1. At a Glance – Blink and You’ll Miss the Drama
HFCL is that one telecom stock which looks like a boring infra supplier until you zoom in and realise it’s juggling telecom products, defence electronics, OFC cables, railways, exports, and a government-heavy order book — all at once.
At ₹68.6, the stock is down ~33% YoY, market cap at ₹10,514 Cr, ROCE at a sleepy 7.55%, and ROE at 4.42%. And yet… it trades at a Stock P/E of ~203x. Yes, two-zero-three.
Q3 FY26 revenue came in at ₹1,211 Cr (up ~20% YoY), PAT at ₹102 Cr, and EBITDA margin expanded to ~19% — a big jump from earlier quarters. Add to that a chunky ₹10,410 Cr order book, a recent ₹550 Cr QIP, and aggressive product pivoting… and suddenly this “telecom infra uncle” starts acting like a tech startup with a defence obsession.
But here’s the real tease: sales over 3 & 5 years are flat-to-negative, promoter holding is sliding, debt is rising, and cash flows are… moody.
So is this a turnaround story, a margin mirage, or just another PSU-style order book illusion? Let’s open the files.
2. Introduction – HFCL: The Shape-Shifting Telecom Veteran
HFCL has been around long enough to have seen 2G scams, 4G rollouts, and now 5G hype cycles — and it’s still standing. That itself deserves a slow clap.
Historically, HFCL was known as a project-heavy telecom EPC and OFC supplier, dependent on government tenders and lumpy execution. Margins were thin, working capital was stretched, and returns looked like government exam results — always “pass”, never “ranker”.
But over the last few years, management decided to change the script.
Less project work.
More products.
More exports.
More defence electronics.
And more IP-led telecom gear like Wi-Fi access points, UBR radios, and AI-driven network management.
The result?
- Telecom Products now 57% of 9M FY25 revenue (vs
- 43% in FY22)
- Turnkey Services shrinking but still large
- Defence reduced as a % of revenue, but expanding in capability
- R&D spend jumping from 2% → 5% of revenue
Sounds great on paper. But HFCL’s financials still look like a company mid-gym-transformation: visible effort, patchy results, and lots of sweating.
3. Business Model – WTF Do They Even Do?
Think of HFCL as a telecom + defence hardware factory that also occasionally behaves like a government contractor.
Core buckets:
1) Telecom Products (the “cooler” part):
- Wi-Fi 5/6 access points
- UBR radios
- Optical fibre & cables (largest market share in India)
- Passive connectivity gear for data centres & FTTx
This segment is product-led, margin-friendly, and requires less working capital. Management wants this to be the future.
2) Turnkey Contracts & Services (the “cash-blocker”):
- BSNL, Railways, rural telecom, fibre rollouts
- Defence communication networks
- EPC-style execution with milestone payments
This brings volume, but also high receivables and thin patience.
3) Defence & Aerospace (the “strategic flex”):
- Electronic fuzes
- Thermal weapon sights
- Surveillance radars
- Software-defined radios
Not massive in revenue yet, but very important politically and strategically.
In short:
HFCL wants to be less L&T EPC, more telecom Bosch + mini-Bharat Electronics.
Question: can margins and returns catch up before patience runs out?
4. Financials Overview – Numbers
