HFCL Q2 FY27 Earnings Call: Raises Revenue Growth Guidance To 80%, Order Book Hits Rs. 28,900 Cr

HFCL Ltd held its Q2 FY27 earnings call on October 19, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Quarter with Broad-Based Margin Expansion

• Revenue of Rs.2,541.79 crores in Q2 FY27 (quarter ended 30 Sep 2026) — up 143.62% YoY and 32.73% QoQ, driven by both volume and price increases (management declined to give the split ratio).
• PAT of Rs.394.22 crores — +448.14% YoY and +60.49% QoQ, with PAT margin at 15.51% (+862 bps YoY); PBT of Rs.538.60 crores (+406.49% YoY).
• EBITDA of Rs.658 crores at 25.89% margin — +223.55% YoY, +47.78% QoQ, with margin up 640 bps YoY.
• H1 FY27 PBT of Rs.870.12 crores and PAT of Rs.639.86 crores — up 1,311.62% and 1,401.31% YoY respectively.
• Exports grew ~493% YoY in Q2 FY27 — H1 revenue of Rs.4,457 crores includes deliveries against the $1.1 billion hyperscaler order, though the exact contribution was not quantified.
• Management stated Q2 was "business as usual" — no one-time high-margin orders, and does not view Q2 FY27 as a peak quarter.

Rs.28,900 Crore Order Book, Capacity Expansion Underway

• Order book of Rs.28,900 crores — up from Rs.26,000 crores in the prior quarter even after Rs.2,500 crores of deliveries, with new orders of Rs.5,500 crores flowing in faster than supply.
• OFC and data center interconnect order book of Rs.18,500 crore — ~70% from hyperscalers (export orders); domestic orders are mostly from telcos.
• Delivery timelines range from 4–6 months to 4 years — some new contracts extend to 4–5 years; management emphasized the book is not evenly distributed over its ~4-year duration.
• OFC capacity expanding from 34 million to 63 million fiber km — fiber capacity from 28 million to 34 million km; FY 2026-2027 OFC revenue guided at approximately Rs.7,000 crores (example figure).
• Preform capacity doubled from 300 to 600 metric tons — commissioning advanced by 9–10 months; full 600-ton facility on track for October 2028 (FY28-29). The 600 MT covers only about half of the 45 million CKM fiber capacity, with the remainder sourced via long-term purchase contracts.
• Planned capex of Rs.1,800 crores for optical fiber, cable and preform expansion and backward integration; a separate capex program of around Rs.1,250 crores is being executed (period unspecified).
• Utilization at 100% on fiber — cable utilization near 100% but varies by product type, with data center products running 24/7.

Data-Center Fiber Mix Lifting Realizations

• Data-center fiber contributed 65–75% of Q2 FY26-27 revenue — telco fiber at 25–35%; data-center fiber (e.g., 180-micron A2) commands ~$25–27/km vs. telco D-fiber at ~$15/km.
• Fiber prices rose 20–25% QoQ — blended fiber prices up ~20% sequentially per management estimates, expected to stabilize or see only modest further increases; not all raw materials saw similar hikes.
• Preform prices surged 600% to $300 per kg — Nahata called it "insane" and expects normalization as global capacity expands; HFCL is insulated via pre-determined contracts and expects no margin impact.
• Connectivity revenue guided at Rs.800 crore for FY 2026-2027 — Q2 connectivity revenue guided at ~Rs.300 crores (rough estimate); FY 2027-2028 target of Rs.2,000 crore reiterated.
• Interconnect revenue of Rs.300 crore expected in Q2 FY 2026-2027 — zero recorded in Q1 FY 2026-2027; full-year FY 2026-2027 guided at Rs.800 crore.
• Telecom EBITDA margin of ~30%–33% in Q2 FY26-27 — management declined to compare with competitors, attributing the level to product mix (high-quality fiber for data centers vs. telcos).

Defense Ramp-Up Aspirations vs. EPC Losses

• Defense revenue of only Rs.80 crores in H1 FY27 — management is aspiring to ~Rs.500 crores for full FY27, implying a significant ramp-up; an analyst questioned the gap but the conversation dropped before management could respond.
• Defense & aerospace guided at Rs.500–Rs.600 crores for FY 2026-2027 — at least Rs.2,000 crores in FY 2027-2028, with an aspiration to reach ~Rs.5,000 crores in three years (by ~FY 2029-2030).
• Aerospace acquisition expected to close in Q3 FY27 — pending order book of Rs.1,600–1,800 crores, with revenue to consolidate thereafter; second batch of thermal weapon sights delivered.
• Ammunition complex in Andhra Pradesh on 1,000 acres — has participated in a tender for 800,000 multi-mode hand grenades, with revenue expected in about two years; multiple indigenous radar products in final trials or tenders.
• EPC segment lost Rs.121 crores in Q2 FY 2026-2027 — H2 FY 2026-2027 combined loss guided at Rs.75–100 crores; profitability expected from Q1 FY 2027-2028 on Army AMC contract approval and BharatNet milestone billing clearance.
• Board committee with E&Y advice finalizing restructuring recommendations — including the EPC business; a board meeting expected in about two weeks (by early November 2026) to decide.

Cost Pass-Through and Backward Integration Protect Margins

• Management confident in sustaining margins above 27% — citing price reset clauses in long-term contracts and protection from raw-material spikes; current Q2 FY 2026-2027 margin of ~26% driven by higher-margin connectivity solutions and limited-supply high-fiber-count cables.
• Preform supply contracts on yearly or 18–24 month cycles — no current input cost pressure from expiring contracts, but cost increases expected upon renewal; customer contracts include annual price variation clauses enabling pass-through.
• Germanium availability not a concern for 2 years out — Nahata noted the current raw material shortage is geopolitical rather than natural; supply tie-ups in early stages with multiple suppliers, with germanium cost a low percentage of total cost.
• Mid-term in-house preform solution planned from Q1 CY2027 (Q4 FY26-27) — described as a trade secret that will reduce costs; late-FY 2028 preform indigenization also cited as a margin lever.
• ONM order book of Rs.5,000 crores carries EBITDA margins of 15%–20% — similar to normal turnkey contracts per management estimates.

Raised Guidance, Hyperscale Demand, and Cautious H2

• FY 2026-2027 revenue growth guidance raised to at least 80% (from 40% after Q1) — management now expects to achieve the Rs.10,000 crore revenue milestone before the originally targeted FY29, "much sooner" given the current run rate.
• Conservative H2 FY 2026-2027 guidance — implying potential sequential flatness or slight decline relative to Q2, citing a cautious approach; management denied any supply constraints such as preform availability.
• Management expects FY 2027-2028 revenue and profitability to be better than H1 FY 2026-2027 — driven by order book execution and capacity expansion, barring geopolitical disruptions; no explicit FY 2027-2028 revenue guidance was provided.
• US targeting approximately $35 billion in data center spending — management cited this as a key long-term demand driver, with global spending around $800 billion this year; India's data center capacity of 1.6 gigawatts expected to reach 6 gigawatts by 2030, with potential to exceed 10–12 gigawatts on private investment.
• Nahata asserted data center demand remains robust despite higher financing costs — major hyperscalers (Google, Meta, Microsoft, OpenAI) maintain a rational debt-equity mix; any slowdown in heavily debt-reliant data centers will be offset by rising demand from Europe, Asia, and telecom operators.
• Telcos resuming fiber purchases after a two-year hiatus — concrete inquiries already received; HFCL has started supplying to Indian telcos with international telco discussions ongoing.
• Debt reduction to begin in FY 2026-2027 — management believes debt will "substantially go down" in the FY 2026-2027 and FY 2027-2028 balance sheets.