HFCL FY26: Exports, high‑density fibre demand, and a bigger order book

HFCL closed FY26 with a sharp improvement in scale and profitability, helped by a better mix and a strong Q4 finish. Consolidated revenue from operations was ₹4,949.27 crore versus ₹4,064.52 crore in FY25. EBITDA rose to ₹826.75 crore, taking EBITDA margin to 16.70% from 12.47% in FY25. Profit after tax was ₹329.44 crore compared with ₹173.26 crore a year earlier.

The March quarter captured the shift most clearly. Q4 FY26 revenue from operations jumped to ₹1,824.12 crore from ₹800.72 crore in Q4 FY25. EBITDA was ₹336.93 crore and PAT was ₹184.45 crore, with a 10.11% PAT margin. Management described FY26 as a milestone year where higher product share, export growth, and execution across segments converged into a record quarter and record year.

A business model that is changing its centre of gravity

Across the presentation and the earnings call, HFCL’s core message is that the company is moving away from low-margin turnkey work towards products and exports. The company reported that products were 62% of revenues in FY26, up from 42% in FY24. Private customers contributed 84% of revenue in FY26, compared with 65% in FY25. Export revenue share rose to 41% in FY26, up from 12% in FY25.

Management framed this as a structural shift rather than a tactical response. The investor deck links demand for high-fibre-count cables to AI data centres and hyperscaler expansion, and it argues that speciality cables tighten effective supply because of lower conversion efficiency. In the call, management said realisations have improved significantly and should be progressively reflected in margins over the coming quarters.

Financial snapshot

OFC is the engine, but the story is increasingly about value

HFCL positions its optical fibre cable business as central to the next growth phase. The presentation highlights a total order book of ₹13,483 crore for OFC, OF and connectivity solutions, including ₹12,248 crore of export orders. It also calls out the company’s single largest multi‑year export OFC order of ₹10,159 crore (about USD 1.1 billion), with a five‑year execution horizon.

On the call, management said the USD 1.1 billion order is expected to start executing towards the end of Q1 FY27. It also stated that more than 70% of cable production is being exported today. HFCL did not provide a simple average realisation per fibre kilometre because the product set has expanded across very different fibre counts and constructions, but management indicated Q4 price movement for them was more than 15% to 20%.

Capacity is being expanded to support the demand environment. The investor deck says OFC capacity is 34 mn fkm p.a. and is expected to expand to about 42.3 to 43 mn fkm by June 2026. Management reiterated that the 34 mn fkm capacity is being scaled in phases and is expected to reach about 39 mn fkm by July 2026 and about 42.36 mn fkm by December 2026.

Alongside cable, HFCL is scaling in data centre adjacencies. Management highlighted data centre interconnect solutions such as pre‑connectorised systems and said these are becoming increasingly important for high‑density AI deployments. It stated that the company is increasing manufacturing capacity for these solutions on a multi‑fold basis in subsidiary HTL, and it expects these interconnect solutions to add about ₹400 crore of revenue in FY27 and about ₹800 crore in FY28.

Backward integration into preform: supply security with a margin lever

A key strategic initiative is the planned preform manufacturing facility. HFCL stated capex of about ₹580 crore, funded through a mix of internal accruals, debt, and equity. The investor deck also lists a preform project capacity of 310 MT per annum by July 2029.

Management’s rationale in the call was twofold. First, control over availability matters because the company’s preform requirement is about 1,000 tons per year, and any supply disruption would hit fibre and cable production. Second, management said make-versus-buy analysis suggests a 15% to 20% reduction in the cost of preform for the volumes produced in-house. The near-term trade-off is time. Management indicated the preform project will take at least two years to come on stream.

Defence is being positioned as a second growth pillar

HFCL’s defence business is being reorganised and expanded. The presentation shows a defence order book of about ₹2,230 crore, including about ₹1,930 crore of export orders via the proposed aerospace business being acquired. In the call, management clarified that the existing defence order book is about ₹300 crore, and the figure rises to about ₹2,230 crore when the aerospace business is included.

The proposed acquisition is being consolidated under HFCL Advance Systems Private Limited (HASPL). Management said definitive agreements are expected to be executed on or before 31 May 2026, with closing expected within the current calendar year. The rationale described is that aerospace has high entry barriers, long approval cycles, and limited qualified suppliers, and acquiring an already-qualified business shortens time-to-scale.

The company is also developing a large defence manufacturing footprint. The deck mentions 1,000 acres land allocated for a defence facility in Andhra Pradesh with a ground-breaking ceremony on 15 May 2026. Management described an ammunition-focused facility for electronic fuzes, multi-mode hand grenades, and 155 mm artillery shells. For the Andhra facility, management said FY27 capex budgeting includes about ₹125 crore (including land and building), with another roughly ₹250 crore over the next two years.

EPC and O&M: a profitability reset is expected, but timing matters

While products and exports are growing, EPC has been a source of pressure. Management acknowledged that EPC losses in recent quarters were largely due to an Army network project in its warranty period, where HFCL incurred costs but did not receive revenue. The company expects an AMC contract with the Army to be signed, which management said could generate about ₹170 crore per year and offset the warranty-related drag.

Management also stated it has started executing BharatNet-type EPC projects where it expects profitability as billing begins. However, it also indicated EPC profitability improvement may become more visible from the second quarter onward in the current financial year.

What management expects next

HFCL avoided giving a hard revenue number for FY27 but repeatedly stated an expectation of 20% to 25% revenue growth over FY26. It also stated an expectation of 3% to 4% improvement in blended margins in FY27, driven by better product realisations, higher value-added mix, and a reduction in turnkey losses as the Army AMC comes through.

Capex expectations were stated at about ₹600 crore for FY27 and about ₹350 crore for FY28.

Takeaways for investors

HFCL’s FY26 results show that the company’s mix shift is already visible in reported margins and in the scale of exports. The order book at ₹21,206 crore provides multi-year visibility, and management is clearly leaning into high-density fibre and data centre-driven demand.

The next 12 months will likely be shaped by three execution items that management itself highlighted: ramp-up of the USD 1.1 billion export contract, progress on data centre interconnect solutions at HTL, and whether EPC losses fade as the Army AMC is signed and BharatNet billing accelerates. The longer cycle bet is the preform project, which management says should improve structural competitiveness but will take time to commission.