Skip to content

    HFCL

    HFCLGood
    Telecommunication·23 May 2025
    Management Summary

    HFCL reported a challenging Q4 and full year FY25, marked by significant declines in revenue and profitability, primarily due to subdued optical fiber cable demand, margin pressure from new telecom products, and slower EPC business offtake. However, management expressed strong optimism for FY26, anticipating a robust rebound driven by full capacity utilization in OFC, new product launches, a growing defense sector, and a strong order book of ₹9,967 crores.

    Highlights

    8

    • Full Year FY25 Revenue stood at ₹4,064 crores, a decline of 8.97% YoY from ₹4,465 crores in FY24.

    • Full Year FY25 PAT was ₹173 crores, a significant decrease of 48.82% YoY from ₹338 crores in FY24.

    • Q4 FY25 Revenue was ₹800.72 crores, down 39.61% YoY and 20.9% QoQ.

    • Q4 FY25 EBITDA was negative at ₹-22.33 crores, resulting in an EBITDA margin of -2.79%.

    • Q4 FY25 PAT was a loss of ₹-83.30 crores, with a PAT margin of -10.40%.

    • The company expects a revenue growth of 25-30% for FY26, with major growth starting from Q2.

    • Optical Fiber Cable (OFC) revenue is projected to grow by 100% in FY26.

    • Order book as of March 31, 2025, increased to ₹9,967 crores from ₹7,685 crores in FY24.

    Key financials

    Metrics

    9

    Periods

    2

    Q4 FY25

    5
    • Revenue
      ₹800.72 Cr
      YoY-39.6%QoQ-20.9%
    • EBITDA
      ₹-22.33 Cr
      YoY-110.6%QoQ-113.0%
    • EBITDA Margin
      -2.8%
    • PAT
      ₹-83.3 Cr
      YoY-1.8%QoQ-2.1%
    • PAT Margin
      -10.4%

    FY25

    4
    • Revenue
      ₹4,064 Cr
      YoY-9.0%
    • EBITDA
      ₹507 Cr
      YoY-25.7%
    • PBT
      ₹217 Cr
      YoY-52.2%
    • PAT
      ₹173 Cr
      YoY-48.8%

    Segment breakdown

    Telecom Products
    ₹608.55 Cr Revenue (Q4 FY25)76% Share of Total Revenue (Q4 FY25)58% Share of Total Revenue (Q3 FY25)27% Share of Total Revenue (Q4 FY24)
    List

    Guidance & targets

    15
    CategoryTargetPriority
    Revenue
    Overall Revenue Growth
    25-30%
    		High
    Revenue
    Optical Fiber Cable Revenue Growth
    100%
    		High
    Revenue
    Passive Connectivity Solutions Export Revenue
    Increase
    		Medium
    Revenue
    Surveillance Radars Revenue
    Start flowing in
    		High
    Revenue
    Night Vision Devices Supply
    Start supply
    		High
    Revenue
    Telecom Products Revenue
    ₹1,200-1,500 crores
    		Medium
    Profitability
    EBITDA Margin
    stable around FY24 levels (approx. 15.27%)
    		Medium
    Profitability
    PAT Margin
    stable around FY24 levels (approx. 7.57%)
    		Medium
    Capex
    OFC Capacity Expansion
    ₹138 crores
    		High
    Capex
    Defense Equipment
    ₹50 crores
    		Medium
    Capacity
    Optical Fiber Manufacturing Capacity Utilization
    Full capacity
    		High
    Capacity
    Optical Fiber Cable Manufacturing Capacity Utilization
    Full capacity
    		High
    Production
    Drone Detection Radar Production
    Start production
    		High
    Exports
    FWA Equipment Export
    Start exporting
    		High
    Business Outlook
    Transition Period End
    End
    		High

    Risks & concerns

    5
    RiskSeverity

    Payment delays in EPC projects from government entities

    HFCL is not getting paid for some EPC projects due to non-completion of milestones, which is not their fault but that of BSNL or Army, leading to caution in taking new EPC orders. — Management acknowledged

    medium

    Delays in ammunition supply for fuse testing by DRDO

    DRDO trials for electronic fuses are delayed because Munitions India Limited has not supplied the required ammunition, despite HFCL paying for it 6 months prior, hindering product commercialization. — Management acknowledged

    medium

    Historical downturn in optical fiber cable demand

    FY25 financial performance was impacted by a downturn in OFC demand and high inventories globally, though management believes this is now recovering. — Management acknowledged

    low

    Margin pressure from newly launched telecom products and slower EPC offtake

    The company experienced margin pressure from new telecom products and slower customer offtake in EPC business in FY25, but expects improvement in FY26. — Management acknowledged

    low

    Areas of Evasion(1)

    • Specific size of the potential NATO order for defense products.

    Q&A highlights

    3

    “Look, definitely, export is the cornerstone of our strategy to increase revenue... As far as fiber optic cable and passive connectivity solution attached with that are concerned, I think I'm quite sure this year, our exports will be in 4 figures. ...this 5% decrease in the prices in some cases, is not impacting much.”

    Reveals HFCL's strategic focus on exports, particularly OFC, and their assessment of tariff impacts, indicating confidence in export growth.

    asked by Balasubramanian, Arihant Capital

    2 min read5 chapters

    Detailed Narrative

    01

    Q4 FY25 and Full Year FY25 Performance Overview

    HFCL reported a challenging Q4 FY25 with revenue at ₹800.72 crores, a 39.61% YoY decline, and a negative EBITDA of ₹-22.33 crores, leading to a PAT loss of ₹-83.30 crores. For the full year FY25, consolidated revenue decreased by 8.97% to ₹4,064 crores, with PAT falling by 48.82% to ₹173 crores. This downturn was attributed to subdued optical fiber cable demand, margin pressure from new telecom products, and slower customer offtake in the EPC business.

    02

    FY26 Outlook and Growth Drivers

    Management is highly optimistic for FY26, projecting an overall revenue growth of 25-30%, with significant growth expected from Q2. This rebound is anticipated to be driven by a strong order book of ₹9,967 crores (up from ₹7,685 crores in FY24), full capacity utilization in optical fiber and cable manufacturing by Q1 FY26 and July 2025 respectively, and increasing demand from data centers, 5G rollouts, and BharatNet Phase III. The company expects the transition period to conclude by Q1 FY26.

    03

    Defense Sector Focus and Opportunities

    The defense sector is emerging as a strategic growth engine for HFCL, with decisive early investments in advanced technologies. The company has inaugurated a new manufacturing facility in Hosur for defense equipment and is developing ground surveillance radars, night vision devices, electronic fuses, and high-capacity radio relay systems. HFCL expects revenue from surveillance radars to start flowing in this year and night vision device supplies to begin in Q2 FY26, with a capex of around ₹50 crores planned for defense equipment.

    04

    Optical Fiber Cable (OFC) Market Dynamics

    After 6-7 quarters of subdued demand, the OFC market is showing clear signs of recovery, fueled by hyperscale data centers, 5G rollouts, and rising export demand. HFCL's optical fiber manufacturing is operating at full capacity in Q1 FY26, and OFC manufacturing will reach full capacity by July 2025. The company projects a 100% growth in OFC revenue for FY26, driven by demand for high-fiber count cables for data centers and increased exports, with a capex of ₹138 crores for capacity expansion.

    05

    New Product Launches and Order Book Breakdown

    HFCL has achieved significant milestones with indigenous MPLS Routers, securing orders worth ₹800 crores, and becoming the first Indian company to commercially launch 5G Fixed Wireless Access Customer Premises Equipment, dispatching over 4 lakh units. The order book of ₹9,967 crores includes approximately ₹2,227 crores from telecom products (50% OFC, 50% other equipment), ₹4,000 crores from turnkey EPC solutions, and ₹3,675 crores from O&M services (including ₹1,000 crores from Defense and ₹1,600 crores from BharatNet).

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.