1. At a Glance
Once a humble battery maker, now the multi-order Kavach-winning, defence-partnering, engineering juggernaut that’s been lighting up the smallcap space. HBL Engineering Ltd. is no longer just a battery stock. It’s a full-on national infrastructure enabler with a side hustle in saving lives on Indian Railways.
2. Introduction with Hook
If Tesla and Indian Railways had a desi child, it would probably look like HBL Engineering.
– Rs. 1,967 Cr revenue in FY25
– Rs. 276 Cr net profit (3x jump in 2 years)
– Market Cap: ₹16,942 Cr — yes, a 16-bagger from pre-Covid levels.
From making lead-acid batteries to becoming India’s Kavach systems emperor, this 1983 baby has aged better than Amitabh Bachchan’s career. The rebranding to HBL Engineering wasn’t just cosmetic — it was a war cry.
3. Business Model (WTF Do They Even Do?)
Core Segments:
- Railway Signalling & Kavach Systems
- India’s Train Collision Avoidance System (TCAS).
- Orders worth ₹3,763 Cr in FY25.
- Industrial Batteries
- 2nd largest globally in Nickel batteries, 3rd in India’s VRLA.
- Sole Indian maker of PLT lead batteries (defence grade).
- E-Mobility & Defence
- PLT Batteries for torpedoes and submarines
- Specialised power solutions for defence applications
- Electronics Manufacturing
- Control systems, monitoring tech, embedded products
In short: They power things, protect lives, and print government tenders like hot pakoras.
4. Financials Overview
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | ₹1,369 Cr | ₹2,233 Cr | ₹1,967 Cr |
| EBITDA | ₹151 Cr | ₹423 Cr | ₹392 Cr |
| PAT | ₹98 Cr | ₹280 Cr | ₹276 Cr |
| ROE | 10.3% | 21.0% | 20.5% |
| OPM | 11% | 19% | 20% |
Takeaway:
Even with a dip in topline (from peaking in FY24), margins held strong. HBL isn’t just growing — it’s evolving.
5. Valuation
At CMP ₹611, with EPS of ₹9.99 and P/E ~61x, it’s not cheap. But let’s talk Fair Value Range:
- Base Case (12% growth, 18% margin): ₹470–₹540
- Bull Case (massive execution of Kavach backlog): ₹660–₹720
- Bear Case (Kavach delays): ₹370–₹410
Valuation is rich, but the moat is real. And no, it’s not the kind of moat Buffett likes — it’s more like a railway barricade.
6. What’s Cooking – News, Triggers, Drama
- June 2025: ₹30 Cr Kavach order from South Central Railway
- May 2025: RDSO Approval for Kavach 4.0 — Hello, ₹3,700+ Cr orders!
- Mar–Apr 2025: Multiple railway tenders bagged (₹1,200+ Cr total)
- Jul 2024: Name officially changed to HBL Engineering Ltd
- Biggest Risk? Delay in execution + policy changes post-2029 elections
Kavach = make or break. No sugarcoating.
7. Balance Sheet
| Item | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity + Reserves | ₹952 Cr | ₹1,221 Cr | ₹1,483 Cr |
| Borrowings | ₹86 Cr | ₹67 Cr | ₹74 Cr |
| Total Assets | ₹1,294 Cr | ₹1,654 Cr | ₹1,980 Cr |
Highlights:
- Almost debt-free
- Strong reserve buildup
- Zero goodwill nonsense
8. Cash Flow – Sab Number Game Hai
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| CFO | ₹122 Cr | ₹273 Cr | ₹239 Cr |
| CFI | ₹-50 Cr | ₹-139 Cr | ₹-320 Cr |
| CFF | ₹10 Cr | ₹-42 Cr | ₹-26 Cr |
| Net Cash Flow | ₹82 Cr | ₹91 Cr | ₹-107 Cr |
Insight:
The investment cycle has kicked in. ₹320 Cr into capex = capacity and infra buildup. Short-term bleed, long-term power play.
9. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 14% | 36% | 26% |
| ROE | 10.3% | 21% | 20.5% |
| Cash Conversion Cycle | 188 days | 158 days | 202 days |
| OPM | 11% | 19% | 20% |
Verdict:
A bit bloated on working capital, but ROCE is sizzling. Just fix the cycle and enjoy the compounding.
10. P&L Breakdown – Show Me the Money
| Year | Sales | EBITDA | PAT | EPS |
|---|---|---|---|---|
| FY23 | ₹1,369 Cr | ₹151 Cr | ₹98 Cr | ₹3.56 |
| FY24 | ₹2,233 Cr | ₹423 Cr | ₹280 Cr | ₹10.13 |
| FY25 | ₹1,967 Cr | ₹392 Cr | ₹276 Cr | ₹9.99 |
Margins up, profits stable despite topline contraction — that’s execution muscle flexing.
11. Peer Comparison
| Name | P/E | ROCE | OPM | Sales (Cr) | PAT (Cr) |
|---|---|---|---|---|---|
| HBL Engineering | 61x | 26.3% | 20% | ₹1,967 | ₹276 |
| Inox India | 51x | 38% | 21% | ₹1,306 | ₹221 |
| Esab India | 46x | 70% | 18% | ₹1,373 | ₹175 |
| Subros | 40x | 21% | 9.5% | ₹3,367 | ₹150 |
Commentary:
HBL’s P/E is toppy. But it’s the only one with large exclusive government defence rail infra contracts. PE = premium execution.
12. Miscellaneous – Shareholding, Promoters
- Promoters: 59.10%
- FIIs: 4.83%
- DIIs: 0.36%
- Public: 35.7%
- No. of shareholders: 3.8 lakh+
This is no longer an underdog. This is theatre of war-level accumulation — DIIs missing out, FIIs just starting.
13. EduInvesting Verdict™
From a quietly profitable battery manufacturer, HBL Engineering has morphed into a full-stack engineering defence + rail tech play — and with Kavach as the keyword, it might just become the stock powering India’s rail safety renaissance.
But make no mistake: the stock isn’t cheap, and success hinges heavily on timely execution and no policy reversals. If it delivers, it will be a case study.
If it stumbles… well, we’ll know what the absence of Kavach feels like.
Metadata
– Written by EduInvesting Research | 13 July 2025
– Tags: Railway Stocks, Kavach Orders, HBL Engineering, Defence PSU Partner, Infra Growth Stocks
