Any update from today’s AGM?
HFCL Ltd has today bagged an order amounting to ~ Rs.287.96 Crores from RailTel Corporation of India Limited (CIN: L64202DL2000GOl107905), a Mini Ratna (Category-I) Central Public Sector Undertaking (CPSU) of Ministry of Railways, for setting up of Secured Optical Packet Switched Network for Defense Forces.
The Secured Optical Packet Switched Network shall enhance the security of applications and provide latest state of the art technology, which will drive the security requirement of Defense Forces.
The hardware and the software provided would be under warranty for a period of 24 months.
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I have gone through the AGM transcript above and key points are as below:
| 1 | With an aim to position ourselves as a tech-powered enterprise, we have steadily been increasing our R&D investments |
|---|---|
| 2 | The year gone by witnessed the addition of a new R&D Center in Bengaluru and that is aimed at developing next generation 5G products |
| 3 | We are certainly deepening our overseas engagement in more than 30 countries, which have traditionally been the strong bastion for our optical fibre cables |
| 4 | we are developing a global sales and marketing talent pool by way of strategically inducted local talent in select geographies |
| 5 | revenue grew by 15.2% to reach Rs.4,422.96 Crores while healthy growth of 13.5% took our EBITDA to Rs.585.71 Crores |
| 6 | Profit after tax grew by 3.8% to reach Rs.246.24 Crores |
| 7 | We close the year with an outstanding order book of Rs.6,875 Crores |
| 8 | The telecom sector in India is at an inflection point given the impending switch to 5G networks, expanding 4G rollout by telcos, PLI schemes to boost exports, the implementation of BharatNet PHASE 2 |
| 9 | The second strategic move is to scale up our manufacturing capacities and capabilities across optical fibre and FTTH cable. |
| 10 | We are already implementing modernization and expansion of our optical fibre and optical fibre cable manufacturing capacities by 20 to 25% |
| 11 | and we are also in the process of setting up a greenfield facility for the manufacture of defence equipment |
| 12 | The Expansions are taking place across three manufacturing locations in Hyderabad, Goa and our subsidiary Company HTL Limited at Chennai |
| 13 | These are expected to be commissioned between October 2021 and March 2022. |
| 14 | Third, we participated in the recently announced PLI scheme of the Government of India through our newly formed wholly owned subsidiary, HFCL Technologies. |
| 15 | To grow our footprint abroad, we are recruiting technocrats with a proven track record and international experience to guide our product and market development. |
| 16 | Additionally, we are strategically focusing on increasing our product business share to 60% of revenue over the next couple of years |
| 17 | In terms of strengthening our balance sheet, I am sure you would note that with a very good debt-equity ratio |
| 18 | The Government has already announced the intention for the 5G auction in the first quarter of the next calendar year. |
| 19 | this year itself we will see the debt coming down by Rs.200 Crores |
| 20 | Note: Total Debt 710 Cr as per Screener |
Disclaimer: Invested
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Sounds Interesting. I checked out this stock. Also read the last call transcript.
My doubt is – how big can it get ? i.e. what’s the market size of these sectors. and how much hfcl can get.
Can anyone share your thoughts or where I can get the info.
Disc: Interested. Not invested
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FII may come and buy in this stock. but they can also leave after getting some profit and it is not easy to keep tracking when they are exiting. So I feel it is better to have our own conviction to go long term in any stock.
I am not sure how much big they can get but seeing they are inclining more towards product side and opening new office on other country. It may take a year to reflect good number. Noting that management walk the talk.
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Could this be a new big opportunity for Fibre Optic Cable manufacturers?
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Since this talks about Satellite based broadband, will it need OFCs ?
You are partly correct. Have a look here…
Considering the high cost of satellite internet, not every individual might be able to subscribe to it. This could be easily solved using “localised community platform” wherein a sungle substation in a village gets connected to starlink and then the entire local community could be connected to that substation using fibre cables.
Its similar to the idea being proposed for solar farms. Places not connected to the conventional electricity grid could put up huge community solar farms and the individual houses could get connected to it via transmission wires.
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I wouldn’t read too much into starlink options largely because Bharatnet rollout of connecting all villages are generally on track. That definitely needs OFC, lakhs of Km. HFCL, sterlite largely supply the OFC. Another large OFC buyer is RailTel who lays these along railway track right of way and sells bandwidth on it on a common carrier basis.
Just a matter of service quality, Sir. BharatNet intended internet speeds are upto 20Mbps while for Starlink (in the United States), the average speeds are coming up at 97Mbps.
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Yes agree. This is my list of their potential growth areas
- India FOC - 28Lakh Km fibers present against target of 50Lkm by 2024
- Bharath net - 23LakhKm FOC needed
- Bharathnet - Access and Optical equipment needed (40gb router, 100gb router etc)
- 5G - New types of cables & new type of equipments
- 5G - Starting new System integrator services
- Large opportunity in Railways digi & mordernisation project - safety, signalling, etc (total investment bucket 25K Cr )
- Defense products - night vision goggles, & other equipment
- Attempting Aerospace products entry
- Expecting export growth - from 125Cr in current yr to 300Cr in FY23 to 500Cr.
Please edit/add your inputs.
Disc: Not invested. Interested
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Pledge on all of promoter group shares have been completely removed. Exactly as the management had indicated in their ConCalls. Great to see the company walking the talk!
Disc: Invested
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5G schedule seems to be in line of management commentary (Q2-Q3 of FY23)!
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