Happy Forgings Files DRHP For Rs 1,300 Cr IPO

Happy Forgings, a company situated in Ludhiana, has submitted its Draft Red Herring Prospectus (DRHP) to the authority on capital markets, Sebi, in order to raise funds for its IPO. A fresh issue of Rs 500 crore and an offer for sale (OFS) of up to 8.05 million shares by the promoter and selling shareholders make up the IPO, which has a face value of Rs 2. Up to 5.37 million equity shares from Paritosh Kumar Garg (HUF) and up to 2.68 million equity shares from India Business Excellence Fund III are included in the offer for sale.

The IPO reservation consists of 15% of the offer for non-institutional bidders, 35% of the offer for retail individual bidders while 50% of the offer on a proportionate basis for qualified institutional buyers.

The book running lead managers for the offer are JM Financial Limited, Axis Capital Limited, Equirus Capital Private Limited, and Motilal Oswal Investment Advisors Limited, while Link Intime India Private Limited is the registrar. The issue is likely to be listed on both the BSE and NSE.

The company may pursue a pre-IPO placement of certain securities for a cash consideration aggregating up to Rs 100 crore ("Pre-IPO Placement") after consulting with the lead bankers to the offering. According to the DRHP, the proceeds from the fresh issuance would be used for general corporate purposes, up to Rs 190 crore for prepayment of all or a portion of certain outstanding borrowings acquired by the Company, and up to Rs 213.60 crore for the purchase of equipment, plant, and machinery.

As of Fiscal 2023, Happy Forgings Ltd, Ludhiana-based is India's fourth-largest engineering-led manufacturer of complex, safety-critical, heavy forged, and highly precise machined components. The company is well-known in the crankshaft manufacturing industry in India because of its more than 40 years of expertise. According to Ricardo Report, it has the second-highest production capacity for industrial crankshafts with high horsepower for commercial vehicles.

From Rs 3,992.02 million in fiscal 2021 or 72.88% of the overall revenue from product sales in that fiscal year, to Rs 8,392.33 million in fiscal 2023, or 78.66% of the total revenue from product sales in that fiscal year, the revenue earned from the sale of machined products has increased dramatically. This illustrates the company's increased focus on machined items with a compound annual growth rate (CAGR) of 44.99%.

By March 31, 2023, it had expanded its annual capacity for forging and machining to 107,000 MT and 46,100 MT, respectively, with the addition of three production facilities in Ludhiana, Punjab.

The consolidated revenue from operations for the fiscal year 2023 grew by 39.12% to Rs 1196.53 crore from Rs 860.05 crore the previous year and more than doubled from Rs 584.96 crore in fiscal 2021 to Rs 1196.53 crore in fiscal 2023. From Rs 142.29 crore in the fiscal year 2022 to Rs 208.70 crore in the fiscal year 2023, net profit grew by 46.67%. Due to its expertise in growing capacity strategically and dedication to capital efficiency, it recorded the best ROCE among peers in Fiscal 2023.

According to a Ricardo Report, the forging and machining markets in India are projected to be worth roughly Rs 60,670 crore and Rs 44879.45 crore, respectively, in fiscal 2024 and are projected to grow at a CAGR of 7.10% and 8.00% to reach Rs 84,772.30 crore and Rs 66,488.08 crore, respectively, by fiscal 2029.