HFCL's m-cap crosses Rs 10,000 crore mark; stock zooms 86% in a month

Shares of HFCL (formerly known as Himachal Futuristic Communications Limited) continued their northward movement in Monday's trade as they surged 18 per cent to Rs 85.90 on the BSE in intra-day session on the back of heavy volumes. A combined 82.10 million shares had changed hands on the counter on the NSE and BSE till 10:59 am.

In the past month, the stock of the telecom cables manufacture has zoomed 86 per cent as compared to a 1.4 per cent rise in the S&P BSE Sensex. The scrip was trading at its highest level since February 2002. A sharp rally in the stock price has seen the market capitalisation of HFCL vault past the Rs 10,000 crore mark. Currently, HFCL's market capitalisation stood at Rs 10,969 crore on the BSE, the exchange data shows.

HFCL is a leading technology enterprise engaged in manufacturing of high-end transmission and access equipment, optical fibre, optical fibre cables (OFC) and specialises in setting up modern communication networks for telecom service providers, railways, defence, smart city and surveillance projects.

It is one of the largest telecom project service providers for Reliance Jio and is currently engaged in rolling out of 4G OFC Network services across Northern India. Apart from deploying networks in Punjab and Jharkhand, HFCL is also supplying fibre optic cables in Maharashtra, Telangana and Chhattisgarh under Bharat Net projects.

5G technology is the next big upgrade for telecommunication networks and HFCL is gearing up to offer various products, solutions and services for this segment. The capex required for 5G deployments on Pan India basis are likely to entail massive investments of around Rs 3,650 billion in the next 5-6 years, the company said in an investor presentation.

Open Radio Access Network (OpenRAN) architecture enable network operators to design and implement 4G and 5G networks by different equipment from different vendors leading to huge opportunities for the manufacturers. Under Bharat Net Phase II Project, Wi-Fi, infrastructure, electronics and optic networks bring out a Rs 40,000 crore opportunity. "The disruptions caused by COVID-19 pandemic have increased the demand for home and industrial IoT devices and applications. The Production Linked Incentive (PLI Scheme) by the Government to incentivize the indigenous telecom product manufacturers increases the profitability and competitiveness," the company said.

Meanwhile, the board of directors of HFCL is scheduled to meet on July 12, 2021, to consider and approve the un-audited financial results of the company for the first quarter ended June 30, 2021, of the financial year 2021-22 (Q1FY22).

For the January-March quarter of last fiscal (Q4FY21), HFCL reported an eight-fold jump in its consolidated profit after tax (PAT) at Rs 86.50 crore in the March quarter (Q4FY21). It had posted a PAT of Rs 8.7 crore in Q4FY20. On a sequential basis, the PAT grew 1.6 per cent from Rs 85.1 crore in Q3FY21. The company’s revenue from operations during the quarter under review more-than-doubled to Rs 1,391 crore from Rs 663 crore in the year-ago quarter. Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin improved 200 basis points (bps) to 13.5 per cent in Q4FY21 from 11.5 per cent in Q4FY20.