The auto ancillary stock is expected to deliver 120 percent PAT growth from FY26 to FY29, supported by a Rs 950 crore order book, capacity ramp-up, and improving margins.
The article outlines the growth outlook and stance of the brokerage on this company, which is an Indian manufacturer specializing in designing and manufacturing heavy forgings and high-precision machined components.
With a market capitalization of Rs 20,325 crore, Happy Forgings Ltd’s share closed at Rs 2,153 per share, up by 0.33 percent from its previous close. The stock of the company gave a return of 120 percent over the last year.
What is the growth expectation of MOSL?
MOSL expects the auto ancillary stock to deliver 120 percent PAT growth from FY26 to FY29, with profit expected to increase from Rs 302 crore in FY26 to around Rs 663 crore by FY29. This translates into a 30 percent CAGR, supported by capacity expansion, higher realisations, improving product mix and operating leverage.
The brokerage also expects the company’s EBITDA margin to reach 33 percent from 31 percent, supported by better product mix, higher realisations and operating leverage as capacity expands. Revenue, EBITDA and PAT are expected to grow at 25 percent, 28 percent and 30 percent CAGR, respectively, from FY26 to FY29.
MOSL has given a Buy rating with a target price of Rs 2,438 per share. The growth outlook is further supported by the company’s Rs 950 crore order book, which provides visibility for future business and supports the brokerage’s earnings growth expectations.
Strong Order Book
The company’s Rs 950 crore order book is expected to support a significant part of its topline growth between FY27 and FY29. The order pipeline provides visibility for future revenue and is expected to benefit the company as existing capacities ramp up and new orders are progressively executed.
Improving Revenue Mix
Passenger vehicles and industrials account for around 70 percent of the current order book, compared with only 24 percent of current revenue. This indicates a potential shift in the revenue mix towards these segments, which management expects to become increasingly important for the company’s growth.
Higher PV and Industrial Contribution
Management expects the contribution from passenger vehicles and industrials to increase to 45 to 50 percent over the medium term. The higher contribution from these segments could help diversify the company’s revenue base and reduce its dependence on its existing commercial vehicle and tractor businesses.
Better Realisations and Margins
The company’s new orders are expected to generate higher realisations and better margins, while capacity ramp-up in forgings and machining should support incremental growth. Along with operating leverage and an improving product mix, these factors are expected to support further expansion in profitability.
Happy Forgings Limited is an Indian engineering and manufacturing company specializing in heavy forgings and high-precision machined components. Founded in July 1979 by Paritosh Kumar Garg, the company is headquartered in Ludhiana, Punjab, and is the fourth-largest engineering-led manufacturer of complex, safety-critical heavy forged and high-precision machined components in India by forging capacity.
Financial Highlight: Revenue increased to Rs 449 crore in Q1 FY27 from Rs 354 crore in Q1 FY26, registering a 27 percent growth YoY. EBITDA rose to Rs 141 crore in Q1 FY27 from Rs 101 crore in Q1 FY26, up 39 percent YoY. Net profit increased to Rs 91.5 crore in Q1 FY27 from Rs 65.7 crore in Q1 FY26, up 39 percent YoY. EPS stood at Rs 9.69 in Q1 FY27 compared with Rs 6.97 in Q1 FY26, up 39 percent YoY.