HBL Power extends rally on healthy outlook; stock zooms 31% in 4 days

Shares of HBL Power Systems hit a new high of Rs 121.50 as they rallied 6 per cent on the BSE in Monday’s intra-day trades, on the back of heavy volumes in an otherwise weak market, on healthy outlook. The stock was trading higher for the fourth straight days, and has zoomed 31 per cent during the period.

In comparison, the S&P BSE Sensex was down 1.3 per cent at 57,432 at 10:14 AM. The average traded volumes at the counter jumped 1.5 times with a combined 1.68 million equity shares changing hands on the NSE and BSE.

HBL focuses on creating technology-solutions that address key user sectors such as telecom, UPS, railways, power, oil & gas, industries, and defence, among other.

In the past six months, the stock surged 82 per cent, as compared to 3.4 per cent decline in the S&P BSE Sensex. Further, in past one year, the stock has more-than-doubled or up 136 per cent , as against 4.4 per cent fall in the benchmark index.

In FY21, HBL had reported a healthy improvement in business performance. Revenue from operations increased by 34 per cent from Rs 909 crore in FY21 to Rs 1,221 crore in FY22, the pre-covid levels. EBITDA more than doubled from Rs 72 crore in FY21 to Rs 160 crore in FY22. EBITDA margin stood at 12 per cent in FY22 against 9 per cent in FY21.

The management said the company’s overall business continues to transform in favour of better-margin portfolios. The electronics and defence verticals are high margin spaces. “We believe that these verticals will report a growth over the coming years owing to recent product approvals, order flows, export opportunities and new avenues. Our battery vertical comprises a combination of decent and low margin segments. The NCPP and PLT batteries, generate healthy returns. The lead-acid battery space has become commoditized and hence competitive. Barring unforeseen adversities, we expect the result of our efforts to yield healthy returns in the next 3-4 years,” HBL said in its FY22 annual report.

Meanwhile, in September, HBL won multiple contracts for supply of Kavach (Train Collision Avoidance System). HBL along with Siemens has signed the first contract under Mission Raftar project, with Eastern Railway for deployment of Kavach. Kavach (TVAS-Train Collision Avoidance System) involves over 260 km of track and 120 locomotives from Howrah to Pradhankhanta. The contract is valued Rs 286.69 crore, of which HBL’s work share is Rs 205.88 crore. The contract is scheduled for completion in 700 days.

The company’s electronics vertical is expected to emerge as the key business and profitability driver over the coming years. Indian Railways have announced their plan to deploy Kavach over 34,368 km of track, covering high density and highly utilised routes, targeting the completion of this ambitious plan by 2026.

The other major opportunity for Kavach (TCAS) is Vande Bharat Trains (Train 18), another flagship project of the Indian Railways. The Railways has decided to equip all new Vande Bharat Trains being produced with TCAS on board in the railway factory itself. HBL has received an order for 46 TCAS systems to be installed on new Vande Bharat Trains being produced at ICF for which deliveries are scheduled in the second half of FY23.