Broker’s call: Happy Forgings (Buy)

In a recent meeting with Happy Forgings' management, discussions focused on the company's growth prospects, capacity expansion, and the strong outlook for core segments such as CV and tractor forgings. The ₹950 crore order book is anticipated to be the primary driver of revenue growth over the fiscal years 2027 to 2029, with PVs and industrials making up approximately 70% of the order book.

Presently contributing 24% to revenue, these segments are expected to increase their contribution to 45-50% in the medium term. Higher realizations, better margins, and the upcoming captive solar project are projected to contribute to structural margin expansion, with margins expected to reach 33% by FY29 from the current 31%. Management expects HFL to achieve revenue, EBITDA, and PAT compound annual growth rates of 25, 28, and 30% over the same period, citing new order wins, improved mix, operating leverage, and the benefits of the captive solar plant, which will become operational in FY28.

The firm reiterates its Buy rating on the stock, with a target price of ₹2,438 (based on the September 2028 earnings per share).