HFCL stock triples in 6 months as AI, defence orders boost outlook

ET Intelligence Group: The stock of HFCL has jumped three times over the past six months, beating the weakness in the broader market. The company, which manufactures optical fibre cables and defence electronics, has significantly raised the FY27 revenue growth guidance to 40% from earlier 20% and Ebitda margin estimate to 23% from 20% given a strong order book in the telecom segment and increasing traction in the defence and aerospace orders. It has benefitted from the buoyancy in the global capital expenditure (capex) towards artificial intelligence (AI) related technologies. The proportion of its overseas revenue increased sharply to 40% in FY26 from around 12% in the previous year. The company expects to earn over 60% revenue from international markets by the end of the current fiscal year.

Given the expectation of a multi-fold rise in revenue and profits over the next five years, the stock has undergone a valuation rerating with the current trailing P/E at 64 compared with a five-year average of 39. However, weak market sentiments and rising geopolitical uncertainties may affect its short-term performance on bourses.

Driving up the company's share price and valuation multiple is the bulging order book, which doubled to ₹21,206 crore at the end of FY26 from just under ₹10,000 crore a year ago. It further grew to a record ₹26,665 crore at the end of June 2026, nearly five times its FY26 revenue of ₹4,949.3 crore. This strengthens the long-term revenue visibility.


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Rising demand from the global AI ecosystem, diversified product portfolio, and expanding export markets have been key growth drivers for the company. To meet the demand, the company has undertaken capacity expansion thereby increasing the optical fibre capacity to 34 million kilometres (km) from 28 million km and that of the optical fibre cable to 43 million km from 34 million km. As a part of its strategy to integrate backwards, it has undertaken a project to set up a preform (high-purity glass rod) manufacturing facility with annual capacity of 300 tonnes by July 2029 at a cost of ₹580 crore.

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Apart from the fibre optics segment, HFCL has diversified into the defence sector, which had an order book of ₹2,300 crore at the end of June. In the June quarter, it started setting up ammunition manufacturing complex to produce multimode hand grenades, electronic fuses and related products.

Its defence portfolio also includes products and solutions pertaining to surveillance radars, thermal imaging, and tactical communication.