Happy Forgings Ltd

Happy Forgings Ltd — Trading Window closed from Oct 1, 2026 until 48 hours after the Board meeting to consider unaudited financial results for the quarter ended Sept 30, 2026.

ESOP Allotment

• The company allotted 22,412 equity shares under ESOP to employees.
• Paid-up capital increases from Rs 18,87,57,468 to Rs 18,88,02,292.

Financial Performance

• Q1 FY27 revenue Rs 449 crore, up 27% YoY; PAT Rs 91 crore.
• EBITDA Rs 141 crore; EBITDA margin 31.3%, up 275 bps.
• Gross margin 60.7%, up 276 bps; gross profit Rs 273 crore.
• Volume growth 23.1%; finished goods up 23%; realizations Rs 253 per kg.
• PAT Rs 91 crore; PAT margin 20.4%, up 178 bps.
• Capacity additions: 4,000-ton forging press; 7,200 MT machining added.
• Total forging capacity 1,52,000 MT; machining 75,200 MT.
• Order book around Rs 950 crore; peak incremental revenue potential in 2–3 years.

Segment Performance

• CV: 33% of revenue; domestic growth ~18%; exports affected by transit delays.
• Farm equipment: 32% revenue; domestic growth >20%; exports growth despite US/Europe headwinds.
• Industrial: 16% revenue; ~50% growth across domestic and export.
• Off-highway: 11% revenue; >40% growth; domestic construction equipment ~9%.
• PV: 8% revenue; >70% growth; domestic >40%.
• Exports from PV more than double; Europe share ~60% of exports.
• Export mix: CV ~7%, PV ~8%, Farm ~5%, Off-highway ~5%, Industrial ~9%.

Capex and Capacity

• 14,000-ton press line utilization about 65–70%.
• Added 10,000-ton press line; some 14k components shifted to 10k.
• 18,000-ton vertical upsetter line: commissioning from Q4; trials from Q3.
• Capacity shift enables larger heavy-line capacity.
• Capex program Rs 650 crore; funded largely from internal accruals.
• Gross margins for new capex: full machined components ~80%; forged crankshafts 60–65%.

Captive Power and New Ventures

• Captive solar project on track; contribution from January onwards; ROW clearance in progress.
• Power benefit 1–1.5%; margin could stay above 30%.
• FY29 onwards: meaningful contribution from new scheme of business.

Outlook and Guidance

• Guidance: FY27 remains positive; EBITDA margin around 30%+.
• Export-heavy portfolio; Rs 950 crore book to translate into revenue over 2–3 years.
• Growth largely funded from internal accruals; occasional bridge loan for LC if needed.
• Capex target about Rs 350–400 crore annually.

Q&A Highlights

• Export freight costs rose to USD 6,000; pass-through ~75%; net incremental cost ~15–20%.
• Export currency gains supported pricing; some domestic price increases in Q2.
• Q4 FY27: 14k press utilization 65–70%; load shift to 10k line.
• Export mix Europe around 60% of exports; PV export growth supported by Europe flow.
• Acquisitions/JVs open; focus on energy/aerospace; valuations high for inorganic moves.
• Organic growth funded by internal accruals; potential bridge loan for LC if needed.

Meeting Details

• Date and time: 14 August 2026, 10:00 AM onwards; format: physical meeting in Mumbai; organizer: Equirus Securities.

Participants

• Key participants: company officials (management) from Happy Forgings.

Purpose

• Purpose: investor conference discussions based on publicly available information.

Meeting Details

• Earnings call for quarter ended June 30, 2026 held on August 05, 2026.
• Format: audio conference; recording available on the company website.
• Purpose: discussion on financial results for quarter ended June 30, 2026.
• Organizer: Happy Forgings Limited.

Business Overview

• Leading Indian manufacturer of heavy forgings and high-precision machined components.
• Diversified customer base across domestic and export OEMs.

Operational Highlights

• Q1 FY27 revenue Rs 449 Cr, up 27% YoY and 6% QoQ.
• Export revenues rose over 30% YoY; exports 28% of revenue.
• Order book visibility ~ Rs 950 Cr over 2-3 years.
• Ultra-heavy component facility capex to complete by year-end; revenues from FY28.
• Captive solar project to contribute to cost efficiencies from FY28.
• Revenue mix: PV 8%, Industrials 16% of revenue; domestic demand across CV, PV, farm, off-highway.

Financial Performance

• FY26 revenue Rs 1,546 Cr; gross profit Rs 915 Cr; EBITDA Rs 471 Cr; PAT Rs 302 Cr.
• FY26 EBITDA margin 30.4%; PAT margin 19.5%.
• Q1 FY27: revenue Rs 449 Cr; EBITDA Rs 141 Cr; PAT Rs 91 Cr.
• Q1 FY27 margins: EBITDA 31.3%; PAT 20.4%.
• Net worth Rs 2,128 Cr; debt/equity 0.15x; net debt/EBITDA -0.19x.
• Liquidity surplus ~Rs 400 Cr; capex funded by cashflows; IPO funds used for growth.
• Capacity: forging 148,000 MT; machining 68,000 MT (FY26).
• Operating cash flow Rs 445 Cr; cum Capex FY21-FY26 Rs 1,995 Cr.

Capital Structure & Liquidity

• Total assets Rs 2,633 Cr; equity Rs 2,128 Cr as of FY26.
• Borrowings Rs 330 Cr; current liabilities Rs 456 Cr.
• Debt levels modest; liquidity supports growth flexibility.

Strategic Priorities & Outlook

• Enter lightweight forging and machining for passenger vehicles.
• Expand wallet share and win new OEM business.
• Expand capacity at existing facilities; grow exports.
• Pursue inorganic growth via acquisitions and alliances.
• Capex cycle continues; 20 MW captive solar plant by 2028.
• Commercial revenues from ultra-heavy facility expected in FY28.

Risks & Mitigation

• Macro demand volatility and raw material price swings.
• Execution risk in capex ramp-up; mitigated by diversified customers and strong balance sheet.

Governance & Leadership

• Board comprises 50% independent directors (3/6); 2 female directors.
• Independent Directors: Atul Lall, Rajeswari Karthigeyan, Ravindra Pisharody.
• ESG roadmap formalised; governance structures and risk management framework planned.
• AA stable credit rating; emphasis on capital discipline.

Financial highlights

• Revenue from Operations rose 27% YoY to ₹449 crore in Q1FY27.
• Gross Profit ₹273 crore; margin 60.7% in Q1FY27.
• EBITDA ₹141 crore; margin 31.3% in Q1FY27.
• PAT ₹91 crore; margin 20.4% in Q1FY27.
• EPS diluted ₹9.68 in Q1FY27.
• Finished Goods Volume 17,793 MT; Realisation ₹253/kg in Q1FY27.

Operational progress & capacity

• Ultra-heavy component facility equipment installation to complete by end-FY28, enabling FY28 revenues.
• Captive solar power project to begin contributing to operating costs from FY28.
• Incremental order book visibility of about ₹950 crore over 2-3 years.
• Exports contributed 28% of revenue in Q1FY27.

Outlook and strategic initiatives

• FY27 outlook remains positive with volume growth expected to strengthen.
• Margins supported by better product mix and operating leverage.

Financial highlights

• Standalone quarter ended June 30, 2026: Revenue from operations Rs 44,942.23 lacs.
• Standalone quarter ended June 30, 2026: Total income Rs 46,050.59 lacs.
• Standalone quarter ended June 30, 2026: PBT Rs 12,263.88 lacs; PAT Rs 9,146.34 lacs.
• Standalone quarter ended June 30, 2026: EPS basic Rs 9.70; diluted Rs 9.68.
• Standalone quarter ended June 30, 2026: Total comprehensive income Rs 9,389.71 lacs.
• Consolidated quarter ended June 30, 2026: Revenue from operations Rs 44,942.23 lacs.
• Consolidated quarter ended June 30, 2026: Total income Rs 46,050.48 lacs.
• Consolidated quarter ended June 30, 2026: PBT Rs 12,263.67 lacs; PAT Rs 9,146.13 lacs.
• Consolidated quarter ended June 30, 2026: EPS basic Rs 9.70; diluted Rs 9.68.
• Consolidated quarter ended June 30, 2026: Total comprehensive income Rs 9,389.50 lacs.
• Subsidiary HFL Technologies: Nil revenue; net loss after tax Rs 0.21 lacs.
• Unaudited results reviewed by independent auditors; no material misstatement observed.
• Single operating segment: auto components and engineering parts.
• Options forfeited Nil; options exercised 28,273.

Financial results and approvals

• Unaudited standalone and consolidated financial results approved for the quarter ended June 30, 2026.
• Limited Review Reports by S.R. Batliboi & Co. LLP attached to the results.
• Audit Committee reviewed and Board approved; single operating segment disclosed.