Happy Forgings raises Rs3 Bn from 25 anchor investors

Global investors such as Fidelity International, Neuberger Berman, Morgan Stanley, Janchor Partners, WhiteOak Capital, Eastbridge Capital and Kotak Offshore participated as a part of the anchor book

Ashish Garg-, MD, Happy Forgings

FinTech BizNews Service   

Mumbai, December 19, 2023: Happy Forgings Limited, the second largest company in India manufacturing commercial vehicle and high horsepower industrial crankshafts (in terms of production capacity), has garnered Rs303 crore from anchor investors, ahead of its initial public offering that opens for public subscription on Tuesday, December 19, 2023. The company informed the bourses that it has allocated 35,59,740 equity shares at Rs850 per share on Monday, December 18, 2023, to the 25 anchor investors. The funds were raised at the upper limit of the Rs808-850 price band. 

Global investors such as Fidelity International, Neuberger Berman, Morgan Stanley, Janchor Partners, WhiteOak Capital, Eastbridge Capital and Kotak Offshore participated as a part of the anchor book. 14 mutual funds including SBI Mutual Fund, ICICI Prudential Mutual Fund, HDFC Mutual Fund, Nippon India Mutual Fund, Kotak Mahindra Mutual Fund, Aditya Birla Sun Life Mutual Fund, Axis Mutual Fund, DSP Mutual Fund, Edelweiss Mutual Fund, Canara Robeco Mutual Fund, Invesco Mutual Fund, Motilal Oswal Mutual Fund, Quant Mutual Fund and HSBC Mutual Fund along with Insurance companies such as SBI Life Insurance, ICICI Prudential Life Insurance, HDFC Life Insurance and Birla Life Insurance participated in the anchor book as well.  

Company received very strong interest from, large global and domestic institutions. Out of the total allocation of 35,59,740 equity shares to the anchor investors, largest pie went to 14 domestic mutual funds amounting to Rs174 crore (approx.) i.e. 58% of the total anchor book size with an allocation of 20,45,766 equity shares. 

Happy Forgings Limited is the fourth largest engineering led manufacturer of complex and safety critical, heavy forged and high precision machined components in India (as of Fiscal 2023 in terms of forgings capacity). The company caters to large domestic and global original equipment manufacturers (“OEMs”) in automotive and non-automotive segments including commercial vehicles, farm equipment, off-highway vehicles, industrial equipment & machinery for oil and gas, power generation, railways and wind turbine industries. It has a diverse product portfolio comprising crankshafts, front axle, components, differential cases, transmission parts etc catering to multiple industries and to a wide base of sticky and long-term customers in India and globally (exports contribute 20.75% of the revenue for half year ended Sept’23). 

The company has established a track record of consistent revenues and high profitability. Revenues doubled from Rs585 crore in FY21 to Rs1,197 crore in FY23 at a CAGR of 43%+ and profit after tax grew 2.4x from Rs86 crore in FY21 to Rs209 crore in FY23 at a CAGR of 55%+ demonstrating margin expansion led by growth in value added machined products. Revenues and profit after tax for half year ended Sept’23 was Rs673 crore and Rs119 crore respectively. EBITDA and net profit margin have expanded from 27% and 15% in FY21 to 29% and 18% for half year ended Sept’23 respectively. 

Motilal Oswal Alternates managed India Business Excellence Fund III (“IBEF III”) invested Rs200 Crore in the company in FY 19 for 11.76% equity ownership.  

JM Financial Limited, Axis Capital Limited, Motilal Oswal Investment Advisors Limited and Equirus Capital Private limited are the book running lead managers and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE. 

IPO Details

The offer of face value of Rs2 per equity share comprises a fresh issuance of equity shares aggregating up to Rs400 crore and an Offer for Sale (OFS) of up to 7,159,920 Equity Shares. OFS includes 49.2 lakh equity shares offered by the promoter family Paritosh Kumar Garg (HUF) and the remaining 22.4 lakh shares offered by the investor India Business Excellence Fund – III (Motilal Oswal Alternates).  

The initial public offering of equity shares of Happy Forgings Limited (together referred as the “Offer”) opens on Tuesday, December 19, 2023, and closes on Thursday, December 21, 2023. The price band for the Offer has been determined at Rs808 – Rs850 per equity share.  

The issue is being made through the book building process, wherein not more than 50% of the issue shall be available for allocation on a proportionate basis to Qualified Institutional Buyers, not less than 15% of the issue shall be available for allocation to non-institutional bidders and not less than 35% of the issue shall be available for allocation to retail individual bidders. 

The IPO will fetch Rs1,009 crore at the upper end of the price band. Investors can bid for a minimum of 17 equity shares and in multiples of 17 equity shares thereafter. 

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