Incorporated in July 1979, Happy Forgings Limited is a manufacturer in India that specializes in engineering and producing heavy forged and high-precision machined components. Their focus is on creating complex and safety-critical components that are both valuable and margin accretive. The company operates with a vertically integrated approach, which involves engineering, process design, testing, manufacturing, and supply of a range of components.
The company produces a wide variety of products, such as crankshafts, front axle beams, steering knuckles, differential cases, transmission parts, pinion shafts, suspension products, and valve bodies, that cater to different industries and customers.
They primarily cater to domestic and global original equipment manufacturers (OEMs) manufacturing commercial vehicles in the automotive sector, while in the non-automotive sector, they cater to manufacturers of farm equipment, off-highway vehicles and manufacturers of industrial equipment and machinery for oil and gas, power generation, railways and wind turbine industries.
Company has an extensive customer base in India and across different regions, including Brazil, Italy, Japan, Spain, Sweden, Thailand, Turkey, the UK and the USA. Happy Forging Limited has three manufacturing facilities, two in Kanganwal and one in Dugri, all located in Ludhiana, Punjab.
Strengths And Risks
+ Leading Player: In terms of forging capacity as of Fiscal 2023, Happy Forgings is the fourth largest engineering led manufacturer of complex and safety critical, heavy forged and high precision machined component in India. Further, they have 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.
+ Manufacturing Capability: Their manufacturing processes, which primarily include die-designing, forging, heat treatment, machining and inspection and testing, are undertaken in-house. This enables them to meet customer requirements or modifications. Company possesses a wide range of engineering and product development capabilities, including die-designing, process design, cutting tool selection, and
inspection and testing, to product specifications without relying on external vendors.
+ Diversified Business Model: Their business model is well diversified by end use industry and customer base, they served 66 customers in Fiscal 2023 with customers spannig across industries, including manufacturers of light, medium and heavy commercial vehicles in the automotive sector and manufacturers of farm equipment, off-highway vehicles and machinery and equipment for oil and gas, power generation, railways and wind turbine industries in the non-automotive sector.
+ Track Record of Financial Performance: We have established a track of consistent revenue growth and profitability. Our revenue from operations increased from Rs. 584.9 Cr in Fiscal 2021 to Rs. 1196.5 Cr in Fiscal 2023 at a CAGR of 43.02% while
restated profit for the year increased from Rs. 86.4 Cr in Fiscal 2021 to Rs. 208.7 Cr in Fiscal 2023 at a
CAGR of 55.38%.
- End User Industry Risk: Happy Forgings business is dependent on the performance of certain 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 the business.
- Raw Material Risk: Company's business and profitability are substantially dependent on the availability and cost of steel, the primary raw material, and any disruption to the timely and adequate supply of steel, or volatility in the prices of eel may adversely impact our business.
- Power and Fuel Dependence: Happy Forgings has significant power and fuel requirements and any disruption to power or fuel sources could increase their production costs and adversely affect the business and financial performance.
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