Happy Forgings Q4 Results Review - Healthy Performance Despite Weakness In Core Segments: Motilal Oswal

Motilal Oswal Report

Happy Forgings Ltd.'s Q4 FY24 results were operationally in line with our expectations, while higher ‘other income’ and lower tax led to profit after tax beat at Rs 658 million (estimate: Rs 607 million), up by 30% YoY.

Happy Forgings maintains its focus on diversifying into industrials and exports, which contributed ~12%/20% of FY24 revenue, compared to 4%/12% in FY23. Currently, exports constitute 60% of the company’s order book.

We raise FY25E/26E earnings by ~3.5%/4.8% to factor in for better-than expected outlook for underlying industries, new order wins, and higher other income.

We remain upbeat on Happy Forgings’ strategy to grow beyond its core segments, which is further complemented by its recent order wins, especially in passenger vehicles and exports. Given its consistent new order wins and huge growth opportunities ahead, we raise our target multiple to 28 times from 26 times earlier. Reiterate Buy with a target price of Rs 1,260.

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