HFCL Limited — Q4 FY26 earnings call

Call held 30 Apr 2026

Management summary

HFCL reported record Q4 FY26 and full-year FY26 performance, driven by strong demand across OFC, telecom, defense, EPC, and exports. The company achieved 20% revenue growth and margin expansion, backed by a record order book of ₹21,200 crores. Strategic initiatives like backward integration into preform manufacturing, expansion in the defense sector, and increased focus on high-value products and global markets are expected to sustain growth and improve profitability, despite some challenges in the EPC segment and geopolitical risks.

Highlights

  • Achieved never-before quarterly and annual performance, reflecting strong strategy and execution.

  • Successfully achieved commitment of 20% revenue growth along with margin expansion for FY26.

  • Secured a robust all-time high order book of ₹21,200 crore, providing strong multi-year revenue visibility.

  • Export revenues significantly increased to 41.36% in FY26, demonstrating growing global acceptance.

  • Share of product-led revenues rose from 27% in FY21 to 62% in FY26, indicating a shift to a more margin-accretive model.

Concerns

  • EPC business was loss-making in the past few quarters, primarily due to warranty period of Army network contract.

  • Geopolitical situations pose a risk, though HFCL has remained largely insulated so far.

Key financials

2 periods

Q4 FY26

  • Revenue
    ₹1,824.12 Cr
    YoY +127.8% QoQ +50.6%
  • EBITDA
    ₹336.93 Cr
    QoQ +38.3%
  • EBITDA Margin
    18.5%
  • PAT
    ₹184.45 Cr
    QoQ +80.2%
  • PAT Margin
    10.1%

FY26

  • Revenue
    ₹4,949.27 Cr
    YoY +21.8%
  • EBITDA
    ₹826.75 Cr
    YoY +63.1%
  • PAT
    ₹329.44 Cr
    YoY +90.1%

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
    66% Q4 FY26 Revenue Share₹1,206 Cr Q4 FY26 Revenue31.8% Q4 FY26 Margins

Order book

high confidence

Total value

₹21,200 Cr

as of 2026-03-31 quantified

Execution

₹18,000 crores for products to be delivered within 1-5 years; ₹3,500 crores for O&M contracts over 6-7 years.

Composition

Mix 2 contract types
  • Products to be delivered 84.9%
  • AMC contracts 16.5%

Share of order book by contract type

The company has a very sustainable order book and continues to receive regular orders, but is hesitant to take very large new orders due to capacity constraints.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹600 Cr balanced mix of internal accruals, debt, and equity for preform facility
    • Preform manufacturing facility ₹580 Cr
    • Fiber and Optical Fiber Cable capacity expansion
    • Defense sector expansion
    • Ammunition-focused facility in Andhra Pradesh
    The project involves an estimated capital outlay of around 580 crore, which will be funded through a balanced mix of internal accruals, debt, and equity. The facility will be state of art based on latest technologies.
  • M&A Aerospace business (unnamed) Acquisition · Announced

    To expand and strengthen defense business, enabling participation in defense aerospace segment, leveraging high-entry-barrier segment with established capability base, certifications, and existing export order book.

    Expected to contribute about ₹1,930 crore export-oriented order book, providing immediate revenue visibility.

    The core objective of this proposed transaction is to create a focused and scalable and future ready defence and aerospace platform by consolidating complementary defence capabilities under our subsidiary, HFCL Advance Systems Private Limited.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY27 · Medium confidence 20% to 25%
    But I can definitely say that over and above the revenue we have achieved in last financial year, we should definitely be able to scale it up by 20% to 25% at least.

    — Mahendra Nahata

  • Data Centre Interconnect Solutions Additional Revenue Revenue · FY27 · High confidence ₹400 crore
    It is expected that data centre interconnect solutions will contribute about Rs.400 crore additional revenue in FY26-27

    — Mahendra Nahata

  • Data Centre Interconnect Solutions Additional Revenue Revenue · FY28 · High confidence ₹800 crore
    and about Rs.800 crore in FY27-28.

    — Mahendra Nahata

  • Aspiration Revenue Revenue · Low confidence ₹10,000 crores
    As far as three to five years' revenue expectation, our aspiration is to reach to INR10,000 crores.

    — Mahendra Nahata

Margin

  • Blended Margin Increase Margin · FY27 · Medium confidence 3% to 4%
    Well, we believe that 3% to 4% increase in margin on a blended basis, on an overall basis is quite expected, 3% to 4% increase.

    — Mahendra Nahata

Defense Revenue

  • Defense Revenue Share Defense Revenue · FY27 · Medium confidence 10% to 12%
    FY27, I think about 10%, 10% to 12%.

    — Mahendra Nahata

Capex

  • Total Capex Capex · FY27 · High confidence ₹600 crores
    Yes. total capex for FY26 would be roughly about the current FY27 could be roughly about INR600 crores, part of which has already been incurred, in fact, which includes for fiber, for optical fiber cable, defense, part of the preform business. All put together, it would be roughly about INR600 crores.

    — Mahendra Nahata

  • Total Capex Capex · FY28 · High confidence ₹350 crores
    INR350 crores.

    — Mahendra Nahata

Capacity

  • Optical Fibre Capacity Capacity · by December 2026 · High confidence 33.9 mn fkm

    From 28 mn fkm today

    Our current Optical Fibre capacity of 28 mn fkm is expected to increase to 33.9 mn fkm by December 2026.

    — Mahendra Nahata

  • Optical Fibre Capital Capacity Capacity · by July 2026 · High confidence 39 fkm

    From 34 mn fkm today

    In parallel, our Optical Fibre Capital capacity, which has been scaling up in phases and currently stands at 34 mn fkm, is expected to reach 39 fkm by July 2026

    — Mahendra Nahata

  • Optical Fibre Capital Capacity Capacity · by December 2026 · High confidence 42.36 mn fkm

    From 39 fkm today

    and to reach 42.36 mn fkm by December 2026.

    — Mahendra Nahata

What to watch in Q1 FY27

EPC Business Profitability

Q2 FY27
Current Loss-making due to warranty period and unbilled revenue
Target Profitable

Why it matters

Turnaround of the EPC segment is crucial for overall profitability and margin expansion, as it has been a drag.

So next year, EPC business should be profitable for us? ... May be second, third, fourth quarter from this financial year.

Risks & concerns

  • Geopolitical situations

    medium

    HFCL has remained largely insulated from current disruptions, but acknowledges that major geopolitical events (e.g., Suez Canal closure, large-scale conflicts) are beyond its control and could impact business.

    Management acknowledged

  • Capacity constraints for new large orders

    medium

    The company is operating at 100% optical fiber capacity and is hesitant to take very large new orders until further capacity expansion is in place, potentially limiting order book growth in the short term.

    Management acknowledged

  • Raw material price volatility (preform, helium, polymers)

    low

    While prices for some raw materials like preform, helium, and polymers have increased, management believes they can pass on these increases to customers, especially for long-term contracts.

    Management downplayed

Q&A highlights

5 direct, 1 evasive
FY27 Revenue Growth Outlook Partial
But I can definitely say that over and above the revenue we have achieved in last financial year, we should definitely be able to scale it up by 20% to 25% at least.

Analyst attempted to get a specific revenue target (₹8,000 crores) for FY27 based on current order book, but management provided a percentage growth range instead of a hard number, indicating cautious optimism.

Asked by Aman Saifee

Blended Margin Expansion Direct
Well, we believe that 3% to 4% increase in margin on a blended basis, on an overall basis is quite expected, 3% to 4% increase.

Management confirmed a specific target for blended margin improvement, which is a key profitability driver for investors.

Asked by Aman Saifee

EPC Business Profitability and Unbilled Revenue Direct
EPC business loss was majorly due to this Army's network which we constructed, and it was undergoing warranty period where we were incurring cost, but nothing was received from the customer. Now, AMC contract is shortly to be signed with Army. Once we start AMC, that would be nullified totally. Moreover, now we have started executing BharatNet kind of EPC project, where there is profitability. As the billing starts, profitability will keep on coming.

Analyst raised a concern about the loss-making EPC segment and rising unbilled revenue. Management provided a clear explanation and a timeline for expected profitability, linking it to specific contract conversions and project execution.

Asked by Rahil Dasani

Preform Manufacturing Facility Timeline and Cost Benefits Direct
Well, it will take at least 2 years. ... And it reduces the cost roughly between 15% to 20% of preform.

Analyst sought clarity on the timeline and financial impact of the backward integration project. Management provided specific figures for both the timeline and the expected cost reduction, which is crucial for future margin improvement.

Asked by Deepak Poddar

Optical Fiber Cable Pricing Trends Partial
So I think, right now, in my personal opinion, the prices have reached to their almost the final level. There may be a few percentage increase may be there, but there will not be any further increase in the prices in my personal opinion.

Analyst inquired about the sustainability of high OFC prices. Management offered a cautious outlook, suggesting prices are stabilizing, which impacts future revenue and margin expectations.

Asked by Saurabh Jain

Strategic Rationale for Defense Acquisitions Direct
This company is in aerostructure business, and we did not have aerospace aerostructure business. So this really expanded our defense business in another area from land systems to aerospace. Now, aerospace is a much more difficult business to enter in from a greenfield situation because the approvals for aerostructure is very critical.

Analyst questioned the strategic move into defense acquisitions. Management clearly articulated the rationale, highlighting the difficulty of organic entry into aerospace and the benefits of acquiring an established player with existing approvals and order book.

Asked by Balasubramanian

Telecom Product Demand Cycle and Data Center Compensation Direct
Then comes 5G, and the demand comes up again, huge demand comes up again. Then 5G is spread out all over the country and optimum level of rollout happens, then the demand stabilizes and only filling the gap demand happens. That's the situation right now with 5G. So now, big spurt of demand will come when the 6G comes around 2029, I would say. ... But by that time, data center demand will compensate or more than compensate lower demand of telecom sector, which is a normal cycle in telecom.

Analyst asked about the future of telecom product demand. Management provided a detailed explanation of the cyclical nature of telecom demand and how the growing data center demand is expected to offset any slowdown in traditional telecom until the next technology cycle (6G).

Asked by Satya

OFC Realization Challenges Evasive
Very difficult to say because there are OFCs of 7,000 fibers per cable and there is the OFC of 1 fiber per cable or 2 fibers per cable. How do I give you average realization? It is very difficult.

Analyst tried to get an average OFC realization figure. Management stated it's impossible to provide due to the wide variety of cable types and fiber counts, making it difficult for investors to model average selling prices.

Asked by Naitik Mohata

3 min read 7 chapters

Detailed narrative

Record Performance and Growth Drivers

HFCL delivered its best-ever quarterly and annual performance in Q4 FY26 and the full financial year 2026. Consolidated revenue for FY26 reached ₹4949.27 crores, marking a 21.8% year-on-year growth, while Q4 FY26 revenue was ₹1824.12 crores. This strong performance was attributed to robust demand across optical fiber cable, telecom, defense, EPC, and exports, successfully achieving the company's commitment of 20% revenue growth along with margin expansion.

Strategic Backward Integration for Competitiveness

To further strengthen manufacturing resilience and structural competitiveness, HFCL is establishing a preform manufacturing facility with an estimated capital outlay of ₹580 crores. This project, expected to be completed within two years, will be funded through a balanced mix of internal accruals, debt, and equity. Management anticipates a 15-20% reduction in preform costs, acting as a key margin expansion lever and long-term competitive advantage.

Robust Order Book and Global Market Focus

The company's order book stands at an all-time high of ₹21,200 crores as of March 31, 2026, with export orders contributing significantly at ₹12,250 crores (58% of the total). This robust order book provides strong sustainability and growth momentum. Export revenues have surged to 41.36% in FY26 from 12.23% in FY25, underscoring the success of the focused export strategy and diversification across geographies.

Expansion in Defense and Aerospace Sectors

HFCL is strategically expanding its presence in the defense sector, with an existing order book of ₹300 crores. A major initiative involves consolidating defense capabilities under HFCL Advance Systems Private Limited, including the acquisition of an aerospace business. This acquisition adds an export-oriented order book of ₹1,930 crores, bringing the total defense and aerospace order book to ₹2,230 crores, and provides entry into a high-entry-barrier segment with established capabilities.

Capitalizing on Data Center Demand and OFC Capacity Expansion

The global optical fiber market is experiencing a structural transformation driven by hyperscale data centers and AI, creating 100-150 million fiber kilometers of incremental demand. HFCL is positioned to capture this with advanced high-fiber count cables and data center interconnect solutions, expecting ₹400 crores in additional revenue from these solutions in FY27 and ₹800 crores in FY28. The company's optical fiber capacity is set to increase from 28 mn fkm to 33.9 mn fkm by December 2026, with capital capacity reaching 42.36 mn fkm by December 2026.

EPC Business Turnaround and Product-Led Growth

The EPC business, which faced losses due to warranty periods on an Army network contract and unbilled revenues, is expected to become profitable from Q2 FY27. This is anticipated as the Army contract converts to an AMC and unbilled revenues are recognized. Concurrently, the share of product-led revenues in the overall mix has increased significantly from 27% in FY21 to 62% in FY26, reflecting a successful transition towards a more margin-accretive model.

FY27 Outlook and Margin Expectations

For FY27, management expects revenue growth of 20-25% over FY26's ₹4949.27 crores. A 3-4% increase in blended margins is also anticipated, primarily driven by the shift to high-value products, the new preform facility, and the turnaround of the EPC business. This margin expansion is expected to commence from Q1 FY27, positioning the company for sustained profitability.

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