1. At a Glance
Ladies and gentlemen, meetHBL Engineering Ltd—the midcap that turned rail safety into a ₹27,000 crore market cap phenomenon. With the stock price sprinting to₹979(up63% in just 3 months, and nearly94% in 6 months), this Hyderabad-based engineering powerhouse has become the poster child for“From batteries to Bharat Kavach.”
In Q2FY26, HBL reportedrecord revenue of ₹1,203 crore(up a wild135% YoY) and aPAT of ₹405 crore, marking a jaw-dropping365% YoY profit surge. Net profit margin? A spicy33%, the kind of number that makes even ITC’s pricing team nervous.
From building nickel-cadmium batteries for submarines to installing railway collision-avoidance tech (Kavach 4.0), HBL has morphed from a quiet industrial battery maker to a national tech darling. ROCE stands tall at27.3%, ROE at20.6%, and debt is laughably small at ₹87 crore.
But wait—behind the ₹4,479 crore order book, a ₹100 crore capex plan, and 5 manufacturing units lies a question every investor should ask: is this rocket ship still fuelled, or are we charging on fumes? Let’s pop the hood.
2. Introduction – From Boring Batteries to National Headlines
Back in 1983, HBL Power Systems started off selling batteries—lead-acid, nickel-cadmium, and anything that could hold a charge longer than your phone. Fast forward to 2025, and this company now suppliescollision-avoidance systems to Indian Railways, lithium packs to defence submarines, andfuture dreamsto investors.
What makes HBL a standout story is its transformation. For decades, it was the reliable but unsexy cousin in the capital goods family—selling VRLA batteries to telecom towers while others chased solar and EV hype. Then cameKavach v4.0.
In May 2025, HBL became thefirst OEM certified by RDSOfor thelatest Kavach version, capable of protecting trains zipping up to 160 km/h. That certification triggered an avalanche of contracts—₹4,000+ crore across 6,980 km of network and over 2,400 locomotives.
Since then, the company’s order inbox has looked like an Amazon sale on steroids. From ₹1,178 crore in August 2024 to₹4,479 crore by July 2025, the backlog has quadrupled. Defence orders, lithium battery exports, and the holy grail of Make-in-India tech have turned HBL into a national mascot for indigenous engineering.
But with great momentum comes great expectation. The question is—can HBL keep its voltage stable?
3. Business Model – WTF Do They Even Do?
Let’s decode the madness behind the megawatts.
HBL operates acrossthree main divisions, each with its own drama:
- Industrial Batteries (71% of FY25 revenue)– This is where it all started. Think of HBL as the power bank of India’s critical infrastructure—telecom towers, railways, UPS systems, and defence outposts.
- Lead-acid and PLT batteriesare the old guard, slowly losing ground to lithium.
- Nickel-Cadmiumremains its cash cow, where HBL is literally#2 in the world.
- Lithium Batteriesare the new growth engine, now serving Siemens Germany and even theVande Bharat trains.
- Defence Business (12%)– This is where HBL goes full Desi Avengers—building batteries for torpedoes, missiles, armoured vehicles, and submarines. Plus, it makesElectronic Fuzesfor everything from grenades to air-dropped bombs. Revenue from this vertical grew24%between FY23 and FY25.
- Industrial Electronics (15%)– The star of the current show.
- TheRail Signaling DivisionbuiltKavach v4.0, the digital guardian angel for trains.
- TheTrain Management System (TMS)covers 4 of the 6 operational TMS setups in India.
- The company’s also teasing a line ofelectric heavy trucks (GVW 35–55 tons), though magnet shortages have delayed the rollout to FY27.
Add in exports to 50+ countries (23% of FY25
sales), two global subsidiaries (HBL America, HBL Germany), and a ₹100 crore capex for high-density lithium cell manufacturing—suddenly, this is not your uncle’s “battery stock.”
If batteries were Bollywood, HBL would be the Shah Rukh Khan comeback story—veteran, reinvented, and cashing big.
4. Financials Overview
| Metric | Latest Qtr (Q2FY26) | YoY Qtr (Q2FY25) | Prev Qtr (Q1FY26) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 1,223 | 521 | 602 | 135% | 103% |
| EBITDA (₹ Cr) | 544 | 109 | 192 | 399% | 183% |
| PAT (₹ Cr) | 405 | 87 | 143 | 365% | 183% |
| EPS (₹) | 13.97 | 3.15 | 5.17 | 344% | 170% |
Annualised EPS = ₹13.97 × 4 =₹55.88, which means theP/E is roughly 17.5x on annualised earnings, far lower than the headline 41x (TTM). Translation? The market’s catching up to its own excitement.
HBL’s quarterly performance looks like someone strapped it to a battery charger—sales doubled, profits quadrupled, and operating margins spiked from17% to 44%in one year.
5. Valuation Discussion – Fair Value Range Only
Let’s get our calculators dirty.
A) P/E Method:
- TTM EPS = ₹23.1
- Annualised EPS (Q2FY26 × 4) = ₹55.9
- Industry P/E = 28.7
So, Fair Value Range = ₹55.9 × (20–28) =₹1,118 to ₹1,565
B) EV/EBITDA Method:
- EV = ₹27,008 Cr
- EBITDA (TTM) = ₹909 Cr
- EV/EBITDA = 29.7xIndustry median = ~20x.Fair EV = 909 × (20–25) = ₹18,180–₹22,725 CrSubtract debt (₹87 Cr), add cash (~₹239 Cr operating CF): Fair Value Equity = ₹18,300–₹22,800 CrPer Share = ₹660–₹825
C) Simplified DCF Approach (₹ Cr):Assume Free Cash Flow = ₹273 Cr (FY24) growing at 20% CAGR for 5 years, discount rate 11%.DCF Value ≈ ₹19,500–₹21,000 Cr.
Fair Value Range (consolidated): ₹660 – ₹1,565 per share.
This fair value range is for educational purposes only and is not investment advice.
6. What’s Cooking – News, Triggers, Drama
You know a company’s having a Bollywood year when every other month is a blockbuster release:
- May 2025:HBL became thefirstto receiveRDSO approval for Kavach 4.0—the railway safety system equivalent of Tony Stark’s Jarvis.
- June–Sept 2025:HBL collectednine major contractsfrom Indian Railways—Western, South Central, Central, and IRCON—worth over₹3,700 Crcombined.
- July 2025:Order book ballooned to₹4,479 Cr, quadrupling from last year.
- Aug 2025:CMD Dr.
