Happy Forgings makes decent debut; lists at 18% premium over issue price

Shares of the auto components maker listed at Rs 1,001.25, up 18 per cent against its issue price of Rs 850 per share on the BSE on Wednesday

Auto components maker Happy Forgings (HFL) had a decent stock market debut on Wednesday with its shares listing 18 per cent higher at Rs 1,001.25 on the BSE against the issue price of Rs 850. On the National Stock Exchange (NSE), the stock listed at Rs 1,000 per share.

At 10:01 AM; HFL was quoting at Rs 974.05, nearly 15 per cent higher against its issue price. The stock hit a high of Rs 1,026.45 and a low of Rs 961 on the BSE in intra-day trade.

A combined 3.3 million equity shares had changed hands on the NSE and BSE till the writing of this report. 

The initial public offer (IPO) of HFL received strong response from the investors with the issue getting subscribed 82.63 times, driven by huge demand from institutional buyers.

The category for Qualified Institutional Buyers (QIBs) was subscribed a whopping 214.65 times. The part for non-institutional investors attracted 63.45 times subscription and the category for Retail Individual Investors (RIIs) got subscribed 15.40 times.

The Ludhiana-based auto component maker's primary clientele includes domestic and global Original Equipment Manufacturers (OEMs) in the commercial vehicle sector.

It also serves non-automotive markets like farm equipment, off-highway vehicles, and industrial machinery.

HFL manufactures a wide range of heavy forged and machined products which include crankshafts, front axle beams, steering knuckles, differential cases, transmission parts, pinion shafts, suspension products and valve bodies across industries for a diversified base of customers.

HFL has transformed from being a forging led player to a leading manufacturer of machined components in India and consistently grew its product basket with a strong focus on manufacturing margin accretive value-added products to achieve higher margins improving its share.

With a high entry barriers business, lengthy customer and product approval process, its in-house design capabilities & fungible production lines have led to a diverse product offering and continuous value addition to its long standing relationships with customers across industries and countries would drive growth for the company.

HFL will continue to grow better than the industry, able to diversify its product basket, with a focus on capital efficiency building healthy financial metrics, said Reliance Securities in an IPO note.

HFL has differentiated itself by focusing on developing heavier, high precision, critical and value added products; for multiple end-use industries, which typically have extremely closed tolerances.

This has translated to the company commanding substantially higher margins and return ratios compared to peers, according to analysts at Nirmal Bang Securities.

The company’s focus on the high HP engine segment insulates them from any potential electric vehicle (EV) disruption as hydrogen, compressed natural gas (CNG) and liquified natural gas (LNG) combustion engine technologies are expected to become prominent alternate powertrain technologies in this segment and crankshaft as a product is compatible to such combustion engines with minimal/ no alterations, brokerage Axis Capital said in an IPO note.