Happy Forgings - Expanding Opportunities With Diversification; Motilal Oswal Initiates Coverage With A Buy

Motilal Oswal Report

Happy Forgings Ltd. is a Ludhiana-based company specialising in diversified forging and machining services. With over four decades of industry experience, it manufactures and delivers top-quality, intricate components. It is ranked as the fourth largest engineering-led manufacturer in India for complex and safety-critical, heavy forged, and high-precision machined components.

The company is well established within the industries and customer segments it serves, including-

1. heavy commercial vehicles (contributing to 41% of revenues),

2. farm equipment (32%),

3. off-highway vehicles (14%) and industrials (13%).

Founded in 1979, Happy Forgings' entire operations are based out of Ludhiana, Punjab, with three vertically integrated manufacturing facilities.

The company is well poised to grow in the coming years, led by expansion through increased capacities, product diversification, client acquisition, and emerging opportunities in industrials and exports.

We expect 21%/25%/30% compound annual growth rate (over FY24E-26E) in standalone revenues/Ebitda/profit after tax and initiate coverage on the stock with a 'Buy' rating and a target price of ~Rs 1,125 (based on 26 times FY26E earnings per share).

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