HFCL (HFCL) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 revenue was INR 1,094 crores (₹1,093.61 crore), down sequentially but up year-over-year, with PAT at INR 73 crores (₹73.33 crore), and a strong order book of INR 6,151 crores.

• Entered strategic partnership with General Atomics for UAV sub-systems, enhancing defense sector presence and export potential, especially in the US market.

• Delivered one of the world's largest broadband network gateways for BSNL and launched new unlicensed band radio products.

• Maintained steady performance despite global optic fiber cable demand softness and monsoon-related execution delays; early signs of recovery seen.

• Focus on R&D, margin-accretive products, new defense launches, and expanding international business to drive future growth.

Financial highlights

• Q2 FY25 revenue: INR 1,094 crores (₹1,093.61 crore); Q1 FY25: INR 1,158 crores; Q2 FY24: INR 1,111 crores.

• Q2 FY25 EBITDA: INR 172 crores (₹145.63 crore); Q2 FY25 EBITDA margin: 15.71%.

• Q2 FY25 PAT: INR 73 crores (₹73.33 crore); Q1 FY25: INR 111 crores; Q2 FY24: INR 70 crores.

• H1 FY25 revenue reached ₹2,251.85 crore, up 6.89% year-over-year; H1 FY25 PAT at ₹183.98 crore, up 26.25% year-over-year.

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

Outlook and guidance

• Management expects fiber optic cable market to recover from next quarter, with improved demand in India and internationally.

• Revenue target of INR 10,000 crores in three years, with 25%-30% growth expected; export revenue from optical fiber segment targeted at 70% of total in three years.

• Margin guidance for FY25 is to remain at H1 levels (~15.86%), with medium-term improvement expected from higher product revenue and backward integration.

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