HFCL Limited reported strong performance for Q3 FY26, marked by significant growth in its Optical Fibre Cable (OFC) business, propelled by hyperscale data center demand and increased export traction. Management highlighted the successful development of advanced 3456-fibre cables and the initiation of a Pre-Connectorised Solutions (PCS) business. The Defense segment also saw progress with successful electronic fuze trials, setting the stage for future revenue ramps in FY27.
Q3 FY26 Earnings Call Summary
HFCL Limited hosted its Q3 FY ’26 Earnings Conference Call on February 03, 2026, detailing performance driven by structural opportunities in core segments. Management highlighted navigating near-term volatility due to supply chain recalibrations early in the quarter, with conditions stabilizing from mid-December.
Optical Fibre Cable (OFC) Segment Strength
Fundamental demand for OFC has strengthened, skewed towards high-fibre-count, high-performance cables for modern hyperscale and AI-focused data centers. This has led to better OFC pricing and realizations, which management expects to increase by at least 10% or more sequentially.
- Capacity Expansion: Optical Fibre Cable capacity is on track to increase from 30.5 mn fkm to 42.36 mn fkm by June 2026. Optical fiber capacity has already doubled to 28 mn fkm, with the balance 6 mn fkm added progressively by December 2026.
- Product Innovation: The company successfully developed a 3456-fibre Micro Duct IBR cable and is developing 6912-fibre Micro Duct IBR cables.
- New Business: HFCL initiated its Pre-Connectorised Solutions (PCS) business for data centers, expecting it to contribute ₹400-500 crore of additional revenues over FY26-FY27.
- MPO Cables: The company commenced production of MPO cables, expecting this segment to generate ₹400-500 crore in revenues over the coming years.
- Revenue Outlook: Management expects the OFC segment to contribute meaningfully higher volumes and revenues from Q4 FY26 onwards, projecting revenue crossing ₹3,500 crores next fiscal year, up from an estimated ₹2,400 crores this year.
Financial Highlights (Consolidated)
Consolidated financial performance for the quarter showed robust growth, particularly in profitability despite flat revenue growth year-over-year:
Q3 FY26 Performance:
- Revenue stood at ₹1210.79 crore (vs. ₹1043.34 crore in Q2 FY26).
- EBITDA reached ₹243.52 crore, with an EBITDA margin of 20.11%.
- Profit After Tax (PAT) was ₹102.37 crore (vs. ₹71.92 crore in Q2 FY26), resulting in a PAT margin of 8.45%.
9M FY26 Performance:
- Revenue was ₹3125.15 crore (vs. ₹3263.80 crore in 9M FY25).
- PAT stood at ₹144.99 crore (vs. ₹256.56 crore in 9M FY25), with a PAT margin of 4.64%.
Export Growth and Business Mix Shift
Exports remain a structural growth engine, with USD 192 million in new export orders secured during Q3 FY26. The business mix has significantly shifted:
- Export revenues accounted for 27% of total revenues in Q3 FY26, a sharp increase from 14% in Q3 FY25.
- Product revenues comprised 60% of total revenues (up from 51% in Q2 FY26), while project revenues were 40%.
Defense Business Milestones
The Defense segment is progressing toward indigenization priorities. The electronic fuzes developed by the company successfully underwent firing trials in January 2026, with final testing expected in April. The company is also engaging in the UAV segment with indigenously developed thermal cameras.
- Revenue Visibility: Management projected defence product revenues to be between INR400 crores to INR500 crores next fiscal year.
- HFCL is one of the 5 shortlisted parties for the expected RFP under the BMP programme.
Telecom Equipment and Services
Telecom Equipment: Production and supply of IP/MPLS routers started in bulk across India for the BharatNet program. The company has secured orders for about 100,000 routers, valued up to INR700 crores or INR800 crores, though constrained by component supply.
Services (O&M): The services side recorded a loss of about INR11 crores due to expenditure during the warranty period. Management expects O&M revenues to grow significantly, potentially reaching INR400 crores to INR500 crores per year within three to five years, driven heavily by the Army’s NFS O&M phase starting soon (expected at INR170 crores per year).
Capital Raise: The company completed an issuance of ₹550 crore via Qualified Institutions Placement during the quarter to fund expansion, R&D, and debt reduction.
Future Focus and Guidance
Management confirmed that future growth relies on sequential expansion. EPC business is intentionally being de-emphasized; the projected revenue for EPC is roughly INR1,000 crores next year, down from an expected INR1,500 crores this year, as focus shifts to core areas like Defense and OFC.
Regarding new fiber technology, development for hollow core fiber is in the very early stages, while multicore fiber demand is not highly anticipated by management.
Source: BSE
