HFCL Limited — Q4 FY25 earnings call

Call held 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

  • 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

2 periods

Q4 FY25

  • Revenue
    ₹800.72 Cr
    YoY -39.6% QoQ -20.9%
  • EBITDA
    ₹-22.33 Cr
    YoY -110.6% QoQ -113%
  • EBITDA Margin
    -2.8%
  • PAT
    ₹-83.3 Cr
    YoY -176.2% QoQ -214.8%
  • PAT Margin
    -10.4%

FY25

  • Revenue
    ₹4,064 Cr
    YoY -9%
  • EBITDA
    ₹507 Cr
    YoY -25.7%
  • PBT
    ₹217 Cr
    YoY -52.2%
  • PAT
    ₹173 Cr
    YoY -48.8%

What they filed

Q1 FY27: revenue up 119.9%, net profit up 948.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,094 1,012 801 871 1,043 −5%1,211 +20%1,824 +128%1,915 +120%
EBITDA158 152 -37 28 190 +20%228 +50%314 +949%414 +1379%
Net profit73 73 -83 -29 72 −1%102 +40%184 +322%246 +948%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

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)

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · FY26 · High confidence 25-30%
    With strong order book, demand pick-up and full capacity utilization, the Company expects growth of 25-30% in revenue of the current financial year on overall basis with major growth starting from Q2.

    — Mahendra Nahata, Promoter and Managing Director

  • Optical Fiber Cable Revenue Growth Revenue · FY26 · High confidence 100%
    I am of the opinion that we will grow by at least 100% this year as compared to last year, 100%.

    — Mahendra Nahata, Promoter and Managing Director

  • Passive Connectivity Solutions Export Revenue Revenue · Starting FY26 · Medium confidence Increase
    Until now, this business was largely domestic, but starting FY26, we expect our revenue to increase from exports.

    — Mahendra Nahata, Promoter and Managing Director

  • Surveillance Radars Revenue Revenue · This year (FY26) · High confidence Start flowing in
    And this year, we expect revenue to start flowing in from surveillance radars.

    — Mahendra Nahata, Promoter and Managing Director

  • Night Vision Devices Supply Revenue · Q2 (FY26) · High confidence Start supply
    The supply of that for that would also start in Q2.

    — Mahendra Nahata, Promoter and Managing Director

  • Telecom Products Revenue Revenue · FY26 · Medium confidence ₹1,200-1,500 crores
    To the best of my knowledge and order book which we have, it would be somewhere between INR1,200 crores to INR1,500 crores.

    — Mahendra Nahata, Promoter and Managing Director

Profitability

  • EBITDA Margin Profitability · FY26 · Medium confidence stable around FY24 levels (approx. 15.27%)
    So for FY '24, what margins we had, we should remain stable around those margins.

    — Mahendra Nahata, Promoter and Managing Director

  • PAT Margin Profitability · FY26 · Medium confidence stable around FY24 levels (approx. 7.57%)

    — Mahendra Nahata, Promoter and Managing Director

Capex

  • OFC Capacity Expansion Capex · Current year (FY26) · High confidence ₹138 crores
    And the total expenditure, which is going to be made is around INR138 crores.

    — Mahendra Nahata, Promoter and Managing Director

  • Defense Equipment Capex · Current year (FY26) · Medium confidence ₹50 crores
    That may be something around INR50 crores or so. It would not be much, maybe around INR50 crores.

    — Mahendra Nahata, Promoter and Managing Director

Capacity

  • Optical Fiber Manufacturing Capacity Utilization Capacity · Q1 FY26 · High confidence Full capacity
    our optical fiber manufacturing has now begun operating at full capacity starting Q1 FY26 as against 45% capacity utilisation during FY25.

    — Mahendra Nahata, Promoter and Managing Director

  • Optical Fiber Cable Manufacturing Capacity Utilization Capacity · July 2025 · High confidence Full capacity
    Our Optical Fiber Cable manufacturing capacity utilization was also 40% during last financial year. This will also start operating at full capacity by July 2025.

    — Mahendra Nahata, Promoter and Managing Director

Production

  • Drone Detection Radar Production Production · Current financial year (FY26) · High confidence Start production
    Our drone detection radar, currently under development, is expected to enter the production within the current financial year.

    — Mahendra Nahata, Promoter and Managing Director

Exports

  • FWA Equipment Export Exports · This year (FY26) · High confidence Start exporting
    And I think this year would be here, we should be able to start exporting this FWA equipment for different other countries also.

    — Mahendra Nahata, Promoter and Managing Director

Business Outlook

  • Transition Period End Business Outlook · Q1 (FY26) · High confidence End
    This transition phase should last in quarter 1, that's it.

    — Mahendra Nahata, Promoter and Managing Director

Risks & concerns

  • Payment delays in EPC projects from government entities

    medium

    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

  • Delays in ammunition supply for fuse testing by DRDO

    medium

    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

  • Historical downturn in optical fiber cable demand

    low

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

    Management acknowledged

  • Margin pressure from newly launched telecom products and slower EPC offtake

    low

    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

Areas of evasion (1)

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

Q&A highlights

3 direct
Exports strategy and impact of reciprocal tariffs Direct
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

Data center demand vs. Telco capex for fiber optic cable Direct
Data center demand has really fuelled a very good growth in the demand of fiber optic cable. ...this is definitely an alternate opportunity for cable manufacturers to supply fiber optic cable. Not only fiber optic cable, we are, at the same time, doing the connectivity solutions, which are required within the data center... So at least for next 5 years, this demand is going to keep on increasing.

Highlights a new, significant growth driver for OFC demand beyond traditional telco capex, driven by AI and data consumption, with a long-term positive outlook.

Asked by Balasubramanian, Arihant Capital

Defense sector outlook and HFCL's role Direct
Really government has, in my personal opinion, has awaken to the possibility that defense preparedness needs which is good, but it needs to be a much higher level. ...we are concentrating in a couple of areas. One, ground surveillance radars... Second is night vision devices... Then communication equipment... Then electronic fuses... And for multimode hand grenade, the trial production for approval, you have to produce 100 units and give it to them and they would try it out, has already begun in our Hosur facility.

Details HFCL's diverse product portfolio and strategic investments in the high-growth Indian defense sector, outlining specific products and their development/production status.

Asked by Vaidik, Monarch Networth Capital Limited

2 min read 5 chapters

Detailed narrative

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.

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.

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.

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.

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).

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