As India’s railway sectors gain momentum, companies like Kernex Microsystems and HBL Engineering are emerging as key players in niche, high-growth segments. While Kernex focuses solely on railway safety systems, HBL boasts a diversified portfolio spanning industrial batteries, railway & defence electronics. But which company is better positioned to capitalise on the current market tailwinds? Let’s take a closer look.
Price Movement
Shares of Kernex Microsystems (India) Limited (KMIL), with a market cap of Rs. 2,180 crores, hit 5 percent upper circuit and closed in the green at Rs. 1,300.75 on Friday. The stock has delivered multibagger returns of nearly 247 percent in one year, and gained by around 64 percent in one month.
Meanwhile, HBL Engineering Limited, with a market cap of Rs. 16,383.6 crore, saw its shares fall by around 2 percent to close in the red at Rs. 591.05 on BSE. The stock has delivered positive returns of nearly 23 percent in one year, and jumped around 17 percent in one month.
Business Overview
KMIL manufactures and sells railway safety systems and software services with a plant located in Hyderabad and a branch in Cairo, Egypt. Its core focus remains on the rail safety equipment and services segment, which serves as its sole business segment.
Additionally, Kernex has a presence in other areas, including Telecom & Defence, Turnkey Project Execution, Embedded & IoT solutions, and Product Design & Development services.
HBL’s principal activities comprise of manufacturing of different types of batteries, including lead acid, nickel cadmium, silver-zinc, and lithium, along with railway & defence electronics and other products.
Segment Revenue
Kernex Microsystems reports all its operating revenue under a single segment — Safety Systems for Railways. In Q4 FY25, HBL derived around 74.6 percent of its revenue from Industrial Batteries, 12.2 percent from Electronics, 9.7 percent from Defence & Aviation Batteries, and the remaining 3.5 percent from Other segments.
Order Book
As of March 2025, Kernex Microsystems reported a total order book valued at Rs. 2,124.16 crores. This includes Rs. 1,730 crore from Chittaranjan Locomotive Works (CLW), Rs. 179.21 crore from South Eastern Railway (SER), Rs. 1,735.38 crore from KMIL-exclusive projects, and Rs. 388.78 crore from joint ventures and consortium-led engagements.
In comparison, HBL’s total Kavach orders stood at Rs. 3,763.83 crores. The company is one of the select few involved in executing Kavach orders for Indian Railways, along with industry players such as KEC International, KMIL, RailTel, and Siemens. The company projects its total sales for FY26 to reach ~Rs. 3,000 crore.
Financial Performance
Kernex reported a significant jump in revenue from operations by nearly 822 percent to Rs. 83 crores in Q4 FY25. Net profit also saw a growth from a loss of Rs. 13 crores in Q4 FY24 to a profit of Rs. 33 crores in Q4 FY25. The revenue grew at a CAGR of over 200 percent, reaching Rs. 190 crores in FY25, up from Rs. 7 crores in FY22.
Additionally, the key financial indicators show a Return on Equity (RoE) of 37.8 percent and a Return on Capital Employed (RoCE) of 23.8 percent. The stock currently trades at a price-to-earnings (P/E) ratio of 40.8, compared to the industry average of 31.4, and has a debt-to-equity ratio of 0.26.
In contrast, HBL reported a decline in revenue from operations by nearly 22 percent to Rs. 476 crores in Q4 FY25, and its net profit also decreased around 44 percent YoY to Rs. 45 crores. The revenue increased at a CAGR of ~17 percent to Rs. 1,967 crores in FY25, as against Rs. 1,236 crores in FY22.
In terms of key financial metrics, the company has a RoE of 20.5 percent and a RoCE of 26.3 percent. Further, the stock has a P/E ratio of 61.1, compared to the industry’s P/E ratio of 30.8, and its debt-to-equity ratio stands at 0.05.
Written by Shivani Singh
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