HDFC Securities Diwali Picks: Happy Forgings – A Precision Performer with Robust Order Book and Growth Potential

October 17, 2025: The HDFC Securities research and analysis team has picked Happy Forgings Limited as one of the top ten picks for this Diwali. The reason for zeroing in on the stock can be attributed to a mix of strong fundamentals, sectoral growth, a diversified product portfolio, and the company’s strong domain expertise. The leading player in precision forgings and machined components has a strong clientele across various sectors, including automotive, rail, power, and energy.

Company Overview

The company is among the top engineering-led manufacturers engaged in the production of heavy forged and high-precision machined components. With its production facility in Punjab, the company caters to OEMs in commercial vehicles, farm equipment, off-highway machines, railways, and other crucial sectors. The company enjoys very strong relationships with domestic and global clients.

Recent Stock Performance

The stock has grown consistently in the past six months (with around 21.23% growth rates recorded). The market capitalisation of the company is around ₹9000 crore. The P/E Ratio is 33.00, which is quite near the industrial average of 36.68. The current price range is between ₹950 and ₹ 970 per share.

Fundamentals and Valuation of the Stock

Happy Forgings has maintained a healthy financial profile, delivering steady growth in both revenue and profitability. Over the past few years, the company has recorded a double-digit growth trajectory, supported by improved capacity utilisation and a shift toward higher-margin machined components. The return ratios remain strong, with a Return on Capital Employed (ROCE) of nearly 19% and a Return on Equity (ROE) of around 15%. The company’s efficient capital allocation and integrated manufacturing model ensure strong operational leverage.

Key Price Levels to Watch

While the LTP is ₹921, the target price is ₹1,083, and the recommended buy range by HDFC Securities is ₹910–₹944.

What Makes Happy Forgings a Preferred Stock

The company’s consistent focus on high-precision engineering and its strong relationships with leading OEMs provide it with a sustainable competitive advantage. Happy Forgings is a key beneficiary of India’s expanding industrial and automotive landscape, particularly as demand for commercial vehicles and capital goods accelerates.
Its integrated facilities, technological expertise, and ability to deliver customised components position it favourably for long-term growth. Furthermore, ongoing capacity expansions and efficiency initiatives are expected to drive margin improvements in the coming quarters, reinforcing its standing as a quality manufacturing play in the mid-cap space.

Risks to Consider

The company primarily deals with B2B clientele, so the demand for its products is largely dependent on macro factors. All the products have a certain degree of cyclical nature, which could be affected by the price of steel and energy. Any slowdown in the core sectors or delays in order execution can have short-term challenges.