01 — At a Glance
The Hidden Champion in India’s Rail Revolution
- 52-Week High / Low₹1,122 / ₹405
- FY26 TTM Revenue₹3,174 Cr
- FY26 TTM PAT₹818 Cr
- Full-Year EPS (TTM)₹28.72
- Annualised Q3 EPS₹36.12
- Book Value₹71.6
- Price to Book9.52x
- Dividend Yield0.29%
- Debt / Equity0.04x
- Order Book (Dec 2025)₹2,999 Cr
Auditor’s Opening Note: HBL Engineering posted ₹874 crore revenue in Q3 FY26 (+94% YoY). That’s not a typo. PAT came in at ₹220 crore (+242% YoY) with margins expanding to 35% OPM and 27% net margin. Why? Because the Indian Railways decided to equip every locomotive with Kavach, an indigenous train collision avoidance system that HBL manufactures. The order book stands at ₹2,999 crore with fresh orders of ₹1,375 crore added in Q3. The P/E of 23.1x is reasonable for a company growing at 148% profit CAGR. The question isn’t whether this is expensive. The question is whether the order execution actually happens.
02 — Introduction
The Unglamorous Company Making India’s Trains Smarter
HBL Engineering makes industrial batteries. Nickel-cadmium batteries, to be precise. Not Tesla. Not Reliance New Energy. Nickel-cadmium. A technology so old and boring that most investors have never even heard of it.
And yet, here we are. In the past five years, HBL’s stock price has gone up 78% CAGR. The company earned ₹39 crore in profit in FY14 and ₹795 crore in TTM. Profit CAGR of 64.6% over a decade. The company has never missed a quarterly payment to shareholders. The balance sheet has ₹87 crore of debt against ₹28 crore EPS. The working capital cycle is 202 days — long, but fully self-funded from operations.
Then, on May 14, 2025, something changed. The Indian Railways approved HBL’s Kavach system Version 4.0 — a Train Collision Avoidance System (TCAS) that stops locomotives from crashing into each other. Within weeks, the company had ₹3,763 crore of orders. By December 2025, they had ₹2,999 crore in active order book with ₹1,375 crore of fresh orders just added.
The business went from “steady-state industrial battery supplier” to “integral cog in India’s ₹15 lakh crore rail electrification mega-project.” The orders are real. The execution timelines are 12–24 months. The margins are fat. And the street is starting to notice.
Feb 2026 Credit Rating Update (CARE): “Reaffirmation of ratings considers improved financial performance in 9MFY26 with revenue growth of ~80%. HBL is expected to maintain positive momentum backed by healthy demand for defence and industrial batteries segments.” Translation: the auditors are impressed.
03 — Business Model: WTF Do They Even Do?
Industrial Batteries Meet Indian Railways. The Plot Thickens.
HBL Engineering manufactures batteries in a world where most investors think batteries are only used by Tesla and mobile phones. Wrong. Nickel-cadmium batteries power submarines, fighter jets, railways, data centres, telecom towers, and UPS systems in hospitals. It’s a technology from the 1950s that still works better than lithium in some applications — particularly in extreme temperature environments and when reliability matters more than energy density.
Revenue breakdown (FY25): Industrial Batteries (71%), Defence Businesses (12%), Industrial Electronics (15%). That last segment includes Kavach — the Train Collision Avoidance System that’s about to supercharge this entire company.
The Kavach story: Indian Railways wanted an indigenous, cost-effective system to prevent head-on collisions between trains. They gave the development contract to HBL in 2019. HBL delivered Versions 1.0, 2.0, and 3.0. On May 14, 2025, after multiple iterations and approvals from the Research Designs and Standards Organisation (RDSO), Kavach Version 4.0 got regulatory sign-off. This version can handle trains running at speeds up to 160 kmph.
The result: ₹4,000 crore in orders covering 6,980 km of rail network, 2,425 locomotives, 758 stations, and 460 level crossings. HBL has manufacturing capacity to execute this in 24 months. Margins are healthy (management guided 18%+ PBILDT). And there’s no competition because HBL is the only company that’s built this system.
Ni-Cd BatteriesGlobal #2Market Position
Exports23%of FY25 Revenue
Kavach Market100%Monopoly (for now)
Domestic Share77%Bulk of Revenue
Order Book Transparency: As of Dec 2025, HBL had ₹2,999 crore order book. This is lower than July 2025 (₹4,479 crore) because of a clause in the CLW (Chittaranjan Locomotive Works) contract: HBL had to deliver 76% of the original order by mid-December 2025, or lose it. They did. The balance 24% was cancelled per contract terms. But fresh orders of ₹1,375 crore came in the same quarter, showing the appetite for Kavach is real, not just one mega-order.
💬 Do you think railways will actually execute all these orders, or will we see delays like every other mega-project in India? Drop your view!
04 — Financials Overview
Q3 FY26: The Numbers That Make No Sense (In A Good Way)
Result type: Quarterly Results | Q3 FY26 EPS: ₹7.96 | Annualised EPS (Avg Q1-Q3 × 4): ₹36.12 | TTM FY26 EPS: ₹28.72
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 874 | 451 | 1,223 | +93.9% | -28.5% |
| Operating Profit | 302 | 94 | 544 | +220.2% | -44.5% |
| OPM % | 35% | 21% | 44% | +1400 bps | -900 bps |
| PAT | 220 | 65 | 387 | +242.1% | -43.0% |
| EPS (₹) | 7.96 | 2.33 | 13.97 | +242.0% | -43.0% |
Sanity Check on The Numbers: Q2 FY26 was exceptional (₹1,223 cr revenue, 44% OPM). This was driven by the Kavach approval and order execution rush. Q3 normalized to ₹874 crore as some bulk orders shifted to Q4. The YoY comparison looks insane (+94% revenue, +242% PAT) because Q3 FY25 was artificially depressed due to RDSO approval delays. The normalised growth story is: Kavach orders ramping, margins staying healthy at 27%+ net, and execution on track. TTM EPS of ₹28.72 gives a P/E of 23.75x on CMP ₹682. Not cheap, but not insane for a company with 148% profit CAGR and ₹4,000 crore+ confirmed orders.
05 — Valuation Discussion
What’s This Company Actually Worth?
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