HFCL has posted its strongest quarter ever, with profit up more than fivefold on soaring telecom product sales. About 18 months ago, the company was making losses. The demand for fibre from AI data centres has reversed that.
HFCL Q2 results mark one of the sharpest turnarounds of the earnings season. The telecom equipment and optical fibre maker reported its best quarterly performance ever. Its shares rose by the maximum 5% allowed for the day and stayed there, as buyers far outnumbered sellers.
The numbers
Consolidated revenue rose 144% to ₹2,541.79 crore in the July–September quarter, from ₹1,043.34 crore a year earlier. Net profit jumped to ₹394.22 crore from ₹71.92 crore, an increase of more than fivefold. Profit before tax rose to ₹538.60 crore from ₹106.34 crore.
Margins improved sharply as well. EBITDA, a measure of operating profit before interest, tax and depreciation, more than tripled to ₹658 crore. EBITDA margin rose from 19.49% to 25.89%. The company retained about 26 paise of operating profit for every rupee of sales.
The first half of the year shows the same trend. Half-year revenue reached ₹4,456.77 crore, and profit rose to ₹639.86 crore from just ₹42.62 crore a year ago.
From losses to a record quarter
The reversal is large. In the March 2025 quarter, HFCL reported a net loss of ₹83 crore as revenue fell 39%. At the time, demand for optical fibre cable was weak, margins on new telecom products were under pressure and customers were slow to pick up orders in its project business.
Since then, the source of demand has shifted. Growth in optical fibre is now coming from AI infrastructure, large hyperscale data centres and telecom network upgrades, rather than only from the rollout of telecom lines to homes. Data centres need huge amounts of fibre to connect servers, and HFCL makes both the fibre and the cable.
That shows up in where the money comes from. Telecom products brought in ₹2,321.98 crore during the quarter, about 91% of total revenue. The turnkey contracts and services business, where HFCL builds networks for clients, is still making a loss at the operating level, so growth remains concentrated in one segment.
Big plans
HFCL expects FY27 revenue to grow at least 80% over last year. It plans to invest about ₹1,800 crore in optical fibre, cable and preform manufacturing. A preform is the glass rod from which fibre is drawn, and making it in-house cuts costs and dependence on suppliers.
The company also has an order book of more than ₹28,900 crore, which gives it visibility on revenue for several quarters. Separately, it is targeting about ₹500 crore of revenue from defence and aerospace this year, a smaller business but one with higher entry barriers.
What next
The stock market had already priced in much of this. HFCL shares had risen about 256% over the past year before today’s results, and about 25% in the past month alone. Investors were betting the AI-driven data centre boom would show up in Indian component makers’ earnings. This quarter is the first clear sign that it has.
The risk is concentration. With nine-tenths of revenue coming from one product line, HFCL’s fortunes now depend on how long global and domestic data centre spending stays strong. A slowdown in that build-out would hit it quickly.
What to watch
The next test is execution: whether HFCL can convert its order book and pipeline into firm revenue fast enough to meet its 80% growth target. Investors will also watch how quickly the ₹1,800 crore capacity expansion comes on stream, and whether the loss-making projects business turns around.
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