Check Before You Invest : HFCL Ltd

Snapshot

Q.1 Which industry/sub-sector does HFCL Ltd belong to?

HFCL Ltd belongs to the Telecom sector, operating specifically within the Telecom-Infrastructure segment.

Q.2 Is HFCL Ltd a good quality company?

HFCL Ltd is a average quality company, based on a somewhat consistent 10-year financial track record.

Q.3 Is HFCL Ltd undervalued or overvalued?

HFCL Ltd appears Overvalued, as its key valuation ratios are above with their past averages.

Q.4 Is HFCL Ltd a good buy now?

HFCL Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Revenue growth of HFCL Ltd?

HFCL Ltd revenue growth is -6.9% for FY-2025, which is below its 5-year CAGR of 1.36%, indicating slower growth.

Q.2 Return on capital employed (ROCE) of HFCL Ltd?

HFCL Ltd Return on capital employed is 7.93% for FY-2025, which is below its 5-year historical median of 12.91%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 13.5%, indicating value preservation.

Q.3 Return on Asset of HFCL Ltd?

HFCL Ltd Return on Asset is 2.93%, which is below its 5-year historical median of 5.21%, indicating deteriorated asset utilization efficiency.

Q.4 Return on Equity (ROE) of HFCL Ltd?

HFCL Ltd Return on equity is 5.01% for FY-2025, which is below its 5-year historical median of 9.13%, indicating the business is making worse use of its shareholders capital.

Q.5 Cash conversion cycle of HFCL Ltd?

HFCL Ltd Cash conversion cycle is 153 days, above its 5-year historical median of 107 days, indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.

	Current Level	5-year Historic Median
Asset Turnover	0.57	0.88
ROE	5.01	9.13
ROCE	7.93	12.91
Cash Conversion Cycle	153 days	107 days

Q.6 Gross Profit margin of HFCL Ltd?

HFCL Ltd Gross profit margin which is the profit after deduction of direct costs, is 8.6% for FY-2025, which is below its 5-year median of 9.1%, indicating decreasing margins.

Q.7 Operating Profit Margin of HFCL Ltd?

HFCL Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 10.93% for FY-2025, which is in line with its 5-year median of 11.41% indicating stable margins.

Q.8 Net Profit Margin of HFCL Ltd?

HFCL Ltd Net Profit Margin is 5.13% for FY-2025, is below with its 5-year median of 5.79%, indicating decreasing margins.

	Current Level	5-year Historic Median
Gross Profit Margin	8.6	9.1
Operating Profit Margin	10.93	11.41
Net Profit Margin	5.13	5.79

Q.9 Debt to Equity ratio of HFCL Ltd?

HFCL Ltd Debt-to-Equity ratio is 0.32, which is above with the industry average of 0.17, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of HFCL Ltd?

HFCL Ltd Debt to cash flow from operations is 2.92, which is at a moderate level.

Ownership & governance

Q.1 Promoter shareholding and pledge status of HFCL Ltd?

Promoters hold 28.29% of the HFCL Ltd, with 1.15% of their stake pledged, indicating low pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 Revenue growth of HFCL Ltd vs industry peers?

HFCL Ltd revenue CAGR is 1.36%, compared to the industry median CAGR of 8.97%, indicating slower growth and losing its market share.

Profit Metrics

	Current Level	5-year Industry Median
Revenue Growth	-6.9	9
Gross Profit Growth	-30.8	-1.3
Operating Profit Growth	-14.6	-0.1
Net Profit Growth	-37.1	-1.4

Operating Efficiency

	Current Level	5-year Industry Median
Asset Turnover	0.57	0.96
ROE	5.01	12.44
ROCE	7.93	12.87
Cash Conversion Cycle (days)	152.96	79

Valuation & price assessment

Q.1 Stock return of HFCL Ltd over the last decade?

Over the last 9 year(s), the stock has delivered a CAGR of 20.5% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	20.5%	30%	19.8%	48.4%

Q.3 Valuation ratios of HFCL Ltd vs historical?

The current P/E is higher that its historical median.

Q.4 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	70.24	40.00	35.21
Price to Book	3.76	3.49	1.76
Price to Sales	3.92	2.58	2.58
EV to EBITDA	28.13	20.57	17.33

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