Happy Forgings (HAPPYFORGE) Q2 24/25 earnings summary

Executive summary

• Achieved year-on-year and sequential growth in revenue, gross profit, EBITDA, and PAT for Q2 and H1 FY25, with adjusted sales up 6.1% YoY, EBITDA up 14.8%, and PAT up 23.8% in Q2 FY25, despite challenging industrial conditions.

• Realizations improved to INR 253/kg in Q2 FY25, up 3.6% YoY, driven by enhanced value addition in the product mix, despite lower steel prices.

• Outperformed industry growth in most segments, expanding market share through new business and maintaining share in existing accounts.

• Continued investments in capacity and technology to support organic growth and resilience.

• Unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2024, were approved and reviewed without qualification by the auditors.

Financial highlights

• Q2 FY25 revenue: INR 361 crores (up 5.3% YoY); EBITDA: INR 105 crores (up 12.4% YoY); PAT: INR 71 crores (up 29.1% YoY); H1 FY25 revenue: INR 703 crores (up 4.4% YoY); PAT: INR 135 crores (up 13.3% YoY); EBITDA margin at 28.9%.

• Standalone revenue from operations for H1 FY25 was ₹70,259.78 lacs, up from ₹67,290.07 lacs in H1 FY24; standalone PAT for H1 FY25 was ₹13,528.48 lacs.

• Gross margin for Q2 FY25: 58.8%; EBITDA margin: 29.2%; PAT margin: 19.8%.

• Realizations improved to INR 253/kg in Q2 FY25, up 3.6% YoY (adjusted), despite steel price declines.

• Finished goods volume up 2.4% in Q2 and 2.6% in H1 FY25 YoY.

Outlook and guidance

• Medium-term macro growth enablers remain positive, with expectations of outsized growth as market conditions improve.

• Export revenue share expected to rise to 30%-35% in the next 2-3 years, driven by global order wins.

• Industrial segment revenue contribution projected to increase to 18%-20% over the next 2-3 years.

• CapEx planned at INR 200-250 crores per annum for FY25 and FY26.

• No deviation or variation in the use of IPO funds; all utilization is in line with stated objectives.