Shares of this smallcap company jumped around 3 percent in Wednesday’s trading session after announcing strategic expansion into Europe. The shares have delivered more than 60 percent returns to its investors in six months.
With a market capitalization of Rs. 16,481 crores, the shares of HFCL Ltd started Wednesday’s trading session on a flatter note at Rs.110.40. During the trading session, the shares hit a high of Rs. 115.75, gaining around 3 percent, also recorded as the company’s fresh 52-week high and are currently trading at Rs. 114 apiece.
Such a bullish movement in the share price was observed after the company in an exchange filing announced that the board of directors approved the strategic expansion into Europe with the setting up of a state-of-the-art optical fibre cable manufacturing facility in Poland.
The proposed manufacturing facility in Poland will begin with an initial capacity of 3.25 mfkm p.a. with a capital outlay of up to Rs. 144 crores and is scalable up to 7 mfkm p.a
The establishment of the manufacturing facility in Poland will be facilitated through the incorporation of a new step-down subsidiary in Poland under HFCL B.V., a wholly-owned subsidiary of the Company in the Netherlands.
This expansion will enable HFCL to gain a significant increase in purchases by existing and new customers. Furthermore, the expansion will help HFCL to bolster its presence in Europe with a target to significantly increase its export revenue share in its OFC vertical revenue from 30 percent to 70 percent within the next 4 to 5 years.
Moreover, the company also mentioned that this strategic move will not only enhance their agility but also reduce transit times by approximately six weeks.
Coming onto the company’s financial statements, the revenue decreased by 7 percent from Rs. 1,111 crores during the September quarter to Rs. 1,032 crores in the December quarter. On a contrasting note, the net profits increased by 17 percent from Rs. 70 crores to Rs. 82 crores during the same period.
As of December 31, 2023, HFCL’s total order book amounted to Rs. 7,678 crores and has also secured several orders exceeding Rs. 1,700 crores from its customers in the last few months. Further, HFCL is also planning to invest massive amounts in R&D to ensure that it is up to date on the latest technologies.
Moreover, HFCL plans to expand its optic fibre capacity from 10 million fibre km/per annum to 33.90 million fibre km/per annum by December 2024. The company has earmarked an estimated capex of around Rs. 470 crores for this expansion and will be using debt and internal accruals as the mode of financing.
Headquartered in Haryana, HFCL was incorporated in 1987. The company is a diverse telecom infrastructure enabler with active interest spanning telecom infrastructure development, system integration, and manufacture and supply of high-end telecom equipment, Optical Fiber and Optic Fiber Cable (OFC).
Written By Vaibhav Patil
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