Happy Forgings IPO opens for subscription. Should you apply? (2024)

The Rs 1,009-crore initial public offering (IPO) of Happy Forgings opened for subscription on Tuesday. The company is an engineering-led manufacturer of safety-critical, heavy-forged, and high-precision machined components.

It makes a wide range of forged and machined products such as crankshafts, front axle beams, steering knuckles, differential cases, transmission parts, planetary carriers, suspension brackets, and valve bodies across industries for a diversified base of customers.

The issue, which closes on December 21, comprises a fresh equity issue of Rs 400 crore and an offer for sale (OFS) of 71.59 lakh shares.

Under the OFS, promoter Paritosh Kumar Garg will offload 49.22 lakh shares and investor India Business Excellence Fund will sell 22.37 lakh shares.

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Happy Forgings IPO review

Analysts say the IPO gives a worthy option for investors seeking exposure to the manufacturing sector. The impressive track record and promising outlook of the company are additional bonuses that come with investing in this issue.

"On the valuation front, we believe that the company is fairly priced. Thus, we recommend a subscribe for long-term rating to the IPO," said Anand Rathi.

"We recommend subscribing to the IPO, given the long-term opportunities in global forgings and machining, expansion of exports, and strong financials," said Incred Equities.

Happy Forgings IPO Price Band

Happy Forgings has set a price band of Rs 808-850 per share for its maiden public offer. Investors can bid for a minimum of 17 shares in one lot and multiples thereafter.

Happy Forgings IPO Issue Structure

About 50% of the offer is reserved for qualified institutional buyers, 35% for retail investors, and 15% for non-institutional investors.

Happy Forgings IPO Proceeds

The company proposes to utilise the net proceeds for the purchase of equipment, plant, and machinery, prepayment of debt and other general corporate purposes.

Financials

For the six months ended September 2023, the company clocked revenues of Rs 600 crore, while profit stood at Rs 116 crore. In FY23, revenues rose 39% to Rs 1,196 crore, and profit jumped 47% to Rs 209 crore.

During FY21-23, its revenue, EBITDA and PAT clocked a CAGR of 43%, 47% and 55%, respectively. Meanwhile, RoCE improved from 14% in FY21 to 22% in FY23.

Book-running lead managers

JM Financial, Axis Capital, Motilal Oswal Investment Advisors, and Equirus Capital are the book-running lead managers to the issue.

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(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)