HFCL shares slip nearly 7% this week after 212% rally. Is this multibagger a buy on dips?

Shares of HFCL fell as much as 5% to an intraday low of Rs 201 on the BSE on Thursday, extending losses for a second straight session. The stock has now declined 6.6% over the last four trading sessions after an exceptional rally that made it the best-performing smallcap stock this year, with gains of 212%.

The recent weakness comes despite a notable improvement in the company's fundamentals. HFCL has been witnessing a strong earnings turnaround, supported by better capacity utilisation and a richer product mix. The latest decline, however, appears to reflect profit-booking following the sharp run-up in the stock.

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Here’s what technicals suggest

Virat Jagad, Senior Technical Research Analyst at Bonanza, said the ongoing correction indicates profit booking near the long-term rising trendline resistance in the Rs 210-220 zone. He noted that the broader trend remains positive, with the stock continuing to trade comfortably above its 20-, 50-, 100- and 200-week moving averages, signalling underlying strength.


Jagad added that the weekly RSI has cooled from overbought levels but continues to remain in bullish territory, indicating that momentum is easing rather than reversing. "Immediate support is placed at Rs 185, followed by Rs 170, while sustained buying above Rs 220 could trigger the next leg of the rally towards Rs 240-250 over the medium term," he said.

Should you buy HFCL shares?

HFCL's order book has reached an all-time high of around Rs 21,200 crore. The management has guided for 20-25% revenue growth in FY27 along with an expansion of 3-4 percentage points in EBITDA margins. It has also outlined a long-term goal of achieving Rs 10,000 crore in revenue.

Domestic brokerage Monarch Networth Capital highlighted the opportunities emerging from HFCL's expansion into defence, aerospace and data centre-related businesses. The company is strengthening its defence and aerospace vertical through a 1,000-acre facility allotted in Andhra Pradesh, a defence manufacturing unit in Hosur and a proposed aerospace acquisition with an export order book of around Rs 1,930 crore.

The brokerage also noted that HFCL is India's largest optical fibre cable manufacturer, with manufacturing facilities across the country. It added that the company was the first Indian player to develop and commercialise 5G Fixed Wireless Access customer-premises equipment.

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According to Monarch, HFCL has evolved rapidly from being a largely domestic optical fibre cable manufacturer into a globally diversified technology company. Export revenue has risen from around 11% of sales in FY24 to nearly 41% in FY26, while the management is targeting exports to contribute more than 50% of revenue by FY27, backed by a confirmed export order book of over Rs 12,000 crore.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)