Happy Forgings Limited IPO

Last Updated on October 10, 2023 by BFSLTeam BFSLTeam

Happy Forgings Limited was established in 1979 as a bicycle crank arm manufacturing unit. Over the years, this Ludhiana-based company became the fourth largest engineering-led, precision-heavy forged machine components manufacturer in India. 

This company filed its Draft Red Herring Prospectus to SEBI in August 2023 with the proposal to go public. According to this document, Happy Forgings Limited is planning to raise Rs. 1,200 – Rs. 1,300 crore funds from its IPO. 

As the firm awaits a green signal from SEBI, let’s take you through some of the important insights about the company. This blog shall help you plan an informed strategy for its upcoming Happy Forgings Limited IPO. 

Also Read: How does an IPO work?

About the Company

Happy Forgings Limited is a well-known designer, manufacturer and supplier of complex machined components and ranked 4th in terms of forging capacity. With the help of vertically integrated operations, Happy Forgings Limited engages in engineering, process designing, testing, manufacturing and supply of components that are value additive and margin-accretive. 

Under their product portfolio, the company offers a wide range of crucial and premium machine products. This includes front axle beams, differential cases, pinion shafts, valve bodies, steering knuckles and crankshafts. Most of the company’s clientele is in the automotive sector and original equipment manufacturers (OEM). 

The company holds 40 years of experience in the field of manufacturing and supplying complex yet premium components as per customer specifications. Happy Forgings Ltd is a supplier to India’s top five OEMs for medium and heavy commercial vehicles and the top 4 OEMs in the farm equipment sector. Its customers include the likes of Tata Cummins Pvt Ltd, JCB India Ltd, Liebherr CMCtec India Pvt Ltd, Ashok Leyland Ltd and Mahindra & Mahindra Ltd.

Happy Forgings Limited is one of the few Indian companies that manufacture and distribute high precision and safety-critical components to commercial vehicle, and farm equipment manufacturers. According to its DRHP, this company holds 3 manufacturing units. Two of these are situated in Kanganwal in Ludhiana while one is located in Dugri, Ludhiana. 

In terms of finances, Happy Forgings Limited’s total income witnessed a drastic rise from Rs. 5,908.13 million in FY2021 to Rs. 12,022.71 in FY2023. As the company grew with time, its profit-after-tax margin also increased from 14.78% in FY21 to 17.44% in FY23. 

IPO Details and Objectives

In August 2023, the leading auto components manufacturing company, Happy Forgings Limited, submitted its DRHP to SEBI to go public. By launching an IPO, the company plans to raise funds of around Rs. 1200 crore to Rs. 1300 crore. 

With the net proceeds that this company earns from its upcoming IPO, it has certain set targets to achieve as per its DRHP. These include plans to purchase equipment, machinery and plants. Furthermore, it also plans to prepay or repay its outstanding dues partially or in full and to fulfil general corporate needs. 

Happy Forging Limited IPO Details

According to the DRHP that Happy Forgings Limited submitted to SEBI, the upcoming IPO will comprise a fresh issue of equity shares worth Rs. 500 crore. The company is also placing an Offer for Sale for approximately 80.55 lakh equity shares by the promoter and a shareholder, namely Paritosh Kumar Garg and India Business Excellence Fund- III.

Happy Forgings Limited has set the face value of equity shares for its upcoming IPO at Rs. 2 per share. The company may also consider a pre-IPO placement of shares that aggregate to Rs. 100 crore. This would reduce the fresh issue size after the completion of share placement.

The company has yet to announce the price band, lot size and IPO opening and closing dates for its public issue. Therefore, consider keeping an eye out for the company’s RHP to know these updates so that you can time your investments accordingly. 

Axis Capital, Equirus Capital, JM Financial and Motilal Oswal Investment Advisors will be the merchant bankers behind the Happy Forgings IPO while Link Intime India is the registrar.

Additional Read: Lohia Corp Ltd IPO

Strengths

Here are the strengths of Happy Forgings Limited that make this company’s IPO an excellent investment choice:

• An excellent track record highlights the company’s infrastructure and building capabilities. This also allows the company to focus on capital efficiency.
• The company holds a long-term and strong relationship with customers regardless of the industry. This helps it build brand loyalty amongst customers. 
• This company is the fourth largest engineering-led producer of highly complex, precision-maintained, safety-critical and heavily forged components in India. The industry prevents competition due to its high entry barrier.
• The company is run by experienced professionals and a capable senior management team. 
• Happy Forgings Limited has a diversified business model that helps this company hold a prominent market position. 

Risks Associated

Besides the above strengths, you must keep in mind the following risks that can hamper the business of Happy Forgings Limited. 

• The success of Happy Forgings Limited business depends mostly on the terms of satisfaction of its top 10 customers. Any discontinuation of services from any of these customers can affect the firm’s finances adversely. 
• The performance of certain industries like agricultural equipment, commercial vehicles, off-highway vehicles, etc., in India and overseas markets, affect the business of Happy Forgings Limited. Any adverse changes in these industries can reduce the revenue of Happy Forgings Ltd.
• Happy Forgings Limited is subject to strict performance requirements; including quality and delivery. Any failure to comply with such requirements can lead to discontinuation of business agreements with its customers. 

Conclusion

We have presented all the important details you should know about the upcoming Happy Forgings Limited IPO to plan your investment strategy. You must also pay special attention to your risk appetite, financial goals and the company’s plan with their IPO. If your financial goal and the company’s IPO motives align, you are good to go for this investment. 

Also Read: How Can You Analyse An IPO?

Happy Forging Limited IPO FAQs