I think the key operative word is mentioned in AR “the current businesses”. Now it’s for investors to decipher, what’s part of ‘current businesses’, are EV trucks part of it ? What about electronic fuses business…
The AGM speech is a delight to read. He talks about so many relevant topics. Here he is talking about why India is struggling with technology. Also goes on to talk about why buy backs are deleterious for a country, why companies are finding it tough to invest their surplus cash, and so many other topics, including fuzes, kavach, defence, grenades. Must read for those interested in the company. There’s a relentless focus in groups on guidance and numbers but the big picture here is management vision, and I think HBL passes that test with flying colours.
The most interesting part in the Chairman’s speech,for me, in the AGM, was…
“We know what technology and products we want to develop in the next five years…, but In my interactions with my team, i question them of the endeavours for the five years, post that”. That’s the kind of long runway in the thinking of HBL.
Given that all endeavours of HBL have had long gestation period, and they’re ok playing the long game… And the hint in the speech on more than one occasion that " there are projects/products we are working on, but would not like to share at the moment…" Gives lots of confidence in what holds for HBL in the future.
With 9 biz units, under the company, and the trajectory taken by them in BESS…," I knew 6 years ago that apart from China, no one has the capability to make money out of Li ion btys…" , i feel there are lots of optionalities as WIP.
But the management will always be “budgeting, and not guiding” …i understand it as remaining in the shadows, till the uncertainty in the development and commercialising of the tech/product is reasonably extinguished.
If any OEM fails to supply Kavach 4.0 systems for locomotives (even HBL has admitted in the AGM that they probably won’t be able to complete the order), the balance undelivered quantity can either be re-tendered (allowing wider participation with new OEMs being approved), or existing OEMs with pending orders may be given more time — though this is unlikely due to strict clauses in the 2024 CLW tender.
In either scenario, the Railways cannot afford to drop or delay the plan to install Kavach systems on all locomotives. The core objective of Kavach— preventing train accidents and collisions — can only be fulfilled if every single locomotive is equipped. Even one loco without Kavach becomes a single point of failure, defeating the entire TCAS scheme.
So it’s only a matter of time before more tenders are floated and all locomotives running in the field are Kavach-fitted.
As for the other two components — station Kavach & trackside Kavach — that’s a different story. Given the scale of the Indian Railways network, deploying Kavach infrastructure across all stations and tracks is a massive challenge. Progress here is understandably slow.
For now, the prime focus is and will be on Locos —via both existing and new tenders; while station and trackside Kavach will remain on the backfoot for some time.
Railways (CLW) has just floated a new Kavach tender for 7000 locos. This was anticipated and now by the end of this year, the orderbooks of both existing and new OEMs are going to expand.
The tender is scheduled to close on 31st October 2025, and if timelines follow the pattern of the previous Kavach 2024 tender (10,000 locos), orders are expected to be placed by December 2025. With this, Railways has officially covered the full fleet of 17,000 locos under the KAVACH system.
Approx cost per loco is Rs.80 lakhs, so total tender value 7000 * 0.80 = 5600 crores.
The delivery schedule is 12 months from contract award, with the same strict clause as in last year’s tender.
There is a special mention of “WAG-12 or EF12K locomotives” and 650 units out of 7000 is to be fitted in these locos.
That said, one unresolved aspect still lingers: what about the undelivered units from the earlier tender. It remains to be seen whether the OEMs involved will be granted an extension or if the pending units will be re-tendered. As per HBL management, the answer is “God knows!”
I am guessing that most of these 7k locomotives will be among the undelivered ones from the previous tender. According to the Quadrant Futuretek MD the tender has a hard deadline of 11th Dec 2025. Govt babus are risk averse and would be unwilling to provide an extension if there is no provision in the contract for this.
Kernex (Onboard or Loco KAVACH capacity of 4000 sets)
Field Trial Approved Vendors (No KAVACH version mentioned):
Quadrant Future Tek
GG Tronics
Everyone else - BEL, BHEL, Siemens, Kyosan, Lotus etc. are at prototype stage only. After that they will get approval for field trials, which is a time consuming process. It doesn’t look like they will become approved vendors anytime soon. So the competition for now is among 5 players only.
In fact, this one was published before the CLW tender I shared above.
Interestingly, this tender reveals additional TAM for locomotive KAVACH in the Railways, expanding to installations in EMU/MEMU trains.
The tender mentions just one Consignee - at ICF, Chennai for Supply & fitment of 2400 KAVACH sets - so the approx tender value turns out to be 1920 crores (considering per unit rate of 80 lakhs).
The nos. from the previous Tender can not be declared undelivered yet, as the delivery schedule isn’t over yet. Only after December 2025, if there is no extension, can the Railways finalize the no of Loco equipment to be retendered.
This article in April 2025 highlighted similar opportunity. Not sure whether the current tender is for the Mumbai suburbs, but good to see that such similar opportunity is already being tendered
Many people are surprised by HBL’s Q2 numbers, but most of it was already known.
What was not known was the margin profile of the Kavach segment. An EBITDA margin above 40 percent is exceptional, but in my view, it won’t be the same for every Kavach supplier. HBL has almost 100% in-house capability for Kavach components, which is not the case for most other OEMs. This gives HBL a clear competitive edge, in addition to the strong execution pace that is now evident.
As always, the management has issued a clear caution that such performance should not be expected to repeat in the upcoming quarters.
The management has always been conservative in its commentary and prefers that shareholders do not “over-expect.” They had earlier cautioned that the kind of growth seen in FY24 would not repeat. Fast forward to Q2 FY26, and the trajectory now makes it quite clear what the coming quarter are likely to look like.
I wanted to understand if for past 2 quarters, has the Company delivered any of the 2200 locomotive orders? Because if I track all their order book announcements, only KAVACH order expected to be delivered in FY26 was the Rs. 1,522 Cr order of locos, which should have yielded Rs. 1290 Cr in topline if we exclude GST from that order.
is it more of case that all 2200 will be delivered all together and are yet to be delivered?
and if those orders are yet to be delivered, where is this 784 crores of revenue in electronics coming from as almost every other order is most likely to be delivered in 2026?
The Chairman had mentioned during the AGM that they won’t be able to complete the entire 2200 loco order before 11th Dec 2025 (tender completion due date). So the 784 Cr is partly from pending KAVACH v4.0 deliveries (they had mentioned earlier that Railways wants some of the v3.2 tenders to be upgraded to v4.0) and partly from Loco KAVACH installations.
If you have been tracking KAVACH news then you might have noticed that KAVACH v4.0 was recently commissioned on the Mathura-Kota section. This section was awarded to HBL, if I remember correctly. You can see the HBL logo on the actual products in this press releae Press Release:Press Information Bureau
This step immediately caught my attention. From a regulatory and operational standpoint, such automation wasn’t mandatory. It wasn’t required for approvals, and it wasn’t essential for execution either. Yet, HBL chose to build it.
To me, that decision reflects a deeper cultural pattern within the company. The real differentiating factor in engineering and manufacturing businesses is often not the product itself but the processes that sit beneath the surface.
As per the latest presentation from Concord Control Systems:
Kavach margins in the industry are expected to be around 25–30 percent. Yet HBL has reported significantly higher margins in its Electronics segment. Well, I am not sure whether Concord mentioned Loco Kavach margins or the overall blended range for Loco, Station & Track..
Whatever it is, in my view, for HBL there are efficiencies at both the product level and the process level, which together can create a margin advantage.
