HFCL share price rises 5% off lows on foray into defence manufacturing biz

HDFC share: HFCL has inaugurated an advanced defence equipment manufacturing facility in Hosur, Tamil Nadu

HFCL share price climbed up to 3.2 per cent on the BSE, to hit an intraday high of Rs 116.65 per share, on Tuesday, December 24. The rise in HFCL shares came after the company announced that it has inaugurated an advanced defence equipment manufacturing facility in Hosur, Tamil Nadu.

 

In a stock exchange filing on Tuesday, HFCL said the new facility is dedicated to producing cutting-edge defence technologies, including HFCL’s indigenously developed Thermal Weapon Sights, Electronic Fuzes, High-Capacity Radio Relay (HCRR) system, and Surveillance Radars.

 

The facility, HFCL said, is capable of manufacturing up to 5,000 Thermal Weapon Sights, 250,000 Electronic Fuzes, 1,000 units each of High-Capacity Radio Relays and Ground Surveillance Radars annually.

 

 

"The new facility is strategically designed to meet the growing demand for high-precision defence technologies. It features a 10,000 Class and 1,00,000 Class clean rooms facility for TI Core and Thermal Weapon Sights production. With a strong focus on quality, reliability, and innovation, HFCL aims to emerge as a leader in defence technology, providing solutions that meet the stringent demands of modern military operations worldwide," HFCL said.

 

Following the news, HFCL shares bounced back 4.6 per cent from the day’s intraday low. At 2:00 PM, HFCL shares were up 1.6 per cent over the previous close at Rs 114.4 per share. By comparison, the BSE Sensex was down 11 points.

 

HFCL is one of the leading technology companies in India, specialising in creating digital networks for telecom companies, enterprises, and governments. Over the years, HFCL has been providing sustainable high-tech solutions to its customers.

 

The facility diversifies HCFL’s services towards India’s defence sector by providing defence technologies to armed forces.

 

India’s actual defence capex, thus far in FY25, stands at Rs 1.7 trillion in as against Rs 1.72-trillion budgeted for the financial year. This is because the share of defence spend in April-October was at 36 per cent, down 700 basis points year-on-year.

 

Given this, analysts at Elara Capital expect large order inflows to be announced in the March quarter of the current financial year (Q4FY25), including imports of Rafale-M ($4 billion) and MQ-9B drones ($3 billion) along with domestic orders for next-generation Corvettes (Rs 36 crore).

 

Similarly, cumulative domestic contracts awarded in FY13-22 stood at Rs 3.1 trillion with Awarded divided by approval ratio at 77 per cent in FY18-22 versus 39 per cent in FY13-17.

 

Domestic AoN approved jumped by 3.5x in FY19 to Rs 1.2 trillion and contract awarded were up by 59 per cent and 46 per cent in FY20 and FY21, respectively. Cumulative domestic AoN was Rs 8.3 trillion in FY23-December 2024. The brokerage, thus, expects a multifold jump in contract awarding in the next two-three years.