HFCL Ltd., a technology company backed by Reliance Industries, has seen its shares skyrocket by 60% in just one month. This significant rally comes as domestic brokerage firms maintain a positive outlook, projecting an additional 40% upside for the small-cap stock, primarily driven by its strategic expansion into the defense sector.
Defence Foray Drives Optimism
The company's foray into defense electronics is a key factor fueling analyst confidence. HFCL's portfolio now includes electronic fuses, radars, and thermal weapon sights, targeting substantial revenue growth in the coming years. Experts anticipate defense revenues to reach Rs 400-500 crore by FY27, potentially scaling to Rs 1,000 crore by FY28. This push is further bolstered by the recent Rs 25 crore acquisition of Spiral EHL, consolidating aerostructures and advanced weapon systems under its subsidiary, HASPL.
An upcoming ammunition complex, involving a capital expenditure of Rs 1,390 crore, is expected to provide HFCL with a first-mover advantage in this critical segment. Indigenous technologies, such as electronic fuses boasting a 96% success rate, and near-monopoly positions in thermal weapon sights and wire harnesses, are poised to support future growth, with fuse trials anticipated by May/June 2026.
Strong Performance and Market Position
HFCL shares closed at Rs 107.10 on Wednesday, commanding a market capitalization close to Rs 16,400 crore. The stock has delivered multibagger returns, soaring 1,140% (12.4 times) from its March 2020 lows of Rs 8.75. Over the last five years, it has jumped 285%, with a nearly 55% gain recorded in 2026 alone.
Beyond defense, HFCL maintains a strong presence in optical fiber and cable, and telecom networking products. The company secured large orders totaling Rs 11,525 crore between March and April 2026. Growth visibility is reinforced by increasing product-led and private orders, robust demand from hyperscale data centers for ultra-high-fiber-count optical fiber cables (OFCs), and planned capacity expansion to 42.4 million fiber kilometers (fkm) by FY27, along with backward integration into preform manufacturing.
A structural shift from traditional telecom to data center and AI infrastructure is boosting demand for higher fiber count cables. HFCL has also signed a significant $1.1 billion long-term contract with a global hyperscaler for OFC supply over the next five years. The company is set to announce its Q4 earnings on Thursday, April 30.
Analyst Projections and Technical View
Brokerage firms like Arihant Capital Markets, Sunidhi Institutional Research, and Geojit Investments have all issued 'buy' ratings for HFCL. Arihant Capital projects revenue, EBITDA, and profit CAGRs of 22%, 45.2%, and 69.5% respectively, over FY25-28E, setting a target price of Rs 147 per share. Sunidhi estimates even higher growth, with CAGRs of 29%, 47%, and 74% for topline, EBITDA, and PAT over FY26e-FY28e, leading to a target price of Rs 130.
Geojit maintains a 'buy' rating with a target price of Rs 150, citing a favorable long-term outlook supported by a structural upcycle in fiber demand, rising export contribution, and anticipated margin expansion. Technically, the stock has shown a breakout from a cup base formation, indicating a potential trend reversal. Momentum indicators like RSI and MACD are favorable, suggesting continued upward movement with support around Rs 86 and potential upside towards Rs 150.
Reliance Industries' Stake
Mukesh Ambani-led Reliance Industries Ltd. holds a significant stake in HFCL through its subsidiaries. As of March 31, 2026, Reliance Ventures owned 1.48% (2,26,81,422 equity shares), while Reliance Strategic Business Ventures (RSBVL) held 3.17% (4,85,32,764 equity shares). RIL's total shareholding in HFCL stood at 4.65% as of Q4FY26.