacity is expanded to 127,000 MT and machining capacity to 57,000 MT, emphasizing fungible lines and vertical integration to serve diverse industries.

4. Market Position & Competitive Advantage:

Happy Forgings stands as India’s 2nd largest manufacturer of commercial vehicle and high-horsepower industrial crankshafts and 4th largest in precision machining of heavy forged components. It benefits from high capital intensity, tight quality tolerances (0.005-0.2 mm), and long approval cycles as strong entry barriers. Operating one of Asia’s largest forging facilities, it plans to expand in heavyweight components where global suppliers are few.

5. Investor Implications:

Robust financials, aggressive capex, and a strong order pipeline show positive growth potential. Capital-efficient expansion into heavyweight and industrial segments should enhance margins and market share. Execution risk in new heavy-capacity commissioning exists but is mitigated by a strong balance sheet and low debt. Overall, the company is well positioned to capture demand growth domestically and internationally.