HFCL Share Price Analysis: All You Need to Know

Himachal Futuristic Communications Limited (HFCL) is a leading optical fiber cable manufacturer in India, and its recent foray into defense manufacturing has attracted interest from many investors. HFCL share price, a small-cap stock, has also surged in the last five years and has multiplied investors’ wealth by over 10 times. 

But, the valuation concerns in small-cap stocks and uncertainty in the market due to geopolitics have impacted HFCL’s share price growth. The stock has corrected by almost 50% in the last six months. 

In this article, we will check out the future growth potential of HFCL share price and the overall business using several metrics. So, let’s start.

HFCL Business Overview

HFCL is primarily a telecom equipment manufacturing company. It deals in Fibre and Fibre Optic Cables, Routers, Wi-Fi access Points, Antennas, Network Management Solutions, and other Passive Networking Components.

The company was incorporated in 1987 and has played a crucial role in the expansion of 2G, 3G, 4G mobile networks in India over the years. A turnaround moment for the company came in 2021, when Reliance invested ₹138 crore in the company’s QIP, taking up a 5% stake. 

HFCL’s core business is divided into three segments- Public Communication, Railway Communication, and Defence Communication.

It is India’s number one optic fiber cable supplier, manufacturing over 14 million KM of optic fibre with five state-of-the-art manufacturing facilities and R&D centres. 

HFCL Management Team

Mr. Mahendra Nahata is the founder and managing director of HFCL and leads the company’s planning, execution, and operational strategies. An experienced and skilled leader in the telecom industry, Mr Nahata has served on the Board of Governors of many prestigious institutions like IIT-Bombay, IIT-Madras, and IIIT-Allahabad. He has majored in commerce at St. Xavier’s College, Kolkata. 

Mr. V.R. Jain is the company’s chief financial officer. He is a qualified chartered accountant and company secretary. He has vast experience in financial management and controls, managing and raising funds for business expansion, policy formulation, and many other areas of finance. Mr Jain has previously worked with Gujarat Heavy Chemicals Ltd. and TransAsia Carpets Limited. 

Mr. Harsh Pagay is Executive Vice President, leading the company’s  Optical Fiber (OF) and Optical Fiber Cables (OFC) business. He did his MBA from ICFAI Hyderabad and a B.Tech from MITS Gwalior, and before joining HFCL, he was with Teracom Limited as its CEO.

Mr. Jitendra Singh Chaudhary is the Executive President of communications and is responsible for the growth of the communication business, including Defense and railways. He is a PGDM holder from IIM, Calcutta, and a B.Tech from MMM Engineering College, Gorakhpur.

HFCL Shareholding Pattern

Quant Mutual Fund holds an 8.30% stake in the domestic institution segment, and Reliance has reduced its stake to 1.57%.

The promoters have pledged their shares, and at the end of December 2024, 47% of their stake is pledged. These have been running since 2021 and were used as collateral to secure credit facilities from lenders. 

HFCL Financials

Total Income

HFCL’s revenue in FY24 declined 4.6% year-on-year to ₹4,566 crores from ₹4,790 crores. 

And, for the period 9MFY25 (April to December 2024), the revenue increased slightly by 2.8% to ₹3,308 crores from ₹3,216 crores recorded in the previous year. 

Nearly 97% of the revenue is derived from the telecom segment, 2% from Railways, and 1%Defenseefense. 

Revenue Share Mix

The company’s revenue share from private customers in FY24 was 74%, which declined to 60%. Due to higher inflows of government orders recently, revenue from government orders are increasing. 

Second, the share of exports in revenue is hovering around 11%.

And, third, in FY24, product led revenue share has been 42%, in CY24, it has increased to 57%. The remaining share is coming from projects like EPC services. 

EBITDA

Despite the slight decrease in revenue in FY24, the company’s EBITDA has increased by 2.4%. And, in 9MFY25, EBITDA rose by nearly 12% to 529.08 crores. 

In FY24, the company’s EBITDA margin improved to 15.28% from 14.04% in FY23. And, for the 9MFY25, it further increased to 16.21%, highlighting operational efficiency. 

Net Profit

In FY24, the company’s net profit rose 6% to ₹337.52 crores. And, profit during the period 9MFY25 was ₹256.56 crores, increasing by 12.45% from ₹228.16 crores. 

PAT Margin in FY24 was 7.56%, rising from 6.70% in FY23. And, for 9MFY25, the PAT margin improved slightly to 7.86%. 

Key Financial Metrics

Current Ratio: The current ratio of HFCL improved marginally to 2.04 times in FY24 from 1.94 times in FY23.

Debt-to-equity Ratio: The debt-to-equity ratio was stable at 0.20 times in FY24, while the debt service coverage ratio improved by 12% to 7.22%. 

Return on Equity (ROE): The ROE of the company increased slightly to 9.09 times in FY24 from 8.90 times in FY23. 

Return on Capital Employed (ROCE): The ROCE of the company slightly declined by 3.45% to 14.85%, from 15.36% in FY23. 

Other Important Metrics

Order Book

At the end of December 2024, the company’s outstanding order book stood at ₹10,410 crores. It was ₹6,151 crores at the end of September 2024. 

As seen in the image below, a large part of the order book consists of government orders under the Bharat Net program. 

R&D Capabilities

HFCL has three state-of-the-art R&D centers in Bengaluru, Hyderabad, and Gurugram, with a team strength of 380 employees and around 10% of the total employees in the market. At the end of FY24, the total number of employees in the company was 3,547.

Now, looking at the R&D spending trend of the company, it has nearly tripled its expenses towards it from ₹89 crore in FY22 to ₹233 crore in FY24.

Period	FY22	FY23	FY24
R&D expenditure as a percentage of total turnover	2.06%	4.03%	5.72%

HFCL Share Price Analysis

HFCL share price has underperformed the broader market and has lost nearly half its value in the last six months. However, if you look at the previous five years’ price action of HFCL share price, it is still a multi-bagger stock. It was a penny stock trading around ₹10 on 24th April 2020. As of 9th April 2025, the stock’s current value is ₹74.3 and has a market cap of ₹11,000 crores. HFCL share price reached an all-time high level of ₹171. 

The stock has a dividend payment history but has been on the lower side. At a current market price of ₹74.3, the dividend yield of HFCL is 0.27%. In FY24, it paid ₹0.20 per share as a dividend to shareholders. 

HFCL Share Price Valuation Metrics

Earnings Per Share (EPS)

The company’s EPS has improved over the last five years but has stagnated over the last three years, which has impacted HFCL’s share price growth. 

Period	FY20	FY21	FY22	FY23	FY24	9MFY25
EPS (₹)	1.77	1.86	2.27	2.18	2.29	1.79

Price-to-Book Value (P/B Ratio)

As of 9th April 2025, HCL share price is trading with a price-to-book value of 2.6 times. The median 5-year Price-to-book value is 3.6 times, indicating the stock is trading below the 5-year median P/B ratio. 

The stock’s P/B ratio has declined from the peak of 6.8 times, recorded in September 2024. 

Price-to-Equity Ratio (PE Ratio)

As of 9th April 2025, HFCL share price is trading at a current PE of 29.3 times, which means that for every ₹1 of earnings, you are paying ₹29.3 as a premium. The 5-year median PE of the HFCL share price is 31 times, which means the stock is trading at a discount over a long duration.

The stock PE has fallen from 62.5 times, recorded in September 2024. 

HFCL Share Price What’s Next

HFCL’s share price has struggled for the last few months due to stagnated revenue, profit growth, and a sell-off in small-cap stocks. However, the company is well poised to capture growth because of the steps taken in the last few years.

• HFCL’s entry into the defense business segment is a big boost for the company, and it has signed multiple contracts with the Indian armed forces. 

• The company has invested significantly in ramping up its R&D efforts to drive innovation. R&D spending has tripled in the last three years. The company slowly migrates from project-led to product-led revenue growth to lower working capital requirements and drive margin expansion.

• The company’s order book stands strong at more than ₹10,000 crore, however, concentration of government orders can be a risk. Driven by defense business and global expansion, the company aims to become a ₹10,000 crore revenue enterprise.

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