HFCL Ltd. (Himachal Futuristic Communications Limited), a company undergoing a significant structural transformation, has been identified by at least two prominent brokerages, Arihant Capital Markets and Centrum Finserve, as a top Diwali stock pick. Despite a substantial 224 percent upside in its shares so far in 2026, analysts project further substantial gains, driven by multiple growth levers.
Strategic Shift and Growth Drivers
HFCL is evolving from a traditional telecom projects company into a global player in optical connectivity and defence technology. This strategic shift is underpinned by several key factors:
- AI-Led Fibre Demand: A strong demand for optical fibre cables, particularly driven by artificial intelligence applications and data-centre interconnect (DCI) solutions, forms a significant part of HFCL's business. Analysts note that approximately 70 percent of its Rs 18,500 crore order book in this segment is linked to hyperscalers, with data centres contributing 65-75 percent of current telecom revenue. The company is actively doubling capacity to meet anticipated demand.
- Emerging Defence Franchise: HFCL is rapidly expanding its presence in the defence sector. Revenue from this segment is guided to reach Rs 500-600 crore in FY27, escalating to at least Rs 2,000 crore in FY28, and an ambitious Rs 5,000 crore within three years. This growth is significantly bolstered by an upcoming aerospace acquisition, expected to close in Q3FY27, which already boasts an executed order book of Rs 1,600-1,800 crore.
- Record Order Book and Exports: Beyond the specific segments, the company maintains a robust overall order book and is seeing rising export volumes, further diversifying its revenue streams.
Brokerage Targets and Financial Outlook
Both Arihant Capital Markets and Centrum Finserve have issued 'Buy' recommendations for HFCL shares, setting ambitious target prices:
- Arihant Capital Markets: Projects HFCL shares to nearly double from prevailing prices, setting a target price of Rs 495. The brokerage highlights the management's upgraded FY27 guidance of at least 80 percent year-on-year growth, with a Rs 10,000 crore revenue aspiration now expected well before FY29. They estimate Revenue, EBITDA, and PAT CAGRs of 51.2 percent, 82.3 percent, and 113 percent, respectively, over FY26-29E, with Return on Equity (RoE) projected to surge from 7.3 percent to 32 percent.
- Centrum Finserve: Recommends a 'BUY' with a target of Rs 290, citing robust earnings visibility and improving profitability that position HFCL to generate superior shareholder returns.
While the company reported a Rs 121 crore EPC (Engineering, Procurement, and Construction) loss, this is largely deemed timing-related, with losses expected to be capped at Rs 75-100 crore over the next two quarters, and a return to profitability anticipated from Q1FY28.
As of Wednesday, the scrip was trading 4.42 percent higher at Rs 226.90 apiece, reflecting strong market sentiment around its future prospects.