Happy Forgings IPO initial public offering : The shares began trading at ₹1,000 on the NSE, however they were listed at ₹1,001.25 on the BSE, a premium of 17.79%. Analysts say that investors can take profits on the day of the company’s listing and then think about buying the stock after assessing the company’s short-term quarterly results.
The company’s shares are already selling on the grey market at a premium of ₹235 ahead of the listing. Given the upper price range of ₹850, it was anticipated that the stock would list at an approximately 28% premium.
The Punjab-based company serves various sectors such as automotive, railways, and more, targeting both domestic and global OEMs. Notable customers include AAM India, Ashok Leyland, Mahindra & Mahindra, among others.
Happy Forgings intends to use the money raised for debt repayment (Rs 152.76 crore) and equipment procurement (Rs 171.1 crore), with the remaining funds going toward general company needs. In terms of finances, FY23 saw strong growth: sales climbed by more than 39%, EBITDA by 47.7%, and net profit by 46.7 percent.
Happy Forgings, a renowned producer of intricate machinery parts, debuted on the stock market with a performance that fell just short of pre-listing projections. Even yet, the business managed to make a noteworthy 17.65% gain, listing at ₹1,000 per share as opposed to its IPO price of ₹850, according to Swastika Investmart Head of Wealth Shivani Nyati.
It is imperative that all sides be carefully considered before making any investment decisions. With the listing’s ambiguity, it is advised to proceed cautiously. Current IPO investors could think about holding onto their shares with a stop loss set around ₹900. But investors hoping for listing returns might sell their investments,” the researcher continued.
Happy Forgings’ stock was projected to list at a premium of about 49% compared to its issue price of ₹850, according to Dhruv Mudaraddi of StoxBox. According to Mudaraddi, the company’s steady performance over the previous three years is what led to the good listing.
Given the company’s established reputation in the crankshaft manufacturing sector, notable clientele, strong financials, diverse product offering, worldwide reach through planned strategic acquisitions and expansion, and prospect additions, analysts advise investors to ‘Subscribe’ to the issue.
“On post-issue basis, the IPO is priced at 38.4 times/33.6 times FY23/FY24E EPS which is 30% discount to the industry average (Bharat Forge and RK Forge),” Indsec, a brokerage, stated.
From the net proceeds of the fresh issuance, Happy Forgings plans to spend ₹171.1 crore for the purchase of machinery, plant, and equipment and ₹152.76 crore for debt repayment. The remaining monies will be used for the company’s regular operations.
Finances
The company’s sales and profitability have increased steadily; during the same period, earnings grew from ₹86.4 crore to ₹208.7 crore at a compound annual growth rate (CAGR) of 55% and revenues increased from ₹585 crore in FY21 to ₹1,196.5 crore in FY23 at a CAGR of 43%.
A Ricardo report states that as of FY23, Happy Forgings ranked as the fourth largest manufacturer in India for both forged and highly precise machined components.
The company is involved in engineering, process design, testing, production, and supply of a range of margin-accretive and value-added components through its vertically integrated activities.
In the non-auto industry, it serves producers of industrial equipment and machinery for the oil and gas (O&G), power generation, railways, and wind turbine industries, as well as farm equipment and OHV. Its main customers are domestic and international OEMs that produce CVs.
Happy Forgings’ pricing on the IPO
Parth Shah, Research Analyst at StoxBox, expressed optimism about Happy Forgings’ initial public offering (“positive listing expected for Happy Forgings Ltd. following strong 82x oversubscription upon listing on the bourses on Wednesday”). We anticipate the stock will list at a significant premium over its offering price of ₹850 per share, given the significant oversubscription.
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