Company Update : Happy Forgings Ltd by Motilal Oswal Financial Services Ltd
Record high margins amid challenging global macro
* Revenue for 2QFY26 stood at INR3.8b, up 4.5% YoY, which is broadly in line with our estimates.
* Revenue growth was driven by 5.2% volume growth, while realizations remained largely stable YoY at INR 251 per kg.
* Revenue growth was driven by healthy demand across domestic segments (CVs, tractors, PVs, and non-auto), while exports remained muted due to weak end-market conditions and customer destocking amid the evolving tariff situation.
* Despite the adverse global macro, EBITDA margin expanded 150bp YoY to a record high level of 30.7%, ahead of our estimates of 28.8%.
* EBITDA came in at INR1.1b, up 10% YoY and 6% ahead of our estimates on the back of improved gross margins (+ 150bp YoY).
* However, lower other income at INR 63m (INR83m in 2QFY25 and INR 104m in Q1FY26) limited PAT growth.
* PAT stood at INR734m, up 10.2% YoY and largely in line with our estimate.
* Its 1HFY26 CFO stood at INR 2.2b, while capex came in at INR2.1b. Cash surplus at the end of Sep’25 stood at INR3.15b.
* Valuation & view: The stock trades at 32.7x/26.4x FY26E/FY27E EPS.
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SEBI Registration number is INH000000412
