Happy Forgings Ltd Q4 FY25 Earnings Analysis

- **Volume Growth:** Expected 10% to 12% volume growth in the next 2 years from new forged and semi-machine businesses (Manish Goyal & Pankaj Goyal, Page 16). - **Revenue/Realization Growth:** Industrial segment realizations currently around INR300-350/kg expected to see better growth (Page 16). - **Industrial Segment Contribution:** Targeting 18%-20% revenue share from Industrial business in next 2 years, excluding new capex; with new capex, Industrial share could exceed 30% in 4-5 years (Page 15). - **Passenger Vehicles Segment:** Expected to contribute 8%-10% of revenues in next few years, up from 4% currently (Page 5). - **Capex & Capacity:** INR650 crore capex underway for heavyweight components plant, with production starting FY27, aiming for ramp-up and higher-margin products (Pages 4 & 7). - **Cautious Outlook:** Some segments like Off-Highway facing short-term headwinds but expected recovery post-infra momentum (Pages 4 & 11).

- Happy Forgings expects 10-12% volume growth over the next 2 years fueled by new businesses in Industrial and Passenger Vehicle segments. - Realizations in the Industrial segment are projected to remain between INR 300-350 per kg, with better growth in realizations anticipated. - The Industrial business aims to increase its revenue contribution from current 14% to 18-20% within 2 years, potentially exceeding 30% in 4-5 years with new capex ramp-up. - EBITDA margins in new Industrial businesses are expected to be strong, upwards of 35%, supporting EBITDA margins over 30%. - The INR 650 crore capex for heavyweight components, starting production by FY27, is expected to enhance profitability and export footprint. - Patents and innovations, alongside customer partnerships, are expected to drive sustained growth and value creation. - Adjusted PAT for 9M FY25 grew 14.3% YoY; momentum is expected to continue with new order ramps, particularly in Passenger Vehicles and Industrial segments.

- Happy Forging Limited has planned a significant strategic capital investment of INR 650 crores over 2-3 years to establish state-of-the-art forging capabilities focused on heavyweight components (large crankshafts, axles, gears, oil & gas valves, precision machined parts). - This facility will be the first of its kind in Asia and the second largest globally and aims to strengthen the export footprint and enhance profitability. - The INR 650 crores capex includes roughly INR 300 crores for forging setup, INR 200 crores for machining lines, and the balance for infrastructure. - Production is expected to begin in FY 2027. - For FY 2026, planned capex is approximately INR 400 crores, including advances for the heavy-duty line and additions in forging (10,000 and 4,000 ton press lines) and machining capacities. - Routine capex is minimal (~INR 30-40 crores); majority is for new equipment and expansion. - Capacity and asset utilization ramp-up is expected gradually over 2-3 years post commissioning.

- The company plans a strategic investment totaling INR 650 crores spread over 2 to 3 years. - Funding for this capex will be primarily through internal accruals and partially through debt. - No specific mention of any equity fundraising. - The investment is aimed at expanding capabilities in high weight components with production expected to begin in FY '27. - Routine capex is relatively low (around INR 30-40 crores), while the majority is dedicated to new equipment. - For FY '26, capex planned is approximately INR 400 crores including advances for heavy-duty lines.

The transcript provided does not explicitly mention the current or expected order book or pending orders in specific figures. However, relevant insights include: - The company has secured new business in Industrial and Passenger Vehicle segments, expecting 10%-12% volume growth over the next 2 years. - New products and orders, especially for large axle components, power genset industrial segments, and lightweight components for passenger vehicles, are ramping up. - The new capex of INR 650 crores is aimed at expanding capacity, largely catering to industrial sectors and enhancing heavy-duty forging. - North American PV export orders have started ramping up from December and are expected to further increase from Q3 FY26. - New order wins in CV and heavy sectors have started pilot lots and testing phases, with commercial volumes expected soon. - No exact pending orderbook value or details on order backlog were disclosed in the call.