HFCL Ltd shares experienced a 3.88% decline to trade at ₹215 on Thursday, June 29, 2026, marking a contrast to the stock's exceptional performance over recent weeks. According to The Financial Express, the stock has demonstrated remarkable momentum with a 268% surge from its 52-week low of ₹59.83 recorded on January 23, 2026, reaching a record high of ₹220.10 on June 22, 2026. The current trading session saw 2.4 lakh shares traded compared with average daily volumes of 26.45 lakh shares in the past month. The stock has delivered multibagger returns of 202% over the last three months and 146% over one year, significantly outperforming the 1.5% gain in the BSE Telecommunication index and 3.05% rise in the SENSEX. The BSE Telecommunication index is currently down 0.67% to 3615.08, with other sector constituents Sterlite Technologies Ltd decreasing 2.08% and Bharti Hexacom Ltd losing 1.45% on the day.
The stock's strong performance has been supported by significant contract wins from Rail Vikas Nigam Ltd (RVNL). On June 17, HFCL announced securing a ₹2,666.09 crore contract for the BharatNet Phase-3 project in the Uttar Pradesh (West) telecom circle. According to the company's regulatory filing, the project involves supplying telecom equipment and related accessories, establishing an optical fibre cable telecom network, carrying out installation and commissioning work, and undertaking maintenance responsibilities. The total contract value of ₹2,666.09 crore comprises capital expenditure of ₹1,192.82 crore and operational expenditure of ₹1,473.27 crore, with the project including a one-year warranty, followed by 24 months of maintenance and 10 years of operation and maintenance services. This contract is in addition to the earlier contract of ₹2,167.65 crore awarded to the Company by RVNL for BharatNet Phase-III projects in the Uttar Pradesh (East) and Uttar Pradesh (West) telecom circles, which was intimated to the stock exchanges on January 23, 2025. The recent analysis shows that HFCL received a purchase order worth ₹135.09 crore from RailTel Corporation of India for the annual maintenance contract of the "Implementation of Secure Operations (OPS) Network" for data centres of the Indian defence forces, demonstrating strong business fundamentals supporting the stock's exceptional performance trajectory.
The stock's remarkable rally reflects a fundamental business transformation from an EPC contractor to a product-focused technology company. According to The Financial Express, product revenue has grown from 27% of total revenue in FY21 to 62% in FY26, while exports have moved from less than 5% to over 41% in the same period. Management has successfully shifted the business mix toward higher-margin products and reduced government exposure, with private customers now contributing the majority of revenues. The company operates across optical fibre, optical fibre cables, telecom networking equipment, broadband access solutions, defence communication systems and railway communication products. In Q4 FY26, HFCL delivered ₹337 crore EBITDA with 18.5% margins and ₹184 crore PAT, representing a dramatic turnaround from the ₹22 crore EBITDA loss and ₹83 crore net loss in Q4 FY25. This shift toward product-led business has supported overall profitability with product businesses generally carrying higher margins than EPC execution.
HFCL closed FY26 with an order book of ₹21,206 crore - the highest in company history and nearly three times the ₹7,010 crore reported in FY23. As per The Financial Express, ₹14,586 crore relates to products rather than EPC execution, with exports accounting for approximately 58% of the total. The centrepiece is a long-term global optical fibre cable supply contract worth ₹10,159 crore with execution expected to begin in FY27. Beyond telecom, defence is becoming a second growth engine with the existing order book covering thermal weapon sights, radar systems, tactical communication systems and specialised defence cables. The proposed aerospace acquisition through HFCL Advance Systems adds manufacturing capability and export-oriented business. Management expects defence to contribute around 10-12% of FY27 revenues with margins expected to remain higher than several traditional telecom segments. The company has also received technology transfer from DRDO for the Multi Mode Hand Grenade programme, opening another avenue within the defence ecosystem.
Despite the operational improvements, the stock trades at approximately 103 times trailing earnings - more than double its three-year median P/E of 49 times and well above the telecom equipment industry average of approximately 15 times. According to The Financial Express, price to book stands at 6.7 times against an industry average of 2.6 times, while EV/EBITDA has expanded to over 41 times. The return on capital employed (ROCE) has improved to 10.9% but remains below leading capital goods and technology manufacturers, with return on equity (ROE) at approximately 7% indicating further profitability improvement is needed. A key concern is that operating cash flow and free cash flow remained negative in FY26, reflecting working capital requirements and ongoing capex. Management expects FY27 revenue growth of 20-25% with further margin improvement if product mix remains favourable, while the medium-term aspiration is ₹10,000 crore revenue by FY29 with EBITDA margins approaching 20-21%. However, execution risks remain significant, including potential delays in the ₹1.1 billion export contract, Army AMC contract delays, and the preform facility commissioning in FY28-FY29.
