HFCL Shares See Remarkable 265% YTD Surge
HFCL Ltd. has delivered exceptional returns for investors in the calendar year 2026, with its shares skyrocketing by over 265% year-to-date. This impressive performance has propelled the stock into 'multibagger' territory, reflecting significant market confidence. The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have placed HFCL under the long-term Additional Surveillance Measure (ASM) framework, a mechanism used to alert investors to unusual price movements and heightened volatility.
Nuvama Initiates 'Buy' Rating on Strategic Pivot
Nuvama Institutional Equities has initiated coverage on HFCL with a 'Buy' rating, forecasting substantial growth for the company. This positive outlook is driven by HFCL's strategic shift towards high-growth segments and its strong operational performance.
Driving Factors: Telecom, Data Centers, and Defence
The brokerage highlights HFCL's decisive pivot from traditional turnkey contracts to advanced telecom and networking products, which now account for 83% of its Q1 FY27 revenue, a significant increase from 27% in FY21. Nuvama believes HFCL is well-positioned to capitalize on the global expansion of data centers, supported by its record order book, ongoing capital expenditure programs, and proven execution capabilities. Furthermore, the company's scaling presence in the defence sector offers valuable diversification and significant future optionality.
Strong Growth Projections and Target Price
Nuvama Institutional Equities projects a compound annual growth rate (CAGR) of 39% for revenue, 68% for EBITDA, and 92% for profit after tax (PAT) for HFCL over the FY26–FY29 period. Based on these robust projections, Nuvama has set a 12-month target price of Rs 380, valuing the stock at 18 times its estimated enterprise value to EBITDA for Q3FY29, aligning with global industry peers.
Key Risks Identified
Despite the optimistic outlook, Nuvama has flagged potential risks, including a slowdown in global data center capital expenditure and possible delays in the completion of HFCL's preform capacity expansion. The stock currently trades at 13.1 times its estimated FY28 enterprise value (EV) to EBITDA.
HFCL's Role in Major Telecom Projects
HFCL's turnkey business has been a significant contributor, notably through its involvement in the BharatNet program, where it has undertaken large-scale fiber network deployment contracts encompassing engineering, implementation, and optical fiber cable (OFC) supply. The company has also secured substantial turnkey projects from private telecom operators, including Reliance Jio, as well as various government and institutional clients.
Jio Platforms IPO Connection: Nahata Family's Stake
The impending initial public offering (IPO) of Jio Platforms is poised to significantly impact HFCL's promoter and managing director, Mahendra Nahata, and his family. The Nahata family and associated entities acquired 37.04 million shares in Jio Platforms in July 2020 through the conversion of compulsorily convertible debentures, followed by an additional 10.83 million shares, bringing their total holding to 47.87 million shares, representing a 0.54% stake.
Jio Platforms is scheduled to launch its Rs 30,200-crore IPO on October 21, with a proposed price band of Rs 1,065–1,119 per share. At the upper end of this band, Jio Platforms' implied market capitalization is estimated at approximately Rs 10.30 lakh crore. Based on the proposed upper price of Rs 1,119 per share, the Nahata family's 47.87 million shares would have an indicative value of around Rs 5,356 crore. It is important to note that this represents an estimated, not yet realized, gain.