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Happy Forgings IPO Check Issue Date Price Band Lot Size And More

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08 Feb 20246 mins readBy MOFSL

Introduction:

2023 proved to be a blockbuster year for Indian stock market investors. As they gear up to welcome 2024, they can end this year on a high. A gamut of promising companies are looking to exploit the prevailing bull market by launching their Initial Public Offerings (IPOs). Happy Forgings Limited is one such company that has created a significant buzz among investors.

Happy Forgings IPO opens for public subscription on Tuesday, 19 December 2023 and will comprise a fresh issue and an offer for sale. The company has fixed the price band for the IPO as Rs. 808 to Rs. 850 per equity share. Keep reading to know more about the Happy Forgings IPO and decide whether to invest.

About Happy Forgings Limited

Happy Forgings Limited commenced its operations in 1979 primarily as a forging company and ventured into the manufacturing of high-precision machine components later. The company’s product portfolio includes crankshafts, pinion shafts, steering knuckles, differential housings, axle carriers, and valve bodies.

For the Financial Year 2022-23, Happy Forgings Limited was the fourth-largest manufacturer of forging and high-precision machine components in India. It specifically caters to domestic and global Original Equipment Manufacturers (OEMs) in diverse industries, including automotive, power, oil and gas, railways, and wind turbines. Some of the company’s marquee clients include Ashok Leyland, JCB India, IBCC Industries, SML ISUZU, Swaraj Engines, and Mahindra and Mahindra.

Exciting opportunities ahead: Don’t forget to apply for Upcoming IPOs!

Key Strengths of the Company

Below are the key strengths of Happy Forgings Limited as highlighted in the company’s Red Herring Prospectus (RHP):

  • The company has more than 40 years of experience in the industry and has emerged as a leading player since its inception
  • It has consistently maintained the highest EBITDA margin compared to its peers. The revenue from operations has increased by over 100% between FY21 and FY23
  • The company’s client list includes the top five Indian OEMs in terms of market share in the commercial vehicles and farm equipment industries
  • The company has a long-standing relationship with marquee clients and has established itself as a trusted supplier
  • The company exports its products across nine countries, including Brazil, Italy, Japan, Sweden, Spain, Thailand, Turkey, the United Kingdom, and the United States of America
  • Integrated manufacturing facilities with in-house process designing and product development capabilities
  • The company has constantly invested in machinery and equipment to expand its manufacturing capacity and seize growth opportunities in the market
  • Boasts highly experienced promoters and senior management teams, which have been instrumental in the company’s growth

Key Risks or Weaknesses Highlighted

The key risks or weaknesses associated with Happy Forgings Limited include:

  • The company derives a significant portion of its revenue from the top ten clients. Loss of business or unhealthy relationships with these clients can adversely impact the company’s financial health
  • The company depends heavily on specific industries, including automotive, farming, etc. Should these industries face downturns, it could impact the company’s business
  • The company has to maintain strict adherence to regulatory and quality control guidelines. The inability to meet these standards may result in the loss of business
  • The company buys raw materials from a limited number of suppliers. Any disruptions in supply-chain management can hamper the entire manufacturing cycle
  • The company is exposed to risks associated with currency exchange rate fluctuations and volatility in the prices of raw materials

Core Financials of the Company

The company’s revenue from operations has thrived, going from Rs. 5,849.58 million in FY21 to Rs. 11,965.30 million in FY23. The profit and net worth of the company have also grown at a steady rate. The table below depicts the key financials of Happy Forgings Ltd. for the last three financial years:

Particulars Six-month Period Ended Sept 2023 As of and for FY Ended March 31
2023 2022 2021
Revenue From Operations 6,729.00 11,965.30 8,600.46 5,849.58
Growth in Revenue 0 0 0 -
Gross Margin 3,789 6,455 4,717 3,334
EBITDA 1,952 3,409 2,308.87 1,587.46
EBITDA Margin 29.01% 28.49% 26.85% 27.14%
Profit After Tax 1,192.99 2,087.01 1,422.89 864.48
Return on Equity 10.81% 21.12% 18.07% 13.40%
Return on Capital Employed 12% 24% 19% 16%

*Amount in Millions

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Details of the IPO

The table below illustrates crucial details of the Happy Forgings IPO:

IPO Date 19 December to 21 December 2023
Basis of Allotment 22-Dec
Listing Date 27-Dec
Face Value Rs. 2 per share
Price Band Rs. 808 to Rs. 850
Lot Size 17 shares
Total Issue Size Rs. 1,009 crores
Fresh Issue Rs. 400 crores
Offer For Sale Rs. 609 crores
Issue Type Book Built Issue
Listing At NSE, BSE

Should you subscribe?

Considering the robust financials of the issuing company and the prevailing bull markets, it makes sense to subscribe to Happy Forgings IPO. However, after considering other factors, such as your investment goals and risk appetite, you must decide.

 

Related Articles:  How to Analyse an IPO | What is IPO Grading? | What is Cut Off Price In IPO Application 

 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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