We increase TP to Rs 1,065 (previously Rs 1,030) and retain our Accumulate rating on Happy Forgings Ltd. (HFL). 2QFY26 was a resilient performance despite ongoing weakness in global CV and off-highway markets. Margins surprised positively, supported by a rich product mix, higher machining throughput and soft raw material costs. Domestic CV and farm demand remained constructive, while export demand continues to be impacted by tariff-led uncertainty and customer destocking. We believe HFL remains uniquely positioned to benefit as the cycle turns, supported by rising PV and industrial forgings contribution and ramp-up of its heavy-weight forging capacity. Accumulate on dips.
HFL delivered revenue of Rs3.77bn (+4.5% YoY), supported by 5.2% YoY volume growth, while realizations remained broadly stable despite lower steel prices, aided by improving mix. Domestic business continued to drive growth, offsetting weakness in exports, which remain soft due to tariff-driven demand disruption and inventory correction in key overseas markets.
During 2QFY26, HFL reported 30.7% EBITDA margins, +151bps yoy (highest ever); driven mainly by declining RM prices and high value addition in product mix. The machining content remains high at 88% in 2QFY26 vs 89% in 2QFY25. Effectively, HFL reported PAT at Rs734mn; +10.3% yoy.
Despite sluggishness in global CV/off-highway cycles, HFL continues to benefit from diversification into PV and industrials. Recent order wins in the PV segment, brake flanges, and e-axle components, both domestically and in export markets and should lift PV contribution to 8-10% of revenues over the next two years. Industrial (wind, power & data-center applications) remains a strong structural driver, with new orders slated for scale-up from FY27. Domestic CV and farm demand remain supportive, while export weakness is expected to persist until Dec’25 due to tariff-driven destocking. The new heavy weight forgings add further diversification into industries like marine, defense, mining, nuclear, etc. and expand growth prospects with superior return ratios meant largely for exports. While the current slowdown is largely in the export market, we have retained the multiple as we expect HFL to bounce back once the cycle turns favorable.
We forecast a Revenue/EBITDA/PAT CAGR of 12.9%/12.9%/7.6% over FY25-28E. We value HFL at 32x Sep’27 earnings to arrive at TP of Rs1,065 (previously Rs1030 – increased mainly on valuation roll forward) and maintain Accumulate rating. Risks: Automotive down-cycle, delay in diversification & adoption of EVs.
Company website: https://happyforgingsltd.com/
| Rating | Accumulate |
|---|---|
| CMP | INR 1,014 |
| Target Price | INR 1,065 |
| Upside | 5% |
Click to download the full Happy Forgings Limited Company Update
HFL reported revenue of ₹3.77 billion, growing 4.5% YoY, supported by 5.2% volume growth. Domestic demand remained strong, offsetting weakness in export markets affected by tariff-led disruptions and customer destocking.
The company achieved its highest-ever EBITDA margin of 30.7%, driven by lower raw material costs, richer product mix, and strong machining throughput with 88% machining share.
HFL is expanding into PV forgings, industrial applications such as wind, power and data centers, and heavy-weight forgings for marine, defense, nuclear, and mining. These are expected to scale meaningfully from FY27 onward.
The target price has been revised to ₹1,065 (from ₹1,030), mainly due to valuation roll-forward. The stock retains an Accumulate rating with an estimated upside of 5% as per the report.
Key risks include an automotive down-cycle, delays in diversification plans, prolonged export weakness, and potential impact from faster EV adoption trends.
Disclaimer: - You are advised to read our disclaimer here: https://www.mnclgroup.com/disclaimers
Empower your finances with ReSach – the stock trading apptrusted by serious investors. Whether you're planning to invest in stocks, explore commodity trading, or need a financial advisor to guide you, Resach brings it all under one platform.
Start trading today with ReSach and unlock seamless investing on the go.
Name of the Company has changed from Networth Stock Broking Limited to Monarch Networth Capital Limited upon Certification of Incorporation received from Registrar of Companies, Mumbai vide certificate dated 13th October, 2015.
If you are not satisfied with the resolution provided, you can lodge your complaint online at: https://scores.sebi.gov.in/link
In case of grievance client can log on to the SMART ODR Portal, if they are unsatisfied with the response provided by us. Your attention is drawn to the SEBI circular no. SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/131 dated July 31, 2023, on “Online Resolution of Disputes in the Indian Securities Market”.
Purchase of REs only gives buyer the right to participate in the ongoing Rights Issue of the concerned company by making an application with requisite application money or renounce the REs before the issue closes. REs which are neither subscribed by making an application with requisite application money nor renounced, on or before the Issue closing date shall lapse and shall be extinguished after the Issue closing date. Please check your dp account for further details.
Please do not share your online trading password with anyone as this could weaken the security of your account and lead to unauthorized trades or losses.
Monarch Networth Capital Limited (‘MNCL’) | CIN No.: L64990GJ1993PLC120014
Unit No. 803-804A, 8th Floor, X-Change Plaza, Block No. 53, Zone 5, Road-5E, Gift City, Gandhinagar - 382050, Gujarat
Ahmedabad
“Monarch House”, Opp Prahladbhai Patel garden, Near Ishwar Bhuvan, Commerce Six Roads, Navrangpura, Ahmedabad - 380009
Mumbai
Monarch Networth Capital Limited, G Block, Laxmi Tower, B Wing, 4th Floor, Bandra Kurla Complex, Bandra East, Mumbai - 400051.
Email for Grievance: grievances@mnclgroup.com
Investors are requested to note that Stock broker (Monarch Networth Capital Ltd) is permitted to receive money from investors through designated bank accounts only named as Up streaming Client Nodal Bank Account (USCNBA). Stock broker (Monarch Networth Capital Ltd) is also required to disclose these USCNB accounts to Stock Exchange. Hence, you are requested to use following USCNB accounts only (Click to View) for the purpose of dealings in your trading account with us. The details of these USCNB accounts are also displayed by Stock Exchanges on their website under “Know/ Locate your Stock Broker".
Mechanism for addressing grievances and information about SCORES.
Mechanism for addressing grievances and information about SCORES.
Monarch Networth Capital Limited (‘MNCL’) | CIN No.: L64990GJ1993PLC120014
(As per LODR Regulations and Companies Act, 2013)
Contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances : Mr. Nitesh Tanwar
Monarch Networth Capital Limited
Unit No. 803-804A, 8th Floor, X-Change Plaza, Block No. 53, Zone 5, Road-5E, Gift City, Gandhinagar - 382050, Gujarat
Ahmedabad
“Monarch House”, Opp Prahladbhai Patel garden, Near Ishwar Bhuvan, Commerce Six Roads, Navrangpura, Ahmedabad – 380009
Mumbai
Monarch Networth Capital Limited, G Block, Laxmi Tower, B Wing, 4th Floor, Bandra Kurla Complex, Bandra East, Mumbai - 400051.
Phone: 022 - 66476400 / 66476405
Email: cs@mnclgroup.com
Email for Grievance: cs@mnclgroup.com
Listing of Equity Shares on Stock Exchange at
BSE
NSE
(Formerly known as Link Intime India Private Limited)
For any queries related to broking please contact helpdesk@mnclgroup.com.
‘Investments in securities market are subject to market risks, read all the related documents carefully before investing.’
