HFCL - HFCL LIMITED Share Price

Management's outlook for HFCL remains optimistic as they anticipate a breakout year driven by strong order inflows and a resurgence in demand across various segments. Key forward-looking points include:

1. Revenue Growth: Management projects a revenue increase of 25% for FY26 compared to FY25, driven by significant contributions from optical fiber cables and defense products.

2. Optical Fiber Cable Segment: The company expects to double its revenue in this segment from Rs.1,200 crores in the previous year to approximately Rs.2,400 crores in FY26. They secured export orders worth around Rs.300 crores in Q1 FY26, with export revenues of Rs.210 crores.

3. Capacity Expansion: HFCL plans to enhance its Intermittently Bonded Ribbon (IBR) cable capacity from ~1.73 million fiber kilometers per annum to ~19.01 million fiber kilometers per annum. The overall optical fiber cable manufacturing capacity will increase from ~25.08 million fiber kilometers to ~42.36 million fiber kilometers per annum.

4. Order Book Strength: As of June 30, 2025, the company's order book stands at Rs.10,480 crores, with an expectation to convert around Rs.3,000 crores of this into revenue in the current fiscal year.

5. Defense Contracts: HFCL has secured a landmark contract for thermal weapon sights for AK-203 rifles and is in advanced stages for additional defense contracts, including a Rs.90 crore tender for tactical cables. This sector is expected to generate approximately Rs.200 crores in revenue this financial year.

6. BharatNet Contribution: Management anticipates revenue contribution from the BharatNet Phase III project to be in the range of Rs.800-1000 crores this year.

The focus on enhanced manufacturing capacities, strategic partnerships, and technological advancements positions HFCL well to capitalize on the growing demand for connectivity and defense technology.

1. Question: "Sir my first question regarding data center. I think data center networking, total addressable market, it's more than $1 trillion over the next four to five years' time. I just want to understand like how we differentiate ourselves in terms of data center networking compared to our competitors?"

Answer: Thank you, Mr. Balasubramanian. The data center market is indeed enormous. We generate revenue primarily from high-capacity fiber optic cables and passive connectivity solutions, which we anticipate will start improving in the upcoming quarters. We have secured contracts with major players for high-capacity cable and expect meaningful revenue from our passive solutions for data centers over the next financial year.

2. Question: "Also, we showcased drone radars and electronic fuzes at the Paris Air Show. What is the commercialization roadmap, and are there any pending certifications or approvals?"

Answer: Revenue from defense products like thermal weapon sights and tactical cables will begin this quarter. We are cautiously optimistic about electronic fuzes, which are due for testing in August. Should testing go well, we expect timely orders. The drone detection radar is nearing the end of lab trials, and we hope that field trials will commence soon, allowing for further production and market demand.

3. Question: "What is the current scenario of optical fiber and applicable fiber cable prices? And what's the status of inventory liquidation at global level operators?"

Answer: Fiber prices range between Rs.240 to Rs.250 per kilometer. The fiber cable realization prices are between Rs.850 to Rs.900 per kilometer. Inventory levels have notably reduced, causing a resurgence in demand from telcos and data center operators, marking a shift in our sales dynamic as orders continue to increase.

4. Question: "Can you bifurcate the defense order book and export order book out of total order book? How much is for defense and how much is for export?"

Answer: Our export order book stands at around Rs.400 crores. From our total order book of Rs.10,000 crores, approximately 12%"”or about Rs.1,300 crores"”comes from the defense sector, which includes tactical cables and thermal weapon sights.

5. Question: "If we receive a very big order for any defense product, are we capable enough for delivery? Do we need to develop a manufacturing facility?"

Answer: We have set up a manufacturing facility in Hosur for defense products and can deliver based on current production capabilities. For significantly large orders, we may need additional facilities, especially for specific products requiring specialized infrastructure.

6. Question: "What is the scenario for ammunition fuzes? When will we start recognizing revenue?"

Answer: If the upcoming August trials for electronic fuzes succeed, we may start recognizing revenue from that segment by the last quarter of the current financial year. Production typically begins two to three months post-successful trials.

7. Question: "What are we expecting from the Rs. 700 crores fundraising? Can you give the breakdown for CAPEX?"

Answer: The Rs.700 crores was merely a resolution enabling future fundraising. The specifics for CAPEX allocation are still under discussion. Potential areas for use include bolstering defense, telecommunications, and optical fiber opportunities.

8. Question: "What is the expected margin position for the fiber optic cable and utilities? When can we expect a return to previous margin levels?"

Answer: Given the current increase in demand, I anticipate margins for fiber optic cables returning to around 15% starting from the current quarter. The previous margin reduction was primarily due to low demand and underutilization of capacity.

9. Question: "What is the status update on our Delhi NCR factory and revenue potential from that?"

Answer: The Delhi NCR factory has begun producing 5G FWA CPE, with approximately Rs.600 crores in supply already completed. Bulk production of routers is expected to commence shortly, with additional supply worth Rs.200 crores anticipated soon.

10. Question: "Regarding the drone detection systems, what's the commercialization timeline after testing?"

Answer: If the field trials for the drone detection radar prove successful, we anticipate entering the production phase within the current financial year, given the rising global interest in such technologies.