Happy Forgings India Limited is coming up with an IPO consisting of a fresh issue of shares worth INR 500 crores and an offer sale. The company will utilize the raised funds to purchase equipment, plant, and machinery and to prepay all or a portion of borrowings availed by the company.

Happy Forgings Limited IPO – Important Details

Happy Forgings Limited IPO – Company Profile

Happy Forgings Limited is the fourth largest engineering-led manufacturer of complex and safety-critical, heavy forged and high-precision machined components in India. Through its vertical integrated operations, the company is engaged in engineering, process design, testing, manufacturing, and supply of various components that are both margin-accretive and value-additive.

With over 40 years of experience in manufacturing and supplying quality and complex components according to customer’s specifications, the company has emerged as a leading player in the domestic crankshaft manufacturing industry with the second largest production capacity for commercial vehicle and high horse-power industrial crankshafts in India.

The company manufactures a wide range of heavy forged and machined products, which include crankshafts, front axle beams, steering knuckles, differential cases, transmission parts, pinion shafts, suspension products, and valve bodies across industries for a diversified base of customers.

Happy Forgings Limited IPO Fundamental Analysis

Happy Forgings Limited shows consistent growth in revenue, profitability, and efficiency. The improving Return on Net Worth (RoNW), Earnings Per Share (EPS), and reduction in the debt-to-equity ratio demonstrate a positive financial trend.

Revenue Growth: 

The company has exhibited consistent growth in revenue over the three years, with a substantial increase from ₹5,849.58 million in 2021 to ₹11,965.30 million in 2023, indicating a positive trend in sales performance.

Profitability:

 Happy Forgings Limited has shown commendable growth in profitability, with the Profit After Tax (PAT) rising from ₹864.48 million in 2021 to ₹2,087.01 million in 2023. This indicates an improving bottom line and operational efficiency.

Return Metrics: 

The Return on Net Worth (RoNW) has seen a consistent uptrend, showcasing an increase from 13.40% in 2021 to 21.12% in 2023. This signifies the company’s ability to generate profits in relation to its net worth, reflecting a positive operational efficiency and effective utilization of funds.

Earnings Per Share (EPS): 

The Diluted EPS has significantly increased from ₹9.66 in 2021 to ₹23.32 in 2023, which indicates robust growth in earnings per share and potentially favorable prospects for investors.

Financial Health: 

The company’s Total Assets and Total Liabilities have been increasing over the years. The Debt to Equity Ratio has reduced from 0.24 in 2021 to 0.22 in 2023, which shows a declining reliance on debt to finance operations, indicating a better financial health position.

Liquidity and Efficiency: 

The Current Ratio has fluctuated but remained above 1, reflecting satisfactory liquidity levels. The Inventory Turnover Ratio has improved from 2.55 in 2021 to 3.12 in 2023, indicating more efficient inventory management.

Gross Margin: 

Although there’s been a slight decrease in gross margin from 56.99% in 2021 to 53.95% in 2023, the company has maintained a relatively healthy gross margin.

Happy Forgings Limited IPO Financial Information

Happy Forgings IPO Peer Comparison

Happy Forgings Limited exhibits competitive revenue, strong EPS at 23.32 (diluted), and robust RoNW of 21.12%. Bharat Forge leads in revenue, Craftsman Automation in EPS (117.56), while Sona BLW Precision Forgings has a higher P/E ratio at 82.65 compared to others.

Happy Forgings Ltd IPO Objective

Happy Forgings Ltd IPO intends to invest INR INR 213.59 crores in new manufacturing equipment. They will consider evolving business needs for specific items. Additionally, they plan to repay borrowings based on cost, interest rates, and legal provisions. The remaining funds will be used for general corporate purposes.

 1. Purchase of equipment, plant, and machinery: Happy Forging’s versatile manufacturing facilities enable them to perform various processes, including designing, forging, testing, and machining, facilitating a broad product range. They plan to invest up to INR ₹2,13.59 crores from Net Proceeds in equipment and machinery to enhance manufacturing capabilities. The exact items may change as per evolving business needs.

 2. Prepayment of all or a portion of certain outstanding borrowings availed by the company: The company’s decision to prepay or repay borrowings hinges on multiple factors, including borrowing costs, interest rates, prepayment conditions, consent from lenders, legal provisions, and commercial considerations. The specified prepayment amounts for each borrowing facility are tentative, subject to commercial factors and the outstanding loan amounts at the time of prepayment.

3. General corporate purpose: The company plans to deploy the balance funds towards the general corporate goal, which is not limited to meeting expenses incurred in the ordinary course of business and includes, without limitation, meeting ongoing available corporate contingencies, meeting their business requirements, funding growth opportunities,  including supporting strategic initiatives, capital expenditure, and any other purpose.

Happy Forgings Limited IPO Risks And Challenges

Happy Forgings Limited IPO relies on the performance of critical industries, faces customer performance requirements, and acknowledges external risks such as economic instability and natural disasters.

1. Happy Forging’s business depends on the performance of specific industries, particularly commercial vehicles, farm equipment, and off-highway vehicles, both in the Indian and overseas markets. Any adverse changes in the conditions affecting these industries can adversely impact their business, results of operations, cash flows, and financial condition.

2. Happy Forgings are subject to strict performance requirements, including, but not limited to, quality and delivery, by their customers,  and any failure by the company to comply with these performance requirements may lead to the cancellation of existing and future orders, recalls, or warranty and liability claims.

3. Almost 70% of the revenue depends on the top 10 customers. The loss of any of these customers could adversely affect the business, financial condition, results of operations and cash flows.

Happy Forgings Ltd IPO – Industry & Market Potential

Forging is a manufacturing process involving the shaping of a metal using compressive, localized forces delivered through hammering, pressing, or rolling. These compressive forces are delivered with a hammer or die. 

The forging industry market size was about 216.2L MT in the calendar year 2014 (US$ 52.2 billion). It increased gradually until the calendar year 2018 to become 243.1L MT (US$ 62.3 billion), where the highest volumes of automotive were registered in the given timeline. Ricardo estimates that from a 257.9L MT (US$ 68.8 billion) market in calendar year 2022, it would grow to a 328L MT (US$ 97 billion) market by calendar year 2029 with a CAGR of 3.6%.

The automotive sector holds about 61% of the forged components market share globally by volume as of calendar year 2022. In terms of value, the automotive sector’s contribution to forged components was about US$ 35.4 billion in 2022. It is estimated to grow as a US$ 49.6 billion market in the calendar year 2029 with a CAGR of 5.1%.

Happy Forgings Ltd IPO- Type of Offer

The company aims to gather INR 500 crores through a fresh share issue for expanding outlets, subsidiary support, and advertising. Additionally, existing shareholders, including promoters, will sell 80.54 lakh shares.

 ● Fresh Issue: The company will issue new shares to raise capital, aiming to collect INR 500 crores. The company intends to utilize the proceeds from the fresh issue to purchase equipment, plants, and machinery and repay the company’s borrowings.

● Offer for sale: Existing shareholders, including promoters and early investors, will sell a portion of their stake in the company- 80.54 lakh shares. 

Happy Forgings Limited IPO Offer Size

Happy Forgings India Limited plans to launch an Initial Public Offering (IPO) that includes a new issuance of shares valued at INR 500 crores and an offer for sale. The proceeds from this initiative will be directed towards acquiring equipment, plants, and machinery. Additionally, the company intends to use the raised funds to prepay all or a portion of its existing borrowings.

Happy Forgings IPO Allotment Structure

 Happy Forgings India Limited’s IPO allocation designates 50% for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for Retail Individual Investors (RIIs) in line with SEBI regulations.

● Qualified Institutional Buyers (QIB): As per SEBI regulations, 50% of the shares offered through the IPO will be reserved for Qualified Institutional Buyers. These include entities such as banks, mutual funds, and insurance companies.

● Non-Institutional Investors (NII): 15% of the shares will be reserved for Non-Institutional Investors. These typically include corporate bodies or individuals investing more than Rs. 2 lakhs.

●  Retail Individual Investors (RII): The remaining 35% of the shares will be allotted to Retail Individual Investors. These individual investors apply for shares with a total value of less than Rs. 2 lakhs.

How to apply for a Happy Forgings India IPO?

To apply for the Happy Forgings India Limited through Alice Blue, you would typically follow these steps:

1.  Open a Demat and Trading Account: If you don’t already have one, you need to open a Demat and trading account with Alice Blue.

2.  Check for IPO Details: Once your account is active, you can check for the Happy Forgings India Limited IPO details in the IPO section of the Alice Blue platform.

3.  Place the Bid: Enter the number of shares you wish to buy and place your bid within the IPO’s price band.

4.  Submit the Application: Confirm all your details and submit your application.

 You can apply for Happy Forgings India Limited IPO at Alice Blue in just a few clicks!

Check Allotment Status: Post the allotment process, you can check the allotment status to see if you have received any shares.

Please note that the allotment of shares is not guaranteed and will depend on the demand for the IPO.

How to Check Happy Forgings India IPO Allotment Status?

Checking the allotment status of an IPO in Alice Blue is usually straightforward. Please follow these general steps:

1.  Log in to your Alice Blue Account: You can do this through the Alice Blue website or their trading app.

2.  Navigate to the Portfolio or IPO Section: This might differ based on the layout of Alice Blue’s platform, but generally, you can find the status of your IPO application under the ‘Portfolio’ or ‘IPO’ section.

3.  Find the IPO Allotment Status: Look for a sub-section called ‘IPO Allotment Status’ or something similar. This is where you can see the status of the IPOs you have applied for.

4.  Select the Happy Forgings India Limited IPO: If you have applied for multiple IPOs, there might be a dropdown menu or a list where you can select the IPO you are interested in. Select the Happy Forgings India Limited IPO.

5.  Check the Status: The status of your application should be displayed here. If the shares have been allocated to you, it would be mentioned here.

 If you face any issues, it’s recommended that you contact Alice Blue’s customer support for detailed assistance.

 Apart from Alice Blue, there are other ways to check the allotment status of the Happy Forgings India Limited IPO:

Registrar’s Website: Visit the website of Link In time India Private Limited, the registrar of the Happy Forgings India Limited IPO. On the homepage, look for the ‘IPO Allotment Status’ option. You must enter your PAN, application, or Demat account number to check your allotment status. Click on the ‘Submit’ button to view your IPO allotment status.

NSE and BSE: You can also check the allotment status on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) official websites. You would need your application number and PAN to check the status.

 Please note that the allotment status will only be available after completing the allotment process, a few days after the IPO window closes.

Happy Forgings India IPO Offer Registrar

The registrar for the Happy Forgings India Limited IPO is Link In time India Private Limited. They are responsible for ensuring the IPO allotment and refund processes are carried out smoothly.

Contact information for the registrar:

Link In time India Private Limited

C-101, 1st Floor, 247 Park

L.B.S. Marg, Vikhroli West

Mumbai – 400 083, Maharashtra

Phone: 022-4918 6200

Email: [email protected]

Website: www.linkintime.co.in

Happy Forgings India Limited IPO FAQs

1. What is the allotment date of the Happy Forgings India Limited’s IPO?

The allotment date of the Happy Forgings India Limited’s IPO is December 22, 2023.

2. What is the price band of the Happy Forgings India Limited’s IPO?

The price band of the Happy Forgings India Limited’s IPO is INR 808-850 per share.

3. What is the size of Happy Forgings India Limited’s IPO?

Happy Forgings India Limited is coming up with an IPO consisting of a fresh issue of shares worth INR 500 crores and an offer sale. The company will utilize the raised funds to purchase equipment, plant, and machinery and to prepay all or a portion of borrowings availed by the company.

4. What is the listing date of Happy Forgings India Limited’s IPO?

The listing date of the Happy Forgings India Limited’s IPO is December 27, 2023.

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