Buy shares of this Ludhiana-based forging company for 21% potential upside, says Motilal Oswal
Happy Forgings shares rose 3.45 per cent to hit a high of Rs 958.85. The stock got listed in December 2023. At the prevailing price, the stock is up 12.80 per cent over its issue price of Rs 850.
- Mar 1, 2024,
- Updated Mar 1, 2024 11:16 AM IST
Motilal Oswal has initiated coverage on a recent stock market debutant Happy Forgings Ltd with a 'Buy' rating and a price target of Rs 1,125, suggesting 21 per cent potential upside ahead. The domestic brokerage expects Happy Forgings to continue to outperform core auto segments led by new order wins in the auto segment. Happy Forgings' healthy order wins in the industrials and exports segments would help drive an improved mix, it said while expecting sales for Happy Forgings to growth at 21 per cent, Ebitda at 25 per cent and profit at 30 per cent, compounded annually, over FY24-26E.
Following the development, the stock rose 3.45 per cent to hit a high of Rs 958.85. The stock got listed in December 2023.
At the prevailing price, the stock is up 12.80 per cent over its issue price of Rs 850
"Its superior financial track record relative to peers serves as a testament of its inherent operational efficiencies and is likely to be a key competitive advantage for HFL going forward. We initiate coverage on Happy Forgings with a BUY rating and a target price of Rs 1,125," Motilal Oswal said.
Happy Forgings is well-poised to grow in the coming years led by expansion through increased capacities, product diversification, client acquisition, and emerging opportunities in industrials and export, Motilal Oswal said.
Happy Forgings said the addition of the 14,000 ton press line in Q3FY23 has enabled the company to forge heavier, safety-critical parts, weighing up to 250Kgs, while also expanding its capabilities across various industries.
Transitioning from solely a forgings player, Happy Forgings has now evolved into a fully machined player, with its machining mix increasing from 53 per cent in FY14 to 84 per cent in 9MFY24, it said.
Following the successful installation of its 14,000 mt press, Happy Forgings experienced a major influx of new order wins from the Industrial segment, leading to a substantial increase in the segment’s contribution to revenue, rising to 13 per cent for YTDFY24 from just 4 per cent in 9MFY23. Happy Forgingsexpects to ramp up the utilisation of this press to 80 per cent in the next three to four years from the current utilization of 40 per cent, Motilal Oswal said.
"Further, given its relatively low manufacturing costs and favorable government policies to push localisation, India is now emerging as the key beneficiary of this trend with many domestic vendors seeing renewed interest from global OEMs for sourcing from them. Like its peers, HFL is also emerging as one of the beneficiaries of this trend. This is evident from its 60 per cent share of exports in the order book. Accordingly, it expects exports contribution to rise to 25 per cent by FY25 from the current 20 per cent for YTDFY24," Motilal Oswal said.
the Ludhiana-based company specialises in diversified forging and machining services. With over four decades of industry experience, it manufactures and delivers top-quality, intricate components. It is ranked as the fourth largest engineering-led manufacturer in India for complex and safety-critical, heavy forged, and high-precision machined components. The company is well established within the industries and customer segments it serves, including a) heavy commercial vehicles (contributing to 41% of revenues), b) farm equipment (32%), c) off-highway vehicles (14%) and industrials (13%). Founded in 1979, HFL’s
entire operations are based out of Ludhiana, Punjab, with three vertically integrated manufacturing facilities. HFL is well poised to grow in the coming years, led by expansion through increased capacities, product diversification, client acquisition, and emerging opportunities in industrials and exports. We expect 21%/25%/30% CAGR (over FY24E-26E) in standalone revenues/EBITDA/PAT and initiate coverage on the stock with a BUY rating and a TP of ~INR1,125 (based on 26x FY26E EPS)
Ludhiana-based
Motilal Oswal has initiated coverage on a recent stock market debutant Happy Forgings Ltd with a 'Buy' rating and a price target of Rs 1,125, suggesting 21 per cent potential upside ahead. The domestic brokerage expects Happy Forgings to continue to outperform core auto segments led by new order wins in the auto segment. Happy Forgings' healthy order wins in the industrials and exports segments would help drive an improved mix, it said while expecting sales for Happy Forgings to growth at 21 per cent, Ebitda at 25 per cent and profit at 30 per cent, compounded annually, over FY24-26E.
Following the development, the stock rose 3.45 per cent to hit a high of Rs 958.85. The stock got listed in December 2023.
At the prevailing price, the stock is up 12.80 per cent over its issue price of Rs 850
"Its superior financial track record relative to peers serves as a testament of its inherent operational efficiencies and is likely to be a key competitive advantage for HFL going forward. We initiate coverage on Happy Forgings with a BUY rating and a target price of Rs 1,125," Motilal Oswal said.
Happy Forgings is well-poised to grow in the coming years led by expansion through increased capacities, product diversification, client acquisition, and emerging opportunities in industrials and export, Motilal Oswal said.
Happy Forgings said the addition of the 14,000 ton press line in Q3FY23 has enabled the company to forge heavier, safety-critical parts, weighing up to 250Kgs, while also expanding its capabilities across various industries.
Transitioning from solely a forgings player, Happy Forgings has now evolved into a fully machined player, with its machining mix increasing from 53 per cent in FY14 to 84 per cent in 9MFY24, it said.
Following the successful installation of its 14,000 mt press, Happy Forgings experienced a major influx of new order wins from the Industrial segment, leading to a substantial increase in the segment’s contribution to revenue, rising to 13 per cent for YTDFY24 from just 4 per cent in 9MFY23. Happy Forgingsexpects to ramp up the utilisation of this press to 80 per cent in the next three to four years from the current utilization of 40 per cent, Motilal Oswal said.
"Further, given its relatively low manufacturing costs and favorable government policies to push localisation, India is now emerging as the key beneficiary of this trend with many domestic vendors seeing renewed interest from global OEMs for sourcing from them. Like its peers, HFL is also emerging as one of the beneficiaries of this trend. This is evident from its 60 per cent share of exports in the order book. Accordingly, it expects exports contribution to rise to 25 per cent by FY25 from the current 20 per cent for YTDFY24," Motilal Oswal said.
the Ludhiana-based company specialises in diversified forging and machining services. With over four decades of industry experience, it manufactures and delivers top-quality, intricate components. It is ranked as the fourth largest engineering-led manufacturer in India for complex and safety-critical, heavy forged, and high-precision machined components. The company is well established within the industries and customer segments it serves, including a) heavy commercial vehicles (contributing to 41% of revenues), b) farm equipment (32%), c) off-highway vehicles (14%) and industrials (13%). Founded in 1979, HFL’s
entire operations are based out of Ludhiana, Punjab, with three vertically integrated manufacturing facilities. HFL is well poised to grow in the coming years, led by expansion through increased capacities, product diversification, client acquisition, and emerging opportunities in industrials and exports. We expect 21%/25%/30% CAGR (over FY24E-26E) in standalone revenues/EBITDA/PAT and initiate coverage on the stock with a BUY rating and a TP of ~INR1,125 (based on 26x FY26E EPS)
Ludhiana-based