HBL Engineering: Booting-up for the Race of the Century

Prdnt_investor · February 13, 2025, 7:08pm

This quarter results suffered mainly from marginal dips in revenues in the industrial batteries and defence segments and a major dip in electronics. Results has provided segmental breakup and even screener paid version provides for segmental break up and margins of each segment.

Recent announcements made by the company have been encouraging for the TCAS ( Kavach ) segment ( which falls under electronics) wherein they have bagged Kavach Loco orders worth 1500 crores. And subsequent to this announcement came the announcement of Kavach track orders of 400 crores. This should provide visibility for electronics division revenue and profitability for FY 26. And we keep hearing and reading about new and new Vande Bharat trains being introduced on various routes which keeps the Kavach order flow visibility healthy.

If industrial batteries and defense continue their steady revenues or show growth, and Kavach revenues get added to the overall revenues, Fy 26 can be a good year.

Even in a presentation made by the company few months back, they had clearly mentioned that Fy 25 would be a year of consolidation and FY 26 and Fy 27 would be years of growth.

Based on order wins, presentation, and management articulation in the AGM, I remain bullish on HBL. We have a very detailed thread on VP for anyone wanting to understand the business of the company.

Some other aspects of the company I like are that

the company has not needed to dilute its equity since 2017 and we have seen strong growth in last couple of years.

Plus balance sheet remains debt free and cash surplus .March 24 ROCE was a healthy 36%.

Promoter holding has remained steady and infact marginally increased albeit by a very small percent.

I like companies that grow, and/or have strong visibility in terms of levers of growth, and don’t need too much additional capital for growth.

disc: I own HBL as disclosed before and have been adding to it in recent price corrections. (this is not an investment advice. Anyone contemplating investment in this company should do their own diligence and take an informed call. Resources for studying this company are freely available, in terms of AGM video, presentations, annual reports, and threads on VP besides other resources one can find. )

Linking on the company thread