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Happy Forgings IPO Details: Launch Date, Share Price, Size, GMP & Review

Happy-Forgings-IPO-Details-Launch-Date,-Share-Price,-Size,-GMP-&-Review

Happy Forgings Limited – About the Company

Incorporated in 1979 in India, Happy Forgings Limited is manufacturing heavy forgings and high-precision machined components. The company specialises in designing and developing these components and is fully involved in the production, design, and testing of a range of products like front axle carriers, crankshafts, steering knuckles, transmission parts, pinion shafts, differential housings, suspension products, and valve bodies.

The company manufactures all these products for diverse industries and clients from various sectors like automotive and heavy machinery manufacturers. Its clients include Ashok Leyland Limited, JCB India Limited, Mahindra & Mahindra Limited, Swaraj Engines Limited, Bonfiglioli Transmissions Private Limited, Meritor Heavy Vehicle Systems Cameri SPA, Liebherr CMCtec India Private Limited, AAM India Manufacturing Corporation Private Limited, Dana India, International Tractors Limited, SML ISUZU Limited, IBCC Industries (India) Private Limited, Meritor HVS AB and various other big companies or small business enterprises need such products.

Currently Happy Forging Limited is operating with its three manufacturing units, two in Kanganwal and one in Dugri, all located in Ludhiana, Punjab. The company is serving not only the Indian market but also exporting its products to various nations globally including the United States of America,UK, Japan, Spain, Italy, Sweden, Brazil, Thailand and Turkey.

Happy Forgings IPO Objectives

One of the main objectives of Happy Forgings IPO is to use the funds raised from the fresh issue of this IPO to acquire a new plant, and machinery, amounting to Rs 171.1 crore.

Out of the total fresh issue of Rs 400 crore that will completely go to the company, the amount of Rs 152.76 crore will be utilized to repay the borrowing to reduce the debts. And remaining portion of funds will used for general corporate purposes.

Happy Forgings IPO Details:

IPO Open Date 19-Dec-23
IPO Close Date 21-Dec-23
Basis of Allotment 22-Dec-23
Listing Date 27-Dec-23
Face Value Rs 2 per share
Price Rs 808 to Rs 850 per share
Lot Size 17 Shares
Issue Size [.] shares
(aggregating up to Rs 1008.59 crore)
Fresh Issue [.]  Shares, aggregating up to Rs 400.00 crore
Offer For Sale 7,159,920  Shares, aggregating up to Rs 608.59 crore
Issue Type Book Built Issue IPO
Listing At BSE & NSE
QIB Shares Offered Not more than 50% of the Net Issue
Retail Shares Offered Not less than 35% of the Net Issue
NII (HNI) Shares Offered Not less than 15% of the Net Issue

 

Happy Forgings IPO Issue Price & Size

The issue of Happy Forgings IPO is set between the range of Rs808 to Rs850 per share. Happy Forgings IPO issue size is Rs1008.59 crore out of which Rs 608.59 crore will be offer-for-sale 7,159,920 shares and the remaining Rs 400 crore will be fresh issue.

Happy Forgings IPO Launch Date

Happy Forgings IPO will be open on 19 Dec 2023 and will be closed on 21 Dec 2023. The basis of the allotment date is 22 Dec 2023 and the listing date is 27 Dec 2023. However, the credit of shares into the demat account is 26 Dec 2023 and refunding the fund will be initiated from 26 Dec 2023 onwards.

Happy Forgings Financial Statements:

Particulars (Rs in Million) FY24 (6M) FY23 FY22 FY21 CAGR
Revenue from Operations 6,729.00 11,965.30 8,600.46 5849.58 43.02%
Other Income 28.33 57.41 60.59 58.55
Total Income 6,757.33 12,022.71 8,661.05 5,908.13 42.65%
Operational Expenses 3492.17 6388.32 4570.70 3006.01
Other expenses 1284.69 2167.58 1720.89 1256.11
EBITDA 1980.5 3466.8 2369.5 1646.0 45.13%
EBITDA Margin% 29.43% 28.97% 27.55% 28.14%
Depreciation 316.53 541.82 377.40 357.56
Interest 71.34 124.75 71.59 117.84
Profit Before Tax 1592.60 2800.24 1920.47 1170.61  
Total tax 399.61 713.28 497.63 306.13
PAT 1192.99 2086.96 1422.84 864.48 55.37%
PAT Margin% 17.73% 17.44% 16.54% 14.78%  
EPS Basic (Rs) 13.33 23.32 15.90 9.66  

Source: RHP

Happy Forgings Financial Performance

The revenue from the operation of Happy Forging sin the first six months of FY24 stood at Rs 672.9 crore, while in the full year FY23 it was Rs 1196.53 crore. Its revenue was at Rs 584.96 crore in FY21 which has grown at a CAGR of 43% from FY21 to FY23.

The EBITDA of the company stood at Rs 198.05 crore in the first half of FY24, while in full-year FY23 it was at Rs 346.68 crore registering a CAGR growth of 45% from Rs 164.6 crore in FY21. The company has maintained its operating margins in the last three years and it has marginally improved in the first six months of FY24 reaching at 29.43%.

However, owing to lower financing costs, the company has shown impressive net profit growth during the same period. In FY21 the PAT of the company was Rs 86.45 crore which has grown at a CAGR of 55.37% and reached at Rs 208.7 crore in FY23. And in the first six of FY24, the PAT of the company touched at Rs 119.3 crore. The Net Profit margin of Happy Forgingswas 17.73% and 17.44% in FY24 (6M) and FY23 respectively, which was 14.78% in FY21.

Happy Forgings IPO Promoters & Shareholding of the Company

As per the prospectus documents, Garg Family Trust is the main promoter of the company holding a 42.51% stake in the company. Ashish Garg and Ayush Capital & Financial Services Private Limited, India Business Excellence Fund –III and Paritosh Kumar are the major shareholders of the company having 14.47%, 12.01%, 11.76% and 10% respectively. For other shareholders and their holdings details see the table below.

S.No. Name of the Shareholder No. of Equity Shares held % of pre-Offer Shareholding
1 Garg Family Trust 38,047,000 42.51%
2 Ashish Garg 12,946,200 14.47%
3 Ayush Capital & Financial Services Private Limited 10,745,100 12.01%
4 India Business Excellence Fund –III 10,529,000 11.76%
5 Paritosh Kumar 8,949,900 10.00%
6 Paritosh Kumar Garg (HUF) 5,607,700 6.27%
7 Megha Garg 2,419,900 2.70%
  Total 89,244,800 99.72%

Sources: DRHP & RHP

Also Read: What is DRHP in IPO: How to Read & Difference between DRHP and RHP

The promoters and shareholders who are selling some of their stakes in the company through this IPO are Paritosh Kumar Garg (HUF), up to 49.2 lakh equity shares, while the remaining 22.4 lakh shares will be sold by the investor India Business Excellence Fund – III.

Why Invest in Happy Forgings IPO?

At the time of investing in Happy Forgings or in any company, there are various things you need to check before buying the IPO. You should perform fundamentals analysis to evaluate the fundamental and financial condition of the company.

This will help you to know the strength and weakness of the company that becomes the grounds for the growth of business and revenue of the company. It will also help to know the risk factors that can affect the business operations and income of the company.

Also Read: What are the Risk Factors Involved in Applying for an IPO

Strengths:

  • The demand for high-precision machined components is growing well due to the growth of automobile and automotive auxiliaries industries across the world. Happy Forgings is equipped with engineering capabilities coupled with machining capabilities and advanced technologies to deploy as part of its manufacturing operations, positioning it to capitalise on the opportunities created by the growing market.
  • Happy Forgings is the fourth largest manufacturer of engineering-led complex and safety-critical, heavy forged and high-precision machined components in India.
  • The company has developed integrated manufacturing operations coupled with in-house product and process design capabilities to keep producing a diverse product portfolio with continuous value addition in the growth of the company.
  • Apart from that Happy Forgings is operating with a well-diversified business model, placing the company on such edge to take advantage of potential alternative engine technologies for better production.
  • The company has long-standing relationships with customers across industries not only in the domestic market but from overseas countries.
  • Track record of consistently building capabilities and infrastructure, with a focus on capital efficiency to improve production capabilities while ensuring the operating margins and revenue of the company.
  • The company is led and managed by experienced Promoters and a senior management team who have extensive knowledge and know-how in the similar industry giving a better vision and growth strategy to the company for better revenue prospects in coming years.
  • At the Financial end, the company has performed well, in the last three years. From FY21 to FY23, it registered a CAGR of 43.02% and 45.13% in its revenue and EBITDA. While net profit for the same period grew at a CAGR of 55.37%.

Risks:

  • Though Happy Forgings is one of the largest engineering manufacturers of complex and safety-critical, heavy forged and high precision machined components in India but faces competition from other players like Bharat Forge, Sona BLW Precision Forgings, Craftsman  Automation,  RK  Forging,  MM  Forgings, Sansera  Engineering,   Ramkrishna  Forgings,  Uno Minda, ThyssenKrupp, American  Axle  &  Manufacturing,  Tianrun  Crankshaft, CIE Automotive,  Endurance and Cummin India.
  • The company mainly depends upon the top 10 customers who account for more than 70.08 per cent, of total revenue from operations of the company. Any kind of dispute with their leading clients or loss of these customers can adversely affect the business of the company.
  • The Happy Forgings doesn't have any definitive supply agreements with suppliers, and it depends on a limited set of suppliers for its primary material, steel. Hence, any kind of disruption from these supplier side, like unavailability or high cost of steel will affect the business and profitability of the company.
  • Around 45% of the revenue of the company comes from the sale of the crankshaft, but there is a significant increase in the adoption of battery-electric vehicles, in which engine technologies don't require such crankshafts. Hence, the adoption of EVs particularly in commercial vehicles, farm equipment, or off-high vehicles will also adversely affect the revenue of the company from this segment.
  • Apart from that from the government side, any kind of regulatory changes of norms to encourage the electric vehicles automakers, and increase duties or taxes on fuel-based vehicles will decrease the demand for crankshafts from the automotive and auxiliaries industries making it difficult for the company to grow.
  • The company is supplying its products, to various countries globally, and earning a notable amount of revenue from these nations. Any kind of economic disruptions in these countries, will also have a negative impact on the revenue of the company.
  • One of another challenges for the company is an increase in the cost of material that will make it difficult to maintain the operating margins of the company. Failure to pass the cost of rising materials will dent its profit margins making it difficult for the company to maintain the margins.

Happy Forgings IPO Grey Market Premium (GMP)

The Grey Market Premium (GMP) is the premium price over the issue price of the company that launched the IPO. The GMP is defined as the demand and supply of shares in the grey market and keeps fluctuating till the date of listing. Though, it is also not a reliable factor to find out the share price of any company, should conduct the fundamental analysis and technical analysis to evaluate the stock and compare the same with its peer group to know its fair value.

Also Read: What is Grey Market Premium in IPO: How is GMP Calculated &Reliable

According to the latest news and online sources, the Grey Market Premium (GMP) of the Happy Forgings is trailing at Rs460 which is 54% above the upper band of the IPO price of Rs850. This GMP shows shares of Happy Forgings are going to list around or above Rs1310, giving a wonderful opportunity for the investors to apply in the IPO and earn from listing gains.

Happy Forgings IPO Review & Analysis

If you consider the upper price band of the Happy Forgings IPO, the share price is at a P/BV of 6.89 based on its NAV of Rs. 123.28 as of 30 Sep 2023. Based on its post-IPO, the P/BV will be 5.33 and NAV of Rs. 159.58 per share.

In the last three years, Happy Forgings has reported an average EPS of Rs. 18.57.  If you attribute the FY24 annualized earnings to the post-IPO fully diluted paid-up equity capital of the company, the share price of the company would be priced at P/E of 33.56.

As this P/E the share price of Happy Forgings is fairly priced if you compare it with its peer group companies. Though owing to some differences in their business models, they all are not comparable on an apple-to-apple basis.But it’s nearest listed competitors Bharat Forge, Craftsman Auto, Ramkrishna Forgings, and Sona BLW are trading at a P/E of 45.85, 47.01, 47.92, and 68.02 respectively. Hence, you can subscribe for the issue or apply in the Happy Forgings IPO from a listing gain perspective to medium to long-term investment point of view.

How to Apply for Happy Forgings IPO?

To apply in any IPO or in Happy Forgings IPO open a trading account and demat account with Moneysukh. You will get here the facility for online trading or investing in equities, commodities and the forex market with tips to trade or invest in the stock market.

Also Read: Trading or Investing Which is Better and More Profitable

Moneysukh is one the best discount brokers in India and offers the best trading platform through online software and trading applications like Trade Radar and TradingView. You will enjoy here the best facilities to trade in secondary markets or apply in the primary market or IPOs. If you have a trading and demat account with Moneysukh just follow the steps given below.

Steps to Apply for Happy Forgings IPO:

Step 1: Wait for the date Happy Forgings IPO opens for online bidding.

Step 2: Now browse trade.moneysukh.com and log in with your User ID & password.

Step 3: Here find the IPO section and select the Happy Forgings IPO.

Step 4: Now you have to fill in the various details like price, quantity, and so on.

Note: While applying in any IPO, always bid at the cutoff price before submitting your application. 

Step 5: Before submitting make the payment and your IPO application is successful.

How to Check Happy Forgings IPO Allotment Status?

The IPO allotment process was conducted 3 to 4 days after the IPO ended. The basis of allotment shares in Happy Forgings IPO is set at 22, Dec 2023. From this date onwards you can check the Happy Forgings IPO allotment status. To check the Happy Forgings IPO allotment status you can browse BSE and NSE, and use your IPO application and PAN card details.

Also Read: How to check IPO allotment status on NSE, BSE through Moneysukh

When an IPO is over subscribed into multiple times, the chances of getting the allotment of shares become less for everyone. The allotment for retail, HNI category and other investors categories all are organized and completed on the same date but with different procedures as per the pre-defined IPO reservation into the different categories.

Also Read: How to Increase the Chances of IPO Allotment

When an IPO is oversubscribed and you have been not allocated any shares, you receive your IPO application money back into your bank account or your fund will be unblocked in the bank account that you have used to apply in the IPO through the ASBA.

However, if you are lucky enough to get the allotment of shares of Happy Forgings even if it is oversubscribed many times, then you will get the shares credited into your demat account before the listing day. And if your shares are into high profits you can sell the shares in the secondary market or keep them for a long-term investment point of view.

Also Read: Benefits of Investing in the Stock Market: Advantages of Share Market

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