Detailed Narrative
Strong Financial Performance in Q4 and Full Year FY26
Happy Forgings achieved its highest ever annual profitability in FY26, with revenues of ₹1,546 crores, marking a 9.8% YoY growth. EBITDA margins expanded by 160 basis points to 30.4%, and PAT margins improved by 90 basis points to 19.5% on an adjusted basis. The fourth quarter of FY26 also demonstrated robust performance, with sales growing 20.4% YoY to ₹424 crores, and EBITDA and PAT increasing by 30.4% and 23.6% respectively. Finished goods volume grew by 11% during the year, maintaining stable realizations at ₹245 per kg.
Strategic Diversification and Value-Added Product Mix
The company is actively diversifying its order pipeline into industrial passenger vehicles, EV-linked programs, and export-oriented businesses to reduce reliance on traditional cyclical segments. Machining contribution increased to 89% in FY26 from 87% in FY25, reflecting a focus on higher value-added products. New businesses secured, totaling ₹950 crores, are expected to yield significantly higher realizations of ₹340-₹350 per kg, compared to the current average of ₹245 per kg, indicating future margin expansion.
Aggressive Capacity Expansion and Capex Plans
Happy Forgings expanded its machining capacity to 68,000 metric tons in FY26, including a 9,800 metric ton addition in Q3. A new 10,000-ton forging line was commissioned in Q4 FY26, and a 4,000-ton press is slated for commissioning in H1 FY27. The company deployed ₹460 crores in capex in FY26 and plans to spend ₹450-₹500 crores in FY27, with a total capex of ₹800 crores projected over the next two years to support high-growth capabilities.
Segmental Outlook and Market Share Gains
In FY26, Commercial Vehicles contributed 37% of revenue, Farm Equipment 32%, Industrials 14%, Off-highway 11%, and Passenger Vehicles 6%. Management expects significant market share gains in FY27, targeting CV market share to increase from 32% to 42% and Farm Equipment market share from 41% to 45%. The company also anticipates a shift in revenue mix, with Industrials growing to 30-31% (from 11%) and Passenger Vehicles to 10% (from 6%), while CV contribution is expected to moderate📎 to 27% (from 37%).
New Business Wins and Export Market Strategy
The company secured ₹140 crores in new businesses across industrial, data center, and passenger vehicle sectors in the last four months, contributing to a total new business order book of ₹950 crores, executable over 2-3 years. Export projects for North America are expected to ramp up from Q2 FY27, and a large industrial order from Europe is slated to commence from FY29. Management expressed confidence in passing on raw material and other manufacturing cost increases to OEMs, with some confirmations already received.
Captive Solar Power Plant for Cost Optimization
As part of its long-term ESG strategy, Happy Forgings is developing a 35 AC megawatt captive solar power plant with a total outlay of up to ₹170 crores. This initiative is expected to significantly reduce annual power costs, with partial benefits commencing from FY28 and full benefits accruing thereafter. Generation from the solar plant is anticipated to start from Q4 FY27, contributing to operational efficiency and sustainability.