Happy Forgings IPO: Happy Forgings intends to use the net proceeds of the new issue to acquire equipment, repay debt, and for general corporate purposes.
Happy Forgings Limited, a manufacturer of heavy forgings, is expected to have a strong debut on the stock exchanges on December 27. Data from Investorgain indicate a robust listing gain of around 27 percent on the upper end of the price band of Rs 808-850 per share.
The expectation of a large listing stems from strong investor interest in the company’s Rs 1,009-crore public offering. On the final day of bidding on December 21, the company’s public offer was subscribed to 82 times. Retail investors purchased 15.09 times their allotted quota, while high net-worth individuals purchased 62.17 times their allotted quota, and qualified institutional buyers (QIBs) purchased 220.48 times their reserved portion.
We anticipate that the stock will trade at a premium of around 49 percent to its issue price of Rs 850 per share. The company’s consistent performance over the last three years has contributed to the strong listing.
Furthermore, the company is a key player in the domestic crankshaft manufacturing industry, with the second-largest production capacity for CV and industrial crankshafts, said Dhruv Mudaraddi, a StoxBox research analyst.
Despite the stock’s positive outlook, Mudaraddi advises investors to book profits on the first day of trading and then consider investing in the company after evaluating its quarterly performance in the near term.
According to domestic brokerage firm Choice Equity, the trailing twelve months’ price earnings are at a premium to the average of the other players. As a result, analysts assigned the issue a subscribe with caution rating in a recent note.
Happy Forgings IPO
Analysts at Reliance Securities, who have a subscribe rating on the stock, believe Happy will continue to outperform the industry in terms of growth and will be able to diversify its product portfolio while focusing on capital efficiency and building healthy financial metrics.
Happy Forgings intends to use the net proceeds from the new issue to purchase equipment, plant, and machinery worth Rs 171.1 crore. A portion of the funds, amounting to Rs 152.76 crore, will also be used to repay debts. The remainder of the funds will be used for general corporate purposes.
A new issue of 400 crore shares and an offer to sell 0.72 crore shares make up the Rs 1,009 crore IPO. On December 18, the offer’s anchor book was available for one day.
Financially speaking, Happy Forgings reported a 46.7 percent year-over-year increase in net profit at Rs 208.7 crore for the fiscal year that ended in March of FY23. During the same period, EBITDA (earnings before interest, tax, depreciation, and amortization) increased by 47.7 percent to Rs 341 crore, and the margin increased by 170 basis points to 28.5 percent. The topline business continued to grow, increasing by more than 39% to Rs 1,197 crore.
