HFCL Ltd (HFCL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (Nuvama Institutional Equities): Ladies and gentlemen, good day, and welcome to the HFCL Limited Q2 FY '27 Earnings Conference Call, hosted by Nuvama Institutional Equities. Before we begin, I would also like to read the disclaimer statement. Statements made during this call may be forward-looking in nature based on management's current beliefs and expectations. They must be viewed in relation to the risks that HFCL's business faces.
Moderator (Nuvama Institutional Equities): cause its future results, performance, or achievements to differ significantly from what is expressed or implied by such forward-looking statements. Investors are, therefore, requested to check the information independently before making any investment or other decisions. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Achal Lohade from Nuvama Institutional Equities. Thank you, and over to you, sir.
Achal Lohade (Nuvama Institutional Equities): Yes, thank you. Good afternoon everyone. On behalf of Nuvama Institutional Equities, we are glad to host the senior management of HFCL Limited. To discuss the Q2 FY27 earnings, we have with us Mr. Mahendra Nahata, Promoter and Managing Director; Mr. V. R. Jain, CFO; Mr. Manoj Baid, Company Secretary, and Mr. Amit Agarwal, Head - Investor Relations. We'll start the call with the opening remarks from the management and then move to Q&A session. Thank you and over to you, sir.
Mahendra Nahata (HFCL Ltd): Thank you, Achal. This is Mahendra Nahata, Managing Director of the company. Good evening to all of you, ladies and gentlemen. I extend a very warm welcome to all of you on HFCL's earnings call for the second quarter and half year ended September 30th, 2026, of the financial year 2026-27. I trust you have had a opportunity to review the financial results, press release, and investor presentation which have been uploaded on the company's website as well as on the websites of the stock exchanges. It is my privilege to present the best ever quarterly performance in HFCL's history that marks a defining moment in our growth journey. These results reflect the increasing scale, strength, and momentum of our business and reinforce our confidence in HFCL's ability to deliver sustained growth and create enduring value for our stakeholders. Let me begin with our outstanding performance for the second quarter and first half of FY27. Both profit before tax and profit after tax grew more than five-fold over the same period last year. Consolidated profit before tax in quarter two of FY27 reached to 538.60 crores as compared to 106.34 crores in Q2 of FY26, rising 406.49% year-on-year and 62.46% quarter-on-quarter. Consolidated profit after tax in Q2 of FY27 rose to 394.22 crores as compared to 71.92 crores in Q2 of FY26, an increase of 448.14% year-on-year and 60.49% quarter-on-quarter basis. On half-yearly basis, the PBT grew from 61.64 crores to 870.12 crores, up by 1,311.62%, while PAT grew from 42.62 crores to 639.86 crores, up by 1,401.31%. Consolidated revenue surged to 2,541.79 crores, increase increasing by approximately 143.62% year-on-year and by 32.73% over the previous quarter. EBITDA increased to 658 crore, delivering growth of 223.55% on year-on-year and 47.78% quarter-on-quarter. Equally significant, EBITDA margin expanded to 25.89%, improving by 640 basis points year-on-year and 264 basis points quarter-on-quarter, while PAT margin rose to 15.51%, gaining 862 basis points over year-on-year and 268 basis points over previous quarter. Together, these numbers demonstrate the strength of our operating model and ability to translate rapid growth into sustainably higher profitability. The momentum we are witnessing today
Mahendra Nahata (HFCL Ltd): reflects the strategic initiatives taken and investments made by the company. We invested ahead of the curve in capabilities, capacity enhancement, backward integration, development of world-class technology products, and global market access with a clear focus on building a stronger and more scalable business. These initiatives are now translating into meaningful business growth, which is also reflected in our export performance, representing a growth of approximately 493% year on year. More significantly, a growing business visibility across these strategic initiatives gives us strong confidence in our journey ahead. I want to assure you that HFCL is on track to maintain a growth trajectory of revenue and profitability ahead. Our focus is on sustaining the pace of execution and translating the opportunity into continued strong performance. Our order book stands at Rs 28,900 crore, providing multiyear revenue visibility. Beyond this secured business, we also have a strong pipeline of orders and advanced stages likely to be converted into firm contracts in due course. Friends, I want to emphasize that we do not see this quarter as a peak, but as the sustained phase of strong growth. Our confidence rests on robust order book, strong pipeline, and long-term customer programs. Our customers include some of the world's largest, financially strong technology companies with demand anchored in long-term agreements and firm commitments. As the pipeline converts converts into orders, we expect our order book to strengthen further. These relationships together with our capacity expansion and growing share of advanced optical connectivity products gives us strong visibility and confidence in sustaining and building on the current revenue and profitability trajectory. Demand continues to accelerate across the infrastructure, hyperscale data centers, and telecom networks. Encouragingly, opportunities with hyperscalers and telecom operators across international markets are steadily converting into firm contracts, strengthening our order pipeline and providing revenue visibility for long term. Our sustained investments in technology, customer relationships, and manufacturing capacity position HFCL strongly to capture this long-term growth opportunity. Friends, you will recall that we began FY27 with the revenue growth aspiration of approximately 20% over FY26. After the first quarter, I revised it to 40%. And today, when I present Q2 FY27 results to you, I'm extremely pleased to share that based on our current expectations and business visibility, we expect revenue growth of at least 80% in this financial year. 20 to 40, 40 to 80. We had envisaged achieving 10,000 crore revenue by FY29. Given the momentum we are seeing, I would not be surprised if we reach this milestone much before that. Friends, to support the next phase, our planned investment of approximately 1,800 crores across optical fiber, optical fiber cable, and preform manufacturing will expand capacities and deepen integration. Our advanced cable portfolio and data center connectivity capabilities are also progressing well, strengthening our ability to serve customers as their requirements grow. Let me now turn to defense and aerospace sector, which we see as HFCL's next major engine of growth. We are very excited by the long-term opportunity in this business. Years of investment in indigenous technology products, product development, and qualification have created a platform that we are now translating into orders and deliveries. Our portfolio spans thermal weapon sights, surveillance radars, electronic fuzes, and multimode hand grenades. In September, we successfully delivered the second batch of thermal weapon sights for AK-203 rifles to the Indian Defense Forces. We expect to complete the acquisition during the current quarter
Mahendra Nahata (HFCL Ltd): Aerospace business. Importantly, the Aerospace business being acquired already has executed order book of approximately 1600 crores providing good visibility from the outset. At the same time, our ambition in this sector extend well beyond this acquisition, and we are actively working on several other large opportunities. We remain on track towards our aspiration of approximately Rs 500 crore of defense revenue in FY '27. We are also setting up an ammunition manufacturing complex in state of Andhra Pradesh. As I have already informed you, that government of Andhra Pradesh has already allotted us 1,000 acre of land parcel to set up this complex. Construction of this site will start soon. Together with the ongoing aerospace acquisition will further strengthen our defense and aerospace platform. With a strong pipeline, expanding capabilities and increasing business visibility, we are confident that defense and aerospace can emerge as a sustainably larger contributor to the company's growth in the coming years. Friends, let me close with conviction. We believe both optical fiber cable, connectivity solutions, defense and aerospace business are on the cusp of enormous growth. In optical fiber cable, continuing demand, a strong order book, and the pipeline and deeper backward integration support our confidence. In defense, our capabilities, deliveries, and strong pipeline are building the next leg of growth. We expect this growth momentum to continue. The opportunity we see extends over the next 6 to 7 years and beyond. We are determined to convert it into sustained revenue growth, stronger profitability, and lasting value for all our stakeholders. Thank you very much for your continued trust in HFCL. I wish you you and your families a very happy Dussehra and a very prosperous Diwali. We all now be happy to take your questions. Thank you very much, ladies and gentlemen, for sparing your time to joining this earnings call of HFCL.
Moderator (Nuvama Institutional Equities): Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Pranav Kshatriya with Emkay. Please go ahead.
Pranav Kshatriya (Emkay): Hello?
Mahendra Nahata (HFCL Ltd): Yeah. Please go ahead.
Pranav Kshatriya (Emkay): Yeah, thanks for the opportunity. And congratulations on a good set of numbers. I have two questions. First question is that your presentation mentions that you have around 18.5 thousand crore rupees of book for OFC and data center interconnect. Wanted to understand, you know, how much of that is coming from hyperscalers, and is there any concentration to specific hyperscaler in this order book? Wanted to get a customer, you know, risk profile, if at all it is there.
Mahendra Nahata (HFCL Ltd): Well, Pranav, I can't obviously give you the customer names and profile, that being confident and under NDA. But out of 18,500 crore, large portion would be from hyperscalers only, large portion. I don't have the exact number, but yeah, maybe 70%, maybe 70% would be from hyperscalers of the export order, of the export orders. Now the indigenous, local orders are from telcos, mostly from telcos. Data centers are yet to pick up in India. As they pick up, we will be supplying to them also.
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