HFCL (HFCL) Q2 24/25 earnings summary

Executive summary

• The company is leveraging India's digital infrastructure growth, with strong opportunities in telecom, defense, and international markets, and has entered a strategic partnership with General Atomics for advanced UAV sub-systems.

• New product launches in unlicensed band radio, advanced broadband gateways, and defense products highlight ongoing innovation and margin-accretive growth.

• Delivered one of the world's largest CUPS-based broadband network gateways for BSNL, supporting BharatNet expansion.

• Maintained steady performance despite global softness in optic fiber cable demand and monsoon-related execution delays, with early signs of recovery and increased global enquiries.

• The order book stands at INR 6,151 crores, with a significant portion to be executed in the next 12-18 months.

Financial highlights

• Q2 FY25 consolidated revenue was INR 1,094 crores, down from INR 1,158 crores in Q1 FY25 and up from INR 1,111 crores in Q2 FY24; H1FY25 revenue reached INR 2,251.85 crores, up 6.89% year-over-year.

• Q2 FY25 EBITDA was INR 172 crores with a margin of 15.71%; H1FY25 EBITDA was INR 357.19 crores, margin 15.86%.

• Q2 FY25 PAT was INR 73 crores, down from INR 111 crores in Q1 FY25 but up from INR 70 crores in Q2 FY24; H1FY25 PAT stood at INR 183.98 crores, up 26.25% year-over-year.

• Q2 FY25 EPS was INR 0.51 (basic and diluted), up from INR 0.50 in Q2 FY24.

• Total assets as of September 30, 2024, were INR 7,522.03 crores (consolidated), up from INR 6,486.83 crores as of March 31, 2024.

Outlook and guidance

• Management expects fiber optic cable demand to recover from the next quarter, with overall growth on track except for the fiber segment.

• Revenue target of INR 10,000 crores in three years remains, with export revenue expected to reach up to 70% of optical fiber segment and 40-50% of telecom segment.

• Margin guidance for FY25 is stable at current levels, with potential for slight improvement as product revenue and backward integration increase.

• Deferred tax asset recognized on unabsorbed capital losses, indicating management's confidence in future taxable profits.