Happy Forgings Ltd Q4 FY26 Earnings Analysis

- Visibility of new and incremental peak annual business of approximately INR 800 crores starting FY '27, scaling over 2-3 years (Page 5). - Expectation of continued domestic demand momentum, supported by stable farm incomes and infrastructure-led growth (Page 6). - Incremental orders: 80-85% of INR 8 billion order wins expected to be executed by FY '28 (Page 12). - Domestic CV and farm business growing ~22% year-on-year in value (Page 11). - Export volumes expected to improve meaningfully from Q2 FY '27, particularly in industrial, EV, and PV segments (Page 10). - Capacity expansions planned: forging capacity up from 150,000 to 180,000 tons by FY '28; machining capacity to increase by 10,000 tons over FY '28 and '29 (Page 14). - Industrial segment volume growth around 2% year-on-year; gradual improvement anticipated (Page 11). - Expect exports and mix improvement to support realization and margin growth (Page 12). Overall, growth driven by new capacity, diversified products, and gradual export recovery.

- Visibility of new and incremental peak annual business of approx. INR 800 crores expected from FY '27, scaling up over 2-3 years (Page 5). - Incremental order wins of INR 800 crores, with 80-85% expected to be executed by FY '28 (Page 12). - Export share and industrial, EV, and export-dependent segments expected to increase, positively impacting revenue diversification and profitability (Page 5). - EBITDA margins targeted within a sustained range of 29% to 31% over the medium term (Page 4). - Margins expected to be range bound between 28% to 32%, with improvements from export ramp-up, product mix, and solar power cost savings starting Q3 FY '28 (Pages 12-13). - Solar project to reduce power costs by INR 25-30 crores per annum, aiding margin expansion (Page 12). - Heavy component capacity augmentation and new plant operational in FY '28 and FY '29 expected to contribute to growth (Page 9, 14). - Profit after tax grew significantly by 22.3% YoY in Q3 FY '26, indicating strong current momentum (Page 6).

- INR 300 crores capex incurred in first 9 months FY '26; FY '27 capex expected close to INR 400 crores excluding solar, INR 480 crores including solar (Page 7). - Commissioning of new 10,000-ton forging press in Q4 FY '26 and a 4,000-ton press in H1 FY '27 to expand forging capacity (Pages 4, 10). - Machining capacity increased to 68,000 MT with an addition of 9,800 MT in Q3 FY '26; further machining capacity expansion planned of 5,000 tons each in FY '28 and FY '29 (Pages 4, 10, 14). - Heavy component related capex progressing as scheduled, with heavy engineering orders worth INR 180 crores; plant utilization to start partly FY '28 and ramp-up by FY '29 (Pages 4, 7, 10, 14). - Signed long-term lease for 80 acres to develop captive solar power plant; expected power cost savings INR 25-30 crores p.a. starting Q3 FY '28 (Pages 4, 11, 15). - Capex focused on expanding high-growth capabilities and long-term value (Page 6).

- There is no explicit mention of any current or planned fundraising through debt or equity in the transcript. - The company highlights a strong treasury position with liquid assets exceeding INR 400 crores, providing significant financial flexibility. - Growth initiatives and ongoing capex, including a INR 480 crore plan for FY '27 (including solar project), are expected to be funded from internal accruals. - The company emphasizes robust cash flow conversions and internal funding to support its growth. - No disclosures of issuing new debt or equity to raise funds were made during the call.

- Current order pipeline/ pending orders stand at approximately INR 800 crores. - Bifurcation of the INR 800 crores order book: - 24% Passenger Vehicle - 27% Commercial Vehicle (CV) - 44% Industrial - 4% Farm Equipment - Out of this, INR 180 crores pertains to heavy engineering/ large crankshaft segment with orders largely signed. - Approximately 80-85% of the INR 800 crores order book is expected to be executed within the next 2 years (by FY '28). - Ramp-up for heavy engineering orders is expected to begin around FY '28 with substantial utilization coming in FY '29. - Discussions are ongoing for further orders, especially in high horsepower crankshaft and other industrial programs.