Happy Forgings (HAPPYFORGE) Q2 25/26 earnings summary

Executive summary

• Achieved record gross margin of 60% and EBITDA margin of 31% in Q2 FY26, with robust cash generation and profitability despite softening steel prices and mixed global demand.

• Q2 FY26 revenue was ₹377 crore (up 4.5% YoY); H1 FY26 revenue was ₹731 crore (up 4.1% YoY); consolidated revenue for H1 FY26 was ₹73,118.89 lacs, up from ₹70,259.78 lacs YoY.

• Domestic market drove growth, offsetting weak export volumes due to global uncertainties and U.S. tariffs.

• Product mix improvement, especially value-added machining (up to 88% share), supported margin expansion.

• Nearly 100% operating cash flow conversion in H1 FY26 due to efficient working capital management; liquidity at ₹315 crore as of September 30, 2025.

Financial highlights

• Q2 FY26: Revenue ₹377 crore (+4.5% YoY), gross profit ₹228 crore (+7.1% YoY), EBITDA ₹116 crore (+9.9% YoY), PAT ₹73 crore (+10.2% YoY, adjusted).

• H1 FY26: Revenue ₹731 crore (+4.1% YoY), gross profit ₹433 crore (+6.7% YoY), EBITDA ₹217 crore (+6.9% YoY), PAT ₹139 crore (+6.7% YoY, adjusted).

• EBITDA for H1 FY26 was ₹22,935.42 lacs; EPS (Diluted) was ₹14.73 for H1 FY26.

• Gross margin: 60.3% (Q2), 59.2% (H1); EBITDA margin: 30.7% (Q2), 29.7% (H1); PAT margin: 19.5% (Q2), 19.0% (H1).

• Realisation per kg remained stable YoY despite lower raw material prices.

Outlook and guidance

• Growth momentum expected to continue, with new projects and ramp-ups planned for Q3 and Q4.

• ₹650 crore strategic Capex program on schedule, targeting capacity expansion in wind, farm, and heavy industrial segments, with heavy forging facilities to be commissioned by FY27.

• Management expects return ratios (ROCE, ROE) to improve further.

• Export recovery anticipated as inventory destocking normalizes, especially in Europe and North America.

• Inorganic growth opportunities under evaluation, with potential closure in 6-8 months.