HBL Power: Signs of change

This looks a bit more complex than it seems on the surface. If some sort of breach / fault in the electronic system caused this then it might lead to a deeper evaluation of all sorts of upgrades before it gets rolled out on a mass scale.

Secondly, in this interview KEC also says they have got orders for the Kavach. So can this IP be shared with more companies to facilitate large scale and quicker implementation? In which case the larger Indian guys like KEC can come in and compete. Seems like a threat to the 3 player hypothesis - unless my understanding is wrong and KEC in turn buys stuff from HBL.

Am not quite sure what the case is here. I don’t think KEC has electronics capability and they are more of a project execution player, so it could be the latter.


KEC is an EPC player. He mentions in the interview that OEM is Kernex


Kavach rollout may take 15 years; not the ‘cure’ for all rail accidents: HBL Power Systems

Upgrading and fixing railways is a mammoth task and a multi-decade endeavour that requires huge capital and commitment from successive governments.


The ABL contract with HBL is for Rs 135 crore for this new Kavach order. Delivery and commissioning to be completed in 18 months.


New kavach order received. It will be good if the momentum of kavach orders picks up from hereon.



Noted from PIB release on Kavach - Interesting Facts

  1. Kavach has so far been deployed on 1465 Route km (Rkm) and 121 locomotives.

  2. Kavach tenders have been awarded for Delhi – Mumbai & Delhi – Howrah corridors (approximately 3000 Route km).

  3. Indian Railways is preparing Detailed Project Report (DPR) and detailed estimate for another 6000 RKm.

  4. The Cost for provision of Track side including Station equipment of Kavach is approximately ₹ 50 Lakhs/Km and cost for provision of Kavach equipment on loco is approximately ₹ 70 lakh/ loco.

Kavach.pdf (456.7 KB)

Disc: - Invested. Not an Advisor and Not an recommendation.


The above has been done on ₹ 351.91 Crores. That doesn’t tie up with 50 Lakhs/Km and on loco is approximately ₹ 70 lakh/ loco. ?

How to reconcile this ? Were the earlier installations done at cheaper rate that were prevailing in those years ?

There is also another theory that “route km” is different from “track km” and the calculations have to get adjusted accordingly.

Hi regarding this query, I found a reply of former Railway officer on quora:

"Route kilometer

A unit of distance, measuring the distance by rail between two points on the railway network. It is a permanent way distance between point A and point B.

Running track kilometers

It indicates the sum of all running lines (counting each line of doubled, tripled, etc., lines separately) between two points say A&B.

Track kilometers or total track kilometers

They include the sum total of all running lines and sidings, yard trackage, etc., between two points A&B.

For example, in 1950–51, route km of Indian railways were 53,596; running track km were 59,315; and total track km were 77,609 (including track in stations, yards, sidings etc.)."


Very strong numbers posted by HBL.

Very strong growth in revenue. And the bigger highlight is the EBITDA margins improving from 11% to 16%. Management beating their own expectations :slightly_smiling_face:

A segmental view of the results of HBL power:

Sharp improvement in the margins of Industrial Battery division along with rev growth.
Electronics division growing rapidly on a smaller base.
Degrowth in rev of Defence and aviation battery. However the margin improved here as well.

Overall it was indeed a very strong quarter. The aggressive guidance published by the management earlier this year now looks like might be achievable.

Another update is " The change in role is from Executive to Non-Executive Director. Mrs. Kavita Prasad Aluru (Daughter of MR AJ Prasad) expressed her intention to take a temporary break from executive role of the Company on completion of her current tenure on close of business hours on August 09, 2023.However, she continues to be a Non-Executive Director and member of various committees of the Board of Directors." ----

The biggest challenge is no concalls done by the management. A better insight of the top management would have given a lot more confidence. This makes it very difficult to hold on the to the existing positions at these valuations.

DISC: Invested from very low levels. Have trimmed my positions recently.


Notes from HBL’s AGM on 29th Sep

Chairman speech

  • We are not only a Railways or defence or batteries company. We have a portfolio of niche products – Business model elaborated on Page 17 of Annual report - niche markets, technology advantage etc.

  • We are not a R&D company. We do lot of development and engineering, but not research. We focus on developing technology across engineering intensive products.

  • Are we going to spend as much money and time in development as in the past? Many products we developed had a long gestation of 7-15 years. But we are not going to spend as much time and money in future as in the past, and it won’t be required too. It is time to start recovering the investments and focus on high growth areas.

  • For HBL, imports of raw material as % of sales is between 7-10% for FY 22 and 23. Compared to this, HAL has 92% of bill of materials as imports. HBL Exports c. Rs 214 crs

    • Import content for HBL is low
    • HBL’s ambition is driven by a German term called Mittlestand (mid-sized cos responsible for Germany industrial revolution) – characterized by – target global position in niche products – and compete through technology and quality and taking care of employees – low debt, stay away from large volume price driven businesses.
  • Do we need working capital for growth we expecting? Not an issue as credit rating strong, and low outstanding debt – also we do not invest in capital intensive products – hence capital is not a constraint

  • Child welfare activities elaborated in Page 36 of AR – started way before CSR became mandatory – expand the program as Company performances further improves.

  • Business segments- Segmentation altered starting Q1 FY 24

  • Industrial batteries

    • This segment is doing well – driven by better product prices, lower RM cost, better efficiencies and increase in productivity - may not improve further from here, may not fluctuate much - we are prepared though for a lightly lower performance in this segment
    • Nickel & lead batteries co-existed for years, with lithium being a recent advancement. Arrival of new chemistry does not mean old one is dead. Telecom (4G and 5G) towers still use lead acid batteries and will still continue for few years. Lithium is used more in rail coaches in Vande Bharat (we will supply) and defence etc.
    • PLT batteries (where we are the only Indian company and one of the few in the world) – Sales are growing rapidly – both from defence and data centres- niche product – superior product with limited competition – competitive strength came from technology
    • Nickel cadmium batteries – we are no 2 in this segment globally – gaining market share steadily – Sales will go up, nickel prices have been reducing – increasing margins
    • Lithium batteries – We manufacture lithium ion cells at a small scale (spent capex Rs 70 crs – and may add Rs 70 crs capex in next 2 years - niche market – not significant capex) – strong position in defence – navy, air force.
    • We do not intend to manufacture lithium-ion cells for industrial use – as China is way ahead of India in this space and it will be tough to compete with them – Indian govt planning a PLI scheme 50Gwh capacity – of this 30Gwh allotted and will take 2+ years for production. In China, in last year alone, 240 Gwh capacity has been brought on stream.
  • Rapid growth opportunities with Good EBITDA elaborated on Page 18 of Annual report

o Kavach under Rail signaling electronics –
Encouraged by RDSO to develop train protection system indigenously in 2007 – Product was developed and trails conducted successfully in Oct’12 – but was not pursued by Indian Railways as HBL was a monopoly – It took another 10 years for competition to come and orders to be rolled out in 2022 – In all, 15 years gestation
TCAS roll outs are complicated (not like telecom) – There will be many hurdles for new competition – and hence competition is not a concern.
Track length of Indian Railways has to be increased – added 10,000 kms in last 70 years – Government plan to add another 20,000 kms in next few years – long headroom before TCAS gets fully implemented.
o TMS & Interlocking under Rail signaling electronics
Sales magnitude much smaller than TCAS
Interlocking - We are safest amongst other safe brands in this space, TMS has slowly started progressing.
o Electronic fuzes for ammunition
MHA confirmed that HBL grenades are satisfactory and imports will now be stopped
Capex in progress to develop large scale facility for electronic fuzes by March 24 – sales should begin by FY 25
o Industrial electronics
Convert trucks already in operation from diesel to electric – 3 other cos are working on it but their solution is not viable for truck operator
HBL develops motors and motor controllers in-house for electric trucks – solution seems economically viable – Created 100% subsidiary Torquedrive Technologies Pvt Ltd (TTL) for marketing of e-trucks and its step-down subsidiary TTL electric Fuel Private Limited (60% held by TTL) for setting up battery charging facilities. The step-down subsidiary is the largest charger of 3-wheelers in the country.

Q&A session
Electronic fuzes
o Fuze capex is mostly infra, buildings, utilities related – Equipment capex is low – c. Rs 2000 crs fuzes can be produced with c. Rs 40 crs of equipment
o Opportunity size - MHA is not allowed to import grenade anymore; Can’t comment on size
o EBITDA margins will be higher than Kavach
o Exports opportunities after few years of selling in India
o Moving to version 4.0 in next round of tenders’ for FY 25
o Start with 5000kms in 1 year (last year 3000 kms) and if these get delivered, then increase tender size
o Apart from HBL, other 2 cos are not on delivery schedule
o Every zone requires 4-5 TMS systems – Total 17 zones – c. total 80 TMS, each costing c. Rs 60 crs– much smaller than Kavach
Tonbo status - One bid made to MoD – technical evaluation on. Other bids to come soon.
Data Centres – requirement for batteries to be more compact, efficient – largest customer is STT. Also exporting PLT batteries to Russian helicopters, Battle tanks, and Missile launch etc.
o HBL batteries are only approved source of Varunastra
o Cost of battery is c. Rs 3 crs depending upon silver price, of c. Rs 10 crs torpedo cost so c. 30%
o We are making 3 key sub-systems in torpedo – motors (currently development is WIP), batteries and hominghead (at customer’s request, started developing 6 months ago – will take 3 years atleast) – this will be 60-65% of cost of torpedo
o Q1 dip in defence – always lumpy – there was a requirement from BDL to speed up production of Varunastra batteries – but is difficult at our end as we are currently having lot of export orders.
EV retro-fits
o Gave up on making e-buses the day FAME incentive was announced – do not want to pursue businesses with government incentives
o Looking at bigger trucks which has larger market size - Truck size is 35 tonnes
Succession plan
o Separate ownership and management
o German system of ‘Supervisory board’ akin to BoD and ‘Operations board’ akin to Management – trying to separate ownership and management on these lines
o Working on succession of key executives also

Disclosure: Invested


Some notes from the above article that I received as a WhatsApp forward.

  1. Exposure to sub-zero temperature and oxygen-deficient atmosphere freezes the fuel and lubricants and impacts the mechanical efficiency of the platforms. The hydraulics, electronics and batteries of the heavily sophisticated platforms are also impacted. Pure Lead-Tin (PLT) batteries, superior to existing Lead-Acid batteries in negative temperatures, are being tested and will be implemented in all vehicles. At the operational and tactical level, introduction of specialist equipment to include rectifiers, PLT batteries, utilisation of specialist grade FOL (fuels, oils, lubricants), preventive maintenance and development of best practices have enabled operational readiness of 95 per cent, which contributes significantly to the operational preparedness of the Army.

  2. These are being used for trucks and are being tested for heavier armoured vehicles. These batteries deliver high current and are vital for starting tanks in extremely low temperatures.


AP train crash: Full Kavach cover may take a decade | Mint (livemint.com)

  • The official said the railways plans to float a ₹5,000 crore tender early next year for fast-tracking the adoption of Kavach. These include two tenders for Kavach, on a 6,000-km network each. This is double the 3,000 km first tender for Kavach issued in 2021.
  • According to an earlier plan of the railways, top priority would be accorded to high-speed trains on busy routes in the New Delhi-Mumbai and New Delhi-Howrah sections.
  • The second priority was to install Kavach on trains running on heavily used networks with automatic block signalling and centralized traffic control.
  • In the third phase, Kavach would be introduced on other high-density routes with automatic block signalling.
  • Officials said the priority order will now be fast-tracked for this anti-collision system, which works best for heavy-density routes where trains run at frequent intervals and the distance between two trains is often a lot less than on other routes.
  • Other than Kavach, automatic block signalling will stop trains automatically if the driver fails to see a signal. Centralized control would add another level of manual or physical check on train operations supported by system checks.
  • So far, around 1,445 km of network has been covered with Kavach. With new tenders, the initiative would be expanded quickly along entire railway network of around 70,000 km.

India’s ‘Kavach’ Protection For Trains: Could This Be The Formula To Run High-Speed Trains? - News18

Ericsson showcased the power of LTE and how it positively impacts the performance of the Kavach system and reduces the latency to ensure that trains can run at high speeds in a secure fashion. The interesting part about Kavach is that it can be integrated with both new and old-gen trains in the country as it is backward compatible, which saves Indian Railways a lot of money which would have been needed to upgrade the existing trains to equip the Kavach security system.

a short youtube video link embedded - Indian Railways Kavach System Explained: How This Anti-Collision Tech For Train Works :eyes::clap: - YouTube

a few points from the above video link:
right now working in UHF Ultra high frequency and if it moves to LTE.

  • it takes 4 seconds to register a locomotive in UHF v/s 160 milliseconds in LTE
  • it takes 2 seconds to communicate between Kavach and Station v/s 40-50 milliseconds in LTE

it helps to run trains at higher speeds when on LTE, especially like Vande Bharat trains.


Railways to upgrade Kavach to LTE; formal rollout likely in 12-15 months - The Hindu BusinessLine

  • The Railways would soon float tenders, around May or June, to upgrade existing and upcoming installations to LTE (long term evolution) technology making the entire system 4G or 5G-enabled and operable.

  • Earlier this month, the Cabinet approved reserving an additional 5MHz spectrum in the 700 MHz band for the Railways for the national rollout of Kavach, over the earlier assigned 5 MHz for the automatic train protection system.

  • Right now, the Railways have an annual capacity to install 1,500 Rkm of Kavach, which will subsequently be taken up to 2,500 Rkm in FY25 and then to 5,000 Rkm in FY26 as approvals for new vendors come in.

  • At least two new vendors are awaiting approvals, sources said. Existing vendors for the tech include Medha, Kernex, and HBL PowerSystems.


Good to know that HBL Deals in NMC as well as LFP Batteries.
Read today that LFP Batteries has double discharges and less heat issues

Disc. Invested and not an advice.


Latest Investor call - https://www.hbl.in/reports/HBL_Investor_call_recording_08072024.mp3


Audio link of the conference call, which took place on 8-Jul-24

If link does not work you can go the website hbl.in - > INVESTORS - > Press “continue” at the bottom of the screen - > Investors Call Recording 08-July-2024


Thanks for sharing the link here. Overall it was a poorly managed concall. Whoever was representing HBL had very poor communication skills, was evasive in his answers and did not know some basic details of their products.

For eg. he did not know what is HBL’s market share in the already awarded KAVACH tenders. How can he not know that? When someone asked how are KAVACH contracts split between the existing 3 players - Medha, Kernex and HBL? He simply replied saying it is decided by Railways Board. No further elaboration on that.

Overall there was hardly any new info over what was shared in their ppt.