Why HFCL Share Price is Rising

The telecom industry is known for its rapid innovation and pivotal role in global connectivity, is experiencing significant growth.

This growth is driven by advancements in 5G technology, increasing data consumption, and expanding digital infrastructure.

Speaking of digital infrastructure, we have to talk about HFCL. The telecom company has established a strong position, benefiting from the rising demand for high-speed internet and advanced communication solutions.

HFCL is a prominent player in the telecommunications and technology sectors. It recently witnessed a remarkable surge in its share price. In the past month it rallied 23.8%.

Read on to know why.

#1 Exemption of Anti-Dumping Duty

On June 14, 2024, the European Commission announced that HFCL is the only Indian company not involved in dumping optical fiber cable (OFC) in European markets.

This decision comes alongside the establishment of provisional anti-dumping duties on all other Indian OFC manufacturers. As a result, HFCL stands alone as the sole Indian company exempt from these duties.

The company has a long history in Europe, having operated there for over a decade. It has built strong relationships with leading European telecommunication companies and internet service providers across multiple countries.

This positive development fueled a strong market reaction, with HFCL's share price opening 5% higher today.

Even before today HFCL share price was on a steady climb. In 2024 so far it is up 48.9%.

#2 Expansion in the European Markets

In a major move for global expansion, HFCL announced a new optical fiber cable (OFC) plant in Poland back in February 2024.

This marks a significant step for the company as it targets the growing demand for OFC in key European markets.

The initial Polish plant will have a production capacity of 3.3 million (m) fiber kilometers, scalable up to 7 m fiber kilometers, with an initial investment of Rs 1.4 billion (bn).

This strategic expansion aims to not only meet the rising demand for OFC but also enhance HFCL's agility. It will also reduce delivery times by up to six weeks, ultimately boosting its order fulfillment capacity.

The establishment of the manufacturing facility in Poland will be facilitated through the incorporation of a new stepdown subsidiary in Poland under HFCL B.V. It is a wholly-owned subsidiary of the company in the Netherlands.

To boost the export share of the OFC business and to capitalise on business opportunities, HFCL B.V. acquired 100% stake in Blue Diwali.

Consequently, Blue Diwali has become a wholly owned subsidiary of HFCL B.V. and also a step-down wholly owned subsidiary of HFCL.

#3 Innovation in Defense Products

Recently, HFCL announced a strategic move to solidify its presence in the defence sector. Through significant investment in R&D over the past five years, it developed a cutting-edge portfolio of defence electronic products.

These proprietary products not only address national security needs but also hold immense export potential. The portfolio includes electronic fuses, thermal weapon sights, ground surveillance radars, high-capacity radio relays, and more.

Additionally, the company is actively developing drone detection radar technology. Its expertise extends to artillery fuses for various calibers. It has successfully completed user trials for the Indian Army's BMP Infantry Combat Vehicle upgrade project.

Its subsidiary, HTL, has already secured contracts with defence public sector undertakings (PSUs) to supply wiring harnesses for military vehicles and equipment.

With India's position as the world's third-largest military spender, fuelled by government initiatives to modernise defence systems, the addressable market for these technologies is vast, reaching multiple billions of dollars.

Leveraging its robust R&D capabilities, the company aims to capture a significant share of this market, both domestically and internationally.

The current product line alone represents a potential market exceeding US$ 10 bn. To further strengthen its position, the company is constructing a state-of-the-art manufacturing facility dedicated to defence products in Hyderabad.

#4 Big Order Win

HFCL capped off a strong Q4 FY24 with a series of impressive order wins that solidifies its position as a key player in the Indian telecom sector.

First, it secured a landmark order Rs 11.3 bn to revolutionise BSNL's Optical Transport Network. This win highlights its expertise and technological capabilities in building robust communication infrastructure.

Second, it emerged as a frontrunner in the country's 5G rollout by becoming the first Indian company to secure an order worth Rs. 6.2 bn for indigenously manufactured 5G networking equipment.

This achievement demonstrates its commitment to domestic innovation and positions them to capitalise on the growing demand for next-generation technologies.

Finally, the company further strengthened its partnership with BSNL by bagging a purchase order worth Rs 1.4 bn to supply UBRs and other associated services. This continued collaboration reinforces its established presence in the Indian telecom market.

What Next?

As on 31 March 2024, HFCL had a strong order Book of Rs 76.9 bn. Its orders are diversified across telecom, defense, and railways which provides strong revenue visibility.

The company set ambitious 2027 goals for revenue, profitability, and market presence. It has a strategic roadmap in place to achieve Rs 90-100 bn revenue range by boosting efficiency and expanding reach.

Key strategic initiatives include advancing its technology prowess in the telecommunications sector, particularly in 5G and 6G products, to capitalise on emerging market demands.

To diversify revenue and boost profitability, the company is shifting from project-based work to a product-led model. This aims to streamline operations, reduce working capital needs, accelerate revenue collection, and increase profit margins.

Its subsidiaries in key global markets like the USA, Canada, and the Netherlands demonstrate its commitment to expanding global market penetration and product marketing capabilities.

It also has plans to strengthen its European presence and growth strategy. It aims to leverage its tech and market expertise to capitalise on strong demand from global telecom service providers.

Along with all this it's targeting the defence segment, aiming for 10-15% of total revenue by FY27. This strategic focus includes both domestic and international defence opportunities, aligning with its plan to diversify revenue streams and achieve sustainable growth.

Investors should note that the success of these initiatives hinges on factors like execution, market competition, and overall economic conditions.

How HFCL Share Price has Performed Recently

In the past five days, HFCL share price has rallied 26.8%. In the last month, it is up 23.8%.

In 2024, so far its share price has rallied 47.1% and its up 81.6% in the last year.

The stock touched its 52-week high of Rs 129 on 18 June 2024 and a 52-week low of Rs 61.5 on 26 October 2023.

About HFCL

HFCL (formerly known as Himachal Futuristic Communications Limited) is a publicly listed telecom company incorporated in India.

It has been in operation since 1987 and is into various segments of manufacturing, research and development (R&D) and turnkey solutions.

Ever since its inception, the company has entered various streams of hardware integration in telecommunications.

The company's manufacturing facilities are located at Solan in Himachal Pradesh, Salcete in Goa, and New Delhi.

It is geared up for meeting the new generation access network demand in future.

For more details about the company, you can have a look at HFCL factsheet and quarterly results on our website.

You can also compare HFCL with its peers.

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