HBL Engineering Ltd Q2FY26: When Railways Meet Lithium—The ₹4,479 Cr Orderbook That Shocked Even the Batteries
1. At a Glance
Ladies and gentlemen, meet HBL Engineering Ltd—the midcap that turned rail safety into a ₹27,000 crore market cap phenomenon. With the stock price sprinting to ₹979 (up 63% in just 3 months, and nearly 94% in 6 months), this Hyderabad-based engineering powerhouse has become the poster child for “From batteries to Bharat Kavach.”
In Q2FY26, HBL reported record revenue of ₹1,203 crore (up a wild 135% YoY) and a PAT of ₹405 crore, marking a jaw-dropping 365% YoY profit surge. Net profit margin? A spicy 33%, 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 at 27.3%, ROE at 20.6%, 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 supplies collision-avoidance systems to Indian Railways, lithium packs to defence submarines, and future dreams to 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 came Kavach v4.0.
In May 2025, HBL became the first OEM certified by RDSO for the latest 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 across three 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 batteries are the old guard, slowly losing ground to lithium.
Nickel-Cadmium remains its cash cow, where HBL is literally #2 in the world.
Lithium Batteries are the new growth engine, now serving Siemens Germany and even the Vande Bharat trains.
Defence Business (12%) – This is where HBL goes full Desi Avengers—building batteries for torpedoes, missiles, armoured vehicles, and submarines. Plus, it makes Electronic Fuzes for everything from grenades to air-dropped bombs. Revenue from this vertical grew 24% between FY23 and FY25.
Industrial Electronics (15%) – The star of the current show.
The Rail Signaling Division built Kavach v4.0, the digital guardian angel for trains.
The Train Management System (TMS) covers 4 of the 6 operational TMS setups in India.
The company’s also teasing a line of electric 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 the P/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 from 17% 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 = 29.7x Industry median = ~20x. Fair EV = 909 × (20–25) = ₹18,180–₹22,725 Cr Subtract debt (₹87 Cr), add cash (~₹239 Cr operating CF): Fair Value Equity = ₹18,300–₹22,800 Cr Per 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 the first to receive RDSO approval for Kavach 4.0—the railway safety system equivalent of Tony Stark’s Jarvis.
June–Sept 2025: HBL collected nine major contracts from Indian Railways—Western, South Central,
