HFCL Q3 Results: Net Profit Surges 41% to Rs 102 Crore as Order Book Hits Rs 11,125 Crore

HFCL Limited has announced its financial results for the third quarter of the fiscal year 2026, demonstrating significant growth in both top-line and bottom-line metrics. The company reported a consolidated net profit of Rs 102.37 crore, representing a 41.04 percent increase compared to the same period in the previous financial year. This growth was supported by a 19.65 percent rise in revenue from operations, which reached Rs 1,210.79 crore. The results reflect the company's successful execution of its strategic priorities, particularly in the areas of exports and high-margin product sales. The stock responded positively to the news, reflecting investor confidence in the company's long-term growth trajectory and operational improvements.

Financial Performance Overview

The company's financial performance in the December quarter was characterized by strong growth across all key parameters. Revenue from operations stood at Rs 1,210.79 crore, up from Rs 1,012 crore in the corresponding quarter of the previous year. This 19.65 percent increase was driven by steady execution in the telecom and networking businesses. Profit before tax also saw a significant rise, reaching Rs 138.11 crore, a 37.75 percent jump from Rs 100.26 crore in Q3 FY25. These figures indicate that HFCL is successfully navigating the competitive landscape while scaling its operations effectively. The company's ability to maintain growth in a dynamic market environment underscores its resilient business model and strategic focus on high-growth segments.

Operational Efficiency and Margin Expansion

Operational performance strengthened materially during the quarter, with EBITDA climbing 41.67 percent year-on-year to Rs 243.52 crore. The EBITDA margin expanded by 312 basis points to reach 20.11 percent, up from 16.99 percent in the previous year. This expansion reflects tighter cost control, improved operating leverage, and a more favorable product mix. The company has been consciously shifting its focus toward high-margin products, which has directly contributed to the bottom-line growth. This level of profitability is a testament to the company's operational excellence and its ability to extract higher value from its manufacturing and service capabilities. The management's focus on efficiency is clearly yielding results in the form of superior margins.

Robust Order Book and Revenue Visibility

As of December 31, 2025, HFCL's order book stood at a substantial Rs 11,125 crore. This massive pipeline provides healthy revenue visibility across the company's product and service portfolios for the coming years. The order book includes a mix of domestic and international contracts, reflecting the company's diversified market presence. This strong backlog ensures that the company can maintain its growth momentum even if short-term market fluctuations occur. The steady inflow of orders from telecom operators, government projects, and international clients highlights the trust placed in HFCL's technological capabilities and delivery track record. The company continues to bid for high-value projects to further strengthen this pipeline.

Strategic Transition to a Product-Led Model

HFCL is undergoing a strategic transition toward a product-led and internationally diversified business model. During the quarter, products contributed 60 percent of the total revenue, while exports accounted for 27 percent. This shift is part of the company's "Innovate in India" approach, focusing on advanced product development to capitalize on global demand. By increasing the share of products in its revenue mix, HFCL is reducing its reliance on low-margin service contracts and improving its overall profitability profile. The growing contribution from exports also provides a natural hedge against domestic market volatility and allows the company to tap into higher-margin international opportunities. This strategic pivot is central to the company's long-term value creation plan.

Global Optical Fibre Market Recovery

The global optical fibre industry has witnessed a revival in demand following a period of inventory normalization. Increased investments by hyperscalers, telecom operators, and enterprises are driving this growth, particularly in the context of data centre expansion and AI-led workloads. HFCL has capitalized on this trend, securing multiple export orders worth approximately $192 million during the quarter. The company's products are gaining wider acceptance in international markets, supported by its focus on quality and technological excellence. As global networks transition to 5G and beyond, the demand for high-quality optical fibre and cables is expected to remain robust, providing a favorable tailwind for HFCL's export business.

Capacity Expansion and Future Readiness

To meet the rising global demand, HFCL is aggressively expanding its manufacturing capacities. The company's optical fibre capacity has already increased to 28 million fibre-kilometres, with plans to reach 33.9 million by December 2026. Similarly, the optical fibre cable capacity is being scaled from 30.5 million to 42.3 million fibre-kilometres by June 2026. These expansions are progressing as planned and will position the company to address the needs of next-generation networks and large-scale data centres. By investing in capacity today, HFCL is ensuring it has the scale required to compete effectively on the global stage and capture a larger share of the growing market for connectivity solutions.

Defence Sector Advancements

HFCL's defence business is scaling up in line with India's push for indigenization. The company has secured multiple contracts for radars, electronic fuses, and electro-optic systems. A major milestone was the allotment of 1,000 acres of land in Andhra Pradesh for setting up advanced defence manufacturing facilities. The company is also making progress in the UAV segment, having entered the night-vision camera market with an indigenized thermal camera. Successful trials of drone detection radars and electronic fuses further demonstrate the company's growing technological prowess in the defence sector. This segment is expected to become a significant contributor to the company's revenue and profitability as serial production commences and volumes scale up.

Market Impact and Valuation

Following the announcement of the Q3 results, HFCL's stock price rose 1.75 percent to Rs 67.54. The market capitalization of the company stands at approximately Rs 10,488 crore. While the stock has faced some pressure over the past year, the recent performance indicates a potential turnaround driven by strong fundamentals. The company's Price-to-Earnings (PE) ratio remains high, reflecting investor expectations of future growth. However, the low debt-to-equity ratio of 0.32 suggests a stable financial structure. Analysts are closely watching the company's ability to manage its working capital and execute its large order book, which will be critical for sustaining the current momentum and driving further valuation re-rating.

Management Outlook and Strategic Vision

Managing Director Mahendra Nahata emphasized that the third quarter was a period of focused execution. He highlighted the expansion of the export footprint and the advancement of the defence portfolio as key drivers of success. The management remains confident in delivering sustainable growth and long-term value creation. The company's goal is to maintain EBITDA margins around 19 percent while targeting a 20 percent growth in revenue. By focusing on innovation and high-tech products, HFCL aims to transform into a global technology enterprise. The strategic focus remains on improving the quality and sustainability of the revenue mix, ensuring that the company is well-prepared for the evolving needs of the global telecom and defence industries.

Conclusion

HFCL's Q3 FY26 results highlight a company in the midst of a successful transformation. With a 41 percent jump in net profit and a massive order book of Rs 11,125 crore, the company is well-positioned for future growth. The strategic shift toward products and exports, combined with the scaling of the defence business, provides a diversified and resilient revenue base. While challenges such as global economic headwinds and domestic project execution remain, the company's focus on capacity expansion and technological innovation offers a strong foundation for long-term success. Investors will continue to monitor the company's progress in the defence sector and its ability to maintain high margins in the competitive optical fibre market.