Happy Forgings Limited (HFL) has delivered robust financial results for the second quarter, showcasing resilience in the face of global market challenges. The company reported a revenue of INR 377.00 crores, marking a 4.5% year-on-year growth, while achieving its highest quarterly gross margin of around 60% and an impressive EBITDA margin of approximately 31%.

Financial Highlights

• Revenue: INR 377.00 crores (4.5% YoY growth)
• Gross Profit: INR 228.00 crores (7% YoY growth)
• EBITDA: INR 116.00 crores (10% YoY growth)
• Profit After Tax: INR 73.00 crores (10% YoY growth on adjusted basis)

The company's profit growth outpaced revenue growth, supported by margin expansion of about 150 basis points each in gross margin and EBITDA margins.

Segment Performance

The domestic market drove growth across commercial vehicles, farm, industrial, and passenger vehicle sectors. However, export volumes remained low due to global market weakness and U.S. tariff uncertainties.

Export Challenges and Outlook

Happy Forgings faced headwinds in its export business, particularly in the U.S. market, where it experienced a 35-40% year-on-year decline in the segment contributing about 10% to the company's revenue. The management expects some improvement in the third quarter as inventory levels normalize and discussions with customers progress.

Future Growth Drivers

1. New Orders: The company secured INR 80.00 crores of new businesses in H1 FY26 with improved realizations.
2. Capacity Expansion: HFL is progressing with its INR 650.00 crores strategic capex program, creating state-of-the-art forging infrastructure for heavy segments and precision components.
3. Diversification: The company is expanding into new sectors like passenger vehicles and working on large projects with European OEMs for farm equipment.
4. Industrial Focus: HFL has secured orders worth INR 350.00 crores annually for its new infrastructure, primarily in highly machined industrial components.

Management Commentary

Ashish Garg, Managing Director of Happy Forgings Limited, stated, "Our performance in Q2 and H1 FY26 was defined by industry-leading profitability and strong cash generation, achieved even as we navigated through softening steel prices and amidst a global demand environment."

Financial Position

Happy Forgings maintains a strong balance sheet with cash liquidity of approximately INR 315.00 crores and a debt-equity ratio below 0.1. The company achieved nearly 100% operating cash flow conversion in H1 FY26, reflecting consistent operating performance and improved working capital efficiency.

While the company faces short-term challenges in its export markets, particularly in the U.S. and Europe, Happy Forgings' diversified portfolio, strong domestic performance, and strategic investments position it well for future growth. The management remains confident in its ability to navigate the current market dynamics and capitalize on emerging opportunities in both domestic and international markets.

As Happy Forgings continues to expand its capabilities and enter new market segments, investors will be watching closely to see how the company leverages its strong financial position and technological advancements to drive sustainable growth in the coming quarters.

Happy Forgings Limited , a leading manufacturer of high-precision, safety-critical, heavy-forged, and machined components, has announced robust financial results for the second quarter and first half of fiscal year 2026, while also addressing recent regulatory compliance matters.

Financial Highlights

For Q2 FY26, Happy Forgings reported:

• Revenue from operations of ₹377.00 crore, up 4.5% year-over-year (YoY)
• EBITDA of ₹116.00 crore, a 9.9% increase YoY, with margins expanding to 30.7%
• Net profit of ₹73.00 crore, up 10.2% YoY on an adjusted basis
• Highest-ever quarterly gross margin at ~60%

For H1 FY26, the company achieved:

• Revenue from operations of ₹731.00 crore, a 4.1% increase YoY
• EBITDA of ₹217.00 crore, up 6.9% YoY, with margins at 29.7%
• Net profit of ₹139.00 crore, a 6.7% increase YoY on an adjusted basis

Operational Performance

The company reported a 5.2% YoY increase in finished goods volume for Q2 FY26, reaching 15,028 MT. For H1 FY26, the volume growth was 4.5% YoY, totaling 29,485 MT. Realization per kg remained relatively stable at ₹251.00 for Q2 and ₹248.00 for H1 FY26.

Segment Performance

Happy Forgings maintained a diverse revenue mix across various sectors:

The company's domestic sales contributed 84% of total revenue in H1 FY26, with direct exports accounting for the remaining 16%.

Regulatory Compliance

Happy Forgings disclosed that it received notices from BSE and NSE regarding non-compliance with Regulation 19(1) and 19(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The non-compliance pertained to the composition of the Nomination and Remuneration Committee for the quarter ended June 2025.

In response, the company:

1. Acknowledged the non-compliance was not willful
2. Paid the imposed fine of ₹14,160.00 (including 18% GST) to both exchanges
3. Confirmed that necessary steps have been taken to strengthen processes and avoid future inadvertent delays

Management Commentary

Ashish Garg, Managing Director of Happy Forgings Limited, stated, "We are delighted to report a robust performance for Q2 and H1 FY26, highlighted by the highest-ever quarterly gross margin (60%) and EBITDA margin (31%). This strong performance underscores our ability to successfully navigate softening steel prices and uneven growth across industry segments and geographies."

He added, "Our balance sheet continues to rank among the strongest in the industry. Efficient debtor and inventory management resulted in nearly 100% operating cash flow conversion in H1 FY26, reflecting improved working capital and strong operating cash flows."

Future Outlook

The company is progressing with its ₹650.00 crore capex program, focusing on expanding capacity, advancing forging and precision machining technologies, and deepening partnerships with leading domestic and global OEMs. Happy Forgings aims to enhance its capabilities and position itself for sustainable, broad-based growth in the coming years.

As the company continues to navigate global trade realignments and tariff-related headwinds, it remains committed to strengthening profitability and financial resilience while pursuing long-term growth opportunities.