How has been the historical performance of Happy Forgings?

Revenue and Profitability Trends

Over the fiscal years ending March 2023 to March 2025, Happy Forgings’ net sales have shown a steady upward trend, increasing from ₹1,196.53 crores in March 2023 to ₹1,408.89 crores in March 2025. This represents a compounded growth rate of approximately 8.3% annually, reflecting the company’s ability to expand its market presence and sales volume.

The operating profit margin, excluding other income, has remained robust and stable, hovering around 28.5% to 28.9% during this period. This consistency indicates effective cost management despite fluctuations in raw material costs and other expenses. Notably, the gross profit margin improved from 27.93% in March 2023 to 30.99% in March 2025, signalling enhanced operational efficiency and pricing power.

Profit after tax (PAT) has also exhibited healthy growth, rising from ₹208.70 crores in March 2023 to ₹267.44 crores in March 2025. Correspondingly, the PAT margin improved from 17.44% to 18.98%, underscoring the company’s ability to convert sales into net earnings more effectively over time. Earnings per share (EPS) followed a similar trajectory, increasing from ₹23.32 to ₹28.38, rewarding shareholders with higher returns.

Cost Structure and Expense Management

Raw material costs, a significant component of total expenditure, increased from ₹547.72 crores in March 2023 to ₹602.78 crores in March 2025. However, the company managed to reduce raw material costs as a percentage of sales, contributing to margin expansion. Employee costs rose steadily from ₹87.78 crores to ₹124.82 crores, reflecting workforce expansion or wage inflation, yet this was balanced by improved productivity.

Other expenses also increased from ₹216.75 crores to ₹285.71 crores over the same period, which may be attributed to higher operational activities or inflationary pressures. Despite these rising costs, total expenditure excluding depreciation grew at a slower pace than revenue, supporting the company’s profitability gains.

Balance Sheet Strength and Asset Growth

Happy Forgings has significantly strengthened its balance sheet, with shareholder’s funds rising from ₹988.30 crores in March 2023 to ₹1,849.55 crores in March 2025. This near doubling of equity base highlights retained earnings accumulation and capital infusion, enhancing financial stability.

The company’s total assets expanded from ₹1,326.16 crores to ₹2,215.22 crores, driven by increases in net block, capital work in progress, and current assets. Net block grew from ₹678.44 crores to ₹907.71 crores, indicating ongoing investments in fixed assets to support capacity expansion. Current assets also rose substantially, with cash and bank balances improving markedly to ₹136.56 crores by March 2025, enhancing liquidity.

Importantly, long-term borrowings were fully repaid by March 2025, reducing financial leverage and interest burden. Short-term borrowings increased moderately but remain manageable relative to the company’s asset base and cash flows.

Cash Flow and Financial Health

Cash flow from operating activities has shown a positive trend, increasing from ₹209 crores in March 2023 to ₹292 crores in March 2025. This improvement reflects stronger earnings quality and efficient working capital management. Although changes in working capital have occasionally exerted pressure, the company maintained healthy cash flow after adjustments.

Investing activities have consistently involved significant outflows, primarily due to capital expenditure, with ₹320 crores spent in March 2025. Financing activities fluctuated, with a notable inflow of ₹280 crores in March 2024, likely linked to debt restructuring or equity infusion, followed by a more moderate inflow in March 2025.

Overall, net cash inflow was positive in the latest fiscal year, and the closing cash and cash equivalents rose to ₹12 crores, marking an improvement in liquidity position compared to previous years.

Summary

Happy Forgings has exhibited a solid historical performance characterised by steady revenue growth, expanding profit margins, and a strengthening balance sheet. The company’s focus on operational efficiency and prudent financial management has enabled it to enhance shareholder value while reducing debt levels. Investors may find these trends encouraging as indicators of sustainable growth and financial resilience.

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