HFCL Q2 FY27 Earnings Call — Analysis (NSE: HFCL)

HFCL reported record Q2FY27 performance with revenue surging 143.6% YoY to ₹2,541.79 Cr and PAT jumping 448% YoY to ₹394.22 Cr, prompting management to raise FY27 revenue growth guidance to at least 80%.

26 Oct 2026 · Analysis by Alpha Inflection

Result quality: stable — Steady quarter. Management sentiment: optimistic.

The take

Q2FY27 Consolidated Revenue ₹2,541.79 Cr ( +143.62% YoY ) . New guidance — FY27 consolidated fy27 revenue growth at least 80% . New story: Defence and Aerospace Growth Pillar .

Results

Revenue jumped 143.62% YoY to ₹2,541.79 Cr, EBITDA margin expanded 640 bps YoY to 25.89%, and PAT surged 448.14% YoY to ₹394.22 Cr on strong optical connectivity exports and hyperscaler demand.

Financial highlights

Guidance

Management upgraded full-year FY27 revenue growth guidance to at least 80% YoY (up from 40% guided in Q1), driven by a ₹28,900 Cr order book and capacity expansion across fiber and data center connectivity.

What management committed to

• Based on current expectations and business visibility, [HFCL] expects revenue growth of at least 80% in FY27 over FY26. — at least 80%, FY27
• [HFCL] remains on track towards [its] aspiration of approximately ₹500 crore to ₹600 crore of Defence revenue in FY27. — INR500 crores to INR600 crores, FY27
• [HFCL] targets Defence & Aerospace segment revenue of at least ₹2,000 crore in FY28 and ₹5,000 crore within 3 years. — at least INR2,000 crores, FY28
• [HFCL] expects connectivity solutions revenue of about ₹800 crore in FY27 and ₹2,000 crore in FY28. — INR800 crores, FY27
• [HFCL] expects to complete the aerospace business acquisition during Q3FY27. — Q3FY27
• [HFCL] will expand optical fiber capacity from 28M fkm to 43M fkm and optical cable capacity from 39M fkm to 63M fkm under a ₹1,800 Cr capex plan. — 63 million fiber kilometers, FY28
• [HFCL's] 600 MT preform manufacturing facility will be commissioned by October 2028. — 600 tons, Q3FY29
• [HFCL] expects EPC segment losses over the next two quarters combined to be between ₹75 crore to ₹100 crore, turning profitable in Q1FY28. — INR75 crores to INR100 crores, Q1FY28

Key themes

Hyperscaler demand boom and guidance upgrades

How the narrative shifted

• AI and Hyperscaler Global Demand: AI infrastructure buildout by US hyperscalers is creating structural demand for high-density optical fiber, with Europe and Asia expected to drive the next growth wave.
• Data Center Connectivity Product Pivot: HFCL is aggressively scaling complex high-margin connectivity solutions and 180-micron A2 fibers inside data centers, transitioning beyond standard telco loose-tube cables.
• Defence and Aerospace Growth Pillar: Indigenous defence electronics (radars, weapon sights, ammo) and the pending aerospace acquisition represent a second multi-year revenue engine targeting ₹5,000 Cr in 3 years.
• Backward Integration and Preform Raw Material Risk: Management is shielded from elevated spot preform prices via long-term contracts and is building a 600 MT in-house preform plant for late-2028 with intermediate sourcing starting Q1.
• EPC Segment Restructuring and Loss Containment: Losses in the EPC business are due to administrative billing lags on BharatNet milestones and will narrow sharply in H2 before achieving profitability in Q1FY28 or undergoing restructuring.

Operational commentary

• Delivered the second batch of indigenously developed Thermal Weapon Sights for AK-203 to the Indian Defence Forces in September 2026.
• Data center interconnect / connectivity solutions revenue delivered ~₹300 Cr in Q2FY27 (after nil in Q1FY27) as high-fiber-density products ramped up.
• Finalizing an aerospace business acquisition during Q3FY27 carrying an unexecuted export order book of ~₹1,600 Cr.
• Allotted 1,000 acres in Andhra Pradesh for setting up an ammunition manufacturing complex; participated in an Indian Army tender for 800,000 Multi-Mode Hand Grenades.
• OFC manufacturing runs at 100% capacity utilization, especially data center lines running 24/7; progressing on capex to expand cable capacity from 39M to 63M fkm and fiber from 28M to 43M fkm.
• Formed a board committee advised by EY to evaluate restructuring options for the EPC business, with recommendations expected within weeks.

Analyst Q&A

• Q. Client concentration and split among hyperscalers within the ₹18,500 Cr OFC and interconnect order book.

  Declined to name specific customers citing NDAs, but confirmed roughly 70% of export orders originate from hyperscalers.

• Q. Whether H2 revenue guidance implies a slowdown or flat trajectory vs Q2 given the 80% annual target.

  Management confirmed guidance is deliberately conservative, there are no supply bottlenecks, and sequential growth is expected in Q3.

• Q. Details regarding the mid-term preform sourcing solution commencing in Q1 calendar year.

  Declined to disclose specifics, citing trade secrets and commercial confidentiality, but confirmed it will lower costs ahead of the late-2028 plant.

• Q. EPC segment losses and expected timeline for turning profitable.

  Explained losses were caused by unbilled expenses under BharatNet milestone processes and pending BSNL/Army AMC contracts; guided H2 losses to ₹75-100 Cr total and segment profitability by Q1FY28.

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