Earnings call transcript: HFCL Q2 2025 reveals strong growth in revenue

HFCL Limited, a prominent player in the Diversified Telecommunication Services industry with a market capitalization of $1.24 billion, reported robust financial performance for the second quarter of fiscal year 2025, showcasing significant revenue growth and strategic advancements in its product lines. According to InvestingPro analysis, the company is currently trading at a premium valuation with a P/E ratio of 325x. Despite a dip in stock price, the company remains optimistic about its future prospects. The earnings call highlighted HFCL’s commitment to expanding its optical fiber capacity and strengthening its position in the defense sector.

Key Takeaways

• HFCL’s Q2 FY26 revenue rose to INR 1,042.34 crores, up from INR 871.0 crores in Q1 FY26.
• The company achieved an EBITDA margin of 19.49%.
• HFCL’s order book stands strong at INR 9,981 crores as of September 30, 2025.
• Stock price fell by 2.72% following the earnings release.
• Major expansion in optical fiber cable capacity planned by June 2026.

Company Performance

HFCL demonstrated impressive growth in Q2 FY26, with revenue increasing significantly from the previous quarter. This growth is attributed to the company’s strategic expansion in its optical fiber and defense product lines. The Indian telecom market’s rapid growth and global demand for optical fiber, driven by AI and cloud technologies, have bolstered HFCL’s market position.

Financial Highlights

• Revenue: INR 1,042.34 crores, up from INR 871.0 crores in Q1 FY26.
• EBITDA: INR 203.37 crores, representing a 19.49% margin.
• Profit After Tax (PAT): INR 71.92 crores, with a margin of 6.89%.
• Order book: INR 9,981 crores as of September 30, 2025.

Market Reaction

Following the earnings announcement, HFCL’s stock price experienced a decline of 2.72%, closing at INR 77.32. This movement reflects investor caution, possibly due to broader market conditions or sector-specific trends. The stock currently trades 44% below its 52-week high of $1.57 and 13% above its 52-week low of $0.78, with a relatively low beta of 0.34, indicating lower volatility compared to the broader market. For deeper insights into HFCL’s valuation and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 stocks with expert analysis and actionable intelligence.

Outlook & Guidance

HFCL maintains a positive outlook, with a revenue growth guidance of 20%. The company anticipates defense revenue to reach INR 500 crores next year, with potential to double subsequently. HFCL is focused on expanding its optical fiber capacity to 42.36 million fiber kilometers by June 2026, positioning itself as a leading player in the global market. InvestingPro data shows the company maintains a "FAIR" overall financial health score of 2.25 out of 5, with particularly strong scores in profitability (2.76) and price momentum (2.69).

Executive Commentary

• "With this increase in data consumption in the world, hyperscalers increase in multifold happening in the world, the demand of optical fiber cables mushrooming," said Mahendra Nahata, highlighting the growing demand in the telecom sector.
• "Our strategy of developing products locally, though it takes time, finally, it gives very, very good results," Nahata added, emphasizing the company’s commitment to innovation and local production.

Risks and Challenges

• Supply chain disruptions could impact production timelines.
• Market saturation in the telecom sector may limit growth.
• Macroeconomic pressures, such as inflation, could affect costs.
• Competitive pressures from global players in the optical fiber market.
• Potential regulatory changes in export markets.

Q&A

During the Q&A session, analysts inquired about the impact of U.S. tariffs, to which HFCL responded that the impact remains minimal. Questions also focused on the company’s ongoing defense product development and trials, indicating strong market interest in HFCL’s strategic initiatives.

Full transcript - HFCL Ltd (HFCL) Q2 2026:

Conference Moderator: Ladies and gentlemen, good day and welcome to the HFCL Q2 FY1 Risk Earnings Conference call hosted by HFCL Mahendra Nahata. This conference call may contain forward-looking statements about the company, which are based on beliefs, experience, and expectations of the company as on date of this call. These statements are not a guarantee of future performance of the company, and it may involve risks and uncertainties that are difficult to predict. As a reminder, all participants will remain in the listening mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your touch-tone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Mohit Dhoja from HFCL Securities Ltd. for opening remarks.

Thank you, and over to you, Mohit.

Yeah, hi, thank you, Riyan, and good afternoon, everyone. Thank you for joining us today for Q2 and HFCL Mahendra Nahata F1 Risk Earnings Call of HFCL Ltd. First of all, I would like to thank management for providing us the opportunity to host the call. From the management side, we have Mr. Mahendra Nahata, Promoter and Managing Director, Mr. V R Jain, Chief Financial Officer, Mr. Manoj Baid, Company Secretary, and Mr. Amit Agarwal, Head of Investor Relations. Without further delay, I would now hand over the call to Mr. Nahata for the opening remarks. Thank you, and over to you, sir.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: Thanks, Mohit. Good afternoon, ladies and gentlemen. I extend a warm welcome to all of you on HFCL Ltd’s earnings call for the second quarter, half-year ending on September 2025. I trust you have had the opportunity to review our initials, press releases, and investor positions, which are available on our website and the stock exchanges. The world around us is changing at an unprecedented pace, driven by rapid advances in artificial intelligence, cloud computing, and digital infrastructure. Technology is no longer just an enabler; it is reshaping economies, industries, and societies. Supply chains are being redefined, and customers are demanding smarter, faster, and more sustainable solutions. Against this backdrop, HFCL Ltd is making a decisive and confident shift, moving beyond making India to innovate in India, creating cutting-edge products and solutions which are capable of serving both domestic and global markets. The telecom industry is at an inflection point.

India continues to be one of the fastest-growing telecom markets globally, with 5G rollouts accelerating and a 6G vision of 2030 shaping the roadmap for the next decade. Data traffic in India is expected to grow at a CAGR of 22.9% over the next five years, driven by increasing smartphone usage, OTT consumption, and enterprise digitization. After a subdued phase, the global optical fiber market has witnessed a strong rebound, led by a surging demand from hyperscalers and data center operators. The explosion of AI workloads and cloud applications is fueling the demand for next-generation high-fiber cables, a trend that is expected to sustain for several years. This revival perfectly aligns with HFCL Ltd’s strengths in design, manufacturing, and innovation, positioning us to capture a larger share in the global market. Globally, telecom operators are impinged by investments in fiber networks, together with the increasing demand of data consumption.

Our investments in enhancing optical fiber and optical fiber cable capacities, indigenous telecom and network infrastructure, and solutions position us to benefit from this sustained wave of network modernization. Our progress in Q2 of FY26 reflects our strategic vision with capacity expansion initiatives, significant defense opportunities, robust export pipeline being built, and industry ESG credentials fully aligned with our long-term strategy. As we discuss today’s results, I’ll share how these initiatives, together with our broader strategy, are positioning HFCL’s sustained growth and leadership in telecom, defense, and digital infrastructure. This call marks a transformative milestone for HFCL as we begin the planned expansion of high-fiber comparable manufacturing capacity from 1.73 million fiber kilometers per annum to 19.01 million fiber kilometers per annum. This expansion has already commenced and is partially already operational. It will be fully operational by June 2026.

Upon completion, HFCL’s total optical fiber cable capacity will reach 42.36 million fiber kilometers per annum, positioning us among the top global optical fiber cable manufacturers. This scale advantage will not only enable HFCL to cater to the rising global optical fiber cable demand, but will also lead to improving cost efficiencies and market competitiveness. HFCL continues to strengthen its global footprint. In the first half of FY26, we secured export orders exceeding INR 650 crore for supply of optical fiber cables, leading international customers to be executed by April 2026. More export orders are already in the pipeline. These opportunities reflect the growing confidence global customers have in HFCL’s technology, reliability, and execution excellence. On the optical fiber front, our capacity expansion programs are progressing extremely well.

We have already achieved a capacity of 28 million fiber kilometers per annum, with all our optical fiber and cable providing adequate capacity. We are well positioned to cater to the surging global demand, particularly driven by AI, cloud, and hyperscaler-led network expansion. Our eco optical fiber, which is engineered for high performance and reduced signal loss, is gaining rapid adoption across domestic and international customers and is expected to recoup a major share of our fiber revenues going forward. In the business, HFCL continues to build momentum across multiple fronts. Our subsidiary, TL Ltd, secured a prestigious contract worth INR 182 crore from the Indian Army for supply of tactical optical fiber cable and related accessories.

This is more than a business win; it is a strategic contribution to our strength in India’s defense communications capability and underscores HFCL’s expanding role in building secure, indigenous, and deep-fund solutions that support national security objectives. Additionally, HFCL has secured an order of approximately INR 50 crore for thermal weapon sights, with execution already underway at our Hosur facility. This marks another step forward in our commitment to indigenous manufacturing and reinforces our growing presence in high-impact security-focused technologies. With multiple vendors already participating, we expect more such significant orders to follow for strengthening our vision in the defense electronics ecosystem. HFCL is well positioned to capitalize and employ significant opportunities in the defense electronics space. The ongoing geopolitical environment, marked by heightened global conflicts and rising defense modernization priorities, has created significant opportunities for indigenous manufacturing.

Global inventories for electronic fuses, ships, and other armaments have depleted, creating urgent strong demand for local manufacturing. Our electronic fuses are currently in the final stages of testing, which we expect to complete by the end of next month. Upon successful completion, which we are confident of, we will develop a position for large-scale production and supply to defense establishments. In parallel, we are developing a standard drone detection radar with software options, which is expected to enter production within the current financial year. Lab trials are underway, and field trials are being set to begin shortly. The product has already attracted strong market interest, driven by a growing need for autonomous aerial threat management systems. During this quarter, a potential 1,000-acre land parcel was passed by the Government of Andhra Pradesh to set up a defense manufacturing complex.

This upcoming facility will focus on the production of artillery ammunition shells, multimodal grenades, and other critical defense equipment. We continue to strengthen our position in India’s defense ecosystem through deeper engagement and participation in large-scale indigenous programs. During the quarter, we participated in a significantly large bid for the upgradation of 811 BMP armored fighting vehicles of the Indian Army. The program represents a key milestone in India’s defense modernization and self-reliance journey. Our ongoing defense product development for electronic fuses and drone detection radars to thermal weapon sights, coupled with upcoming defense facilities in Ahmedabad, helped establish HFCL Ltd, a center of excellence for defense electronic manufacturing in India, in both domestic and global opportunities. The quarter also represents a solid success in India’s digital connectivity programs.

HFCL Ltd has been playing a critical role in the BharatNet initiative, and I am pleased to share that we have received additional orders for routers under the BharatNet project for the Nahal Circle. We are participating in two additional circles this quarter, and accepting meaningful orders and flows from these circles also, further strengthening our industry position as a key partner in building the nation’s partnership structure. Our indigenously developed telecom and network products continue to witness strong demand across telecom, enterprise, and broader applications, reflecting our global relevance as a technology-driven response provider. We created a smart purchase strategy to power high-value technology-driven manufacturing in defense and telecom. With expanded scale, diversified products, and export development, HFCL Ltd is poised for sustainable and profitable growth. Our plants continue to operate at full capacity utilization, underscoring global demand across telecom, defense, and exports.

HFCL Ltd has taken a strategic decision to divest its entire 15.9% in Nivate Systems Private Limited for INR 52.4 crore. While the transition is currently underway, this will reflect our intent to sharply focus on core strategic telecom and defense. The accompanying deployment will support high-growth innovation and initiatives aligned with our long-term vision. HFCL Ltd continues to strengthen our sustainable business practices. Earlier this year, we received an ESG rating of 63 from NEC Sustainability Rating Analytics Committee. I am pleased to share that this has further improved ESG risk assessment and insights committee. It has now attained the HFCL Ltd ESG rating of 65, and CFC Village Private Limited is rated as 73 in October 2025. These achievements reflect our ongoing commitment to environmental stewardship, social responsibility, and strong openness.

For HFCL Ltd, ESG is not merely a compliance exercise; it is a strategic impact that drives innovation, operational efficiency, stakeholder trust, and long-term recreation. Now, coming to financial performance for Q2 of FY26, revenue was INR 1,042.34 crores versus INR 871.0 crores of quarter one of FY26, and INR 1,093 crores for Q2 of FY25. EBITDA shifted to INR 203.37 crores versus INR 140.29 crores of quarter one and INR 171 crores of quarter two of FY25. EBITDA margin was 19.49%. The larger EBITDA margin was 4.93% of quarter one and 15.7% of quarter two of FY25. PAT was INR 71.92 crores versus a loss of INR 29.31 crores in quarter one and INR 73 crores of profit in quarter two of FY25. PAT margin was 6.89% versus negative 3.36% in quarter one and 6.71% in quarter two of FY25.

Secondary revenue for telecom products stood at 51.43% versus 56.35% in quarter one and 46% in quarter two of FY25. Order book stood at a very healthy order book of INR 9,981 crores, practically INR 10,000 crores as of September 30, 2025, versus INR 10,480 crores in the previous quarter. These strong financial results reflect the robustness of our business. As we look ahead, HFCL Ltd is clearly defined by innovation, diversification, and execution excellence. The revival of the global optical fiber cables market and a ramp-up of our OFC capacity, breakthrough in defense manufacturing, and expanding export momentum, each milestone reinforces HFCL Ltd’s evolution into a technology powerhouse with global footprint. With strong vision, excellent opportunity, and the trust of our stakeholders, we remain committed to delivering sustainable growth and long-term value guided by our philosophy of innovating India for the world and to strengthen India’s technological sovereignty.

Thank you very much for your continued support, and I wish all of you a very, very happy New Year in advance. Thank you very much.

Conference Moderator: Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Our facilitators are set to use their handsets while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Ajay Jain, from Iron Capital. Please go ahead.

Yeah, thank you for taking my questions and wishing you a safe and happy New Year. I just want to understand what will impact on U.S. tariffs on our business? Second question on the follow-up slide, are we meeting our 20% guidance on the revenue side for this year?

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: Abhishek, thank you very much. First of all, yes, we are maintaining the guidance of 20%, and you will see these data coming up from the current working quarter, maintaining that guidance on. Number two, Abhishek, the impact of U.S. tariffs. It is hard to know. Can you predict what is going to be tomorrow? Not even government data can predict what the minister will come out with something else tomorrow. Anyway, having said that, we have been able to minimize the tariff impact on HFCL. I don’t want to go into that detail, but we have been able to minimize through completely legal procedures. You know there’s nothing misclassified or nothing illegal about it. Very legal procedures with relevance to certain U.S. court decisions and customs ruling. We have been able to minimize the tariff impact on HFCL. That much I can say.

There is very minimal impact on HFCL’s exports, which is most logical for our cable to the United States. It might be proper for me to go into more detail, but I can assure you the impact is minimal.

Thanks, sir. One more just follow-up question. Can you talk about how we are doing in defense and what kind of strategy or if you can talk about two-year or three-year strategy on the defense, what kind of revenue we can see on the defense side?

Abhishek, I say defense is going to grow very strong. You know the government of India has decided, and then our discipline, as we all know from the normal news items, media statements from all these leaders we see. There is a huge emphasis on self-reliance, and more and more things are to be produced locally. Once there is a big growth in the defense market, and if there is a growth, then all the people who are able to produce locally, with this importance of self-reliance, are naturally going to grow. Of course, what we are doing in defense takes a little time, a little extra time, I would say, because of the test procedures involved. As far as HFCL Ltd is concerned, we are doing a lot of things in there.

One, communications side, yes, we have executed a very large network, and we expect to start an annual maintenance contract of that, which will be about INR 170 crore per year, which has already been accepted by the Indian Army. Then our electronic fuses have already reached the testing range. I expect that within the month of November, the testing would be completed, and I am very sure that our fuses will pass those tests. I expect very, very good demand coming up for those electronic fuses, not only from India, but from many other countries. For our radars, which we have designed, which I did not cover in my speech, those are getting very good traction. Radars are not only used for border defense, they are going to be used for many of the critical infrastructures within India also.

We are going to give a full presentation to the Home Ministry also about how these radars are useful for not only border, but also Home Ministry responsible to a large chain like BSF and all that. BSF, IDPP, all are coming to Home Ministry, not the Army alone. Also, core surveillance, where the Navy is already trying our radar for the last six months. They first tried one, now they have put two more in two different locations. I have not fully visited those locations. They are able to monitor ship movements around those areas with the connectivity to the naval headquarters. The naval headquarters, they can see the ship movements happening in those areas. Those are the kind of radars we have developed. Our drone detection radars would also be ready very soon with the soft capability.

These are the equipment, and some more equipment which we are designing, like maritime detection radar. This is another equipment we have designed. Electronic fittings, as I already told you. All the radars, fittings, participation in BMP2 upgradation program, which is a multi-thousand crore program, multi-thousand crore program. We are one of the five shortlisted parties. I’m sure you know with a number of more products which we are talking about, including ammunition, which is going to be another area of our expansion. We have already been allotted a 1,000-acre land parcel in Ahmedabad, where we propose to set up a factory for producing ammunition and several other products of defense application. All put together, I’m very, very confident about defense business in the future.

When you come to revenue expected, you know next year, coming year, you know which is in the current year, I would say, I expect roughly about INR 200-plus crores of revenue from defense. Next year, it should exceed INR 500 crores. It should exceed INR 500 crores. Year next to that, I am pretty full. I am not giving any projection or guidance, but it should reach these four figures. The new products which we are having, a number of new products we are developing, defense revenue should increase multifold in the coming years.

Thank you, sir. What will your company do?

Looking at defense product to product, generally, since this is a market which is a bit of a difficult market, margins are better than normal communication products, I would say. Maybe 15% net margin, as a general rule, I’m saying, somewhere equal to 10, somewhere equal to 50. As a general rule, I’m saying in export, it could be better. In export, it can be as high as 20% to 25%.

Profit margin?

Yeah, profit margin.

Sir, last question. Sir, is there any company case for us? Because now we are adding in, working into a different segment, telecom product, ECE, and defense. Is there any company case for value unlocking via demerger or any other opportunity for us?

We have not really thought about any at this point of time. If you think about it, we’ll come back to you.

Thank you very much for taking your question, sir, and all this.

Conference Moderator: Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to two questions per participant. The next question comes from the line of Alla Subramaniam from Ahmed Capital. Please go ahead.

Gurinder, thank you so much for the opportunity. Sir, beyond the hype of fiber cables, what specific passive cutting cable or passive connective systems products are you looking for, like scale data centers? Recently, one of the wiring cable players mentioned that 8% to 9% of our total data center project cost goes for wiring cables. I just want to understand what kind of objective size do you have, especially for data centers?

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: There’s a lot of noise. Yeah, Mr. Bala. High fiber count cable is just one of them. Then MPW solutions, for example, connecting back to direct connectivity, those are some of the opportunities which are there. Likewise, a lot of connectivity solutions we are developing, not only high fiber count cables which are used for long-distance connectivity from data center to data center, but V data center connectivity solutions also we are developing at this point of time. The way the hyperscaling of data centers is taking place all over the world, predominantly in the U.S., and now we are also doing a lot of work in this area. We expect that revenue from our passive connective solution, including that for telecom, which we expect this year to be around INR 400 crore, should reach to four figures in the next financial year.

That is our expectation because we are developing those connectivity solutions for data centers also, which is taking a little time because they are very specific, very high-tech solutions. I think we should be able to complete those developments by January or so, and exporting those connectivity solutions also, apart from the high fiber count cables which we are doing at this point of time.

Okay, thank you.

I think two-and-a-half quarters maintained yearly in the 20% kind of change now in telecom products. I think this quarter is exceeding yearly 29.7%. How do you look at the telecom product margin coming out of the next two to three months’ time? The current rate of pricing for the way of bandwidth and in middle and cable operators, right?

Mr. Bala, sir, there is a lot of noise behind you. The noise is not clear. I can’t understand what you’re exactly saying. There’s a lot of noise.

Yes, sir. I’ll repeat again. Two years back, we estimated nearly 92% kind of points for telecom products, right? They’ve reached 23,000, I think. It’s above our levels. I just want to understand what kind of points you expect in the two to three years’ time timeline. Secondly, in this case, given that price has gone away by the FCC and our inventory levels on the global operator side.

Thank you very much, Mr. Aisha. We run a very strong product-to-product customer service time to time now. Company dependent, this year, this quarter, every time I see now, it’s been 2.49. We expect to, in this financial year, we expect to be around that only. Around that only. Specifically, I cannot tell you now which product would get how much money at what timeframe. For example, last quarter for cable margin was very bad. This quarter improved. Telecom products, so you know it’s product to product and time to time. Generally, you can say margins are centered around 10% or so yearly. Data margin is about anywhere to 20% of the number. I think we should be able to maintain the number we are seeing right now.

Bala, we can take your questions offline. There are a lot of questions for you.

Okay, thank you.

Conference Moderator: Thank you. The next question from the line of Anav Sharada from MK Group. Please go ahead.

Hello. Thank you for the opportunity. I got a lot of questions. Firstly, I see export share for our telecom subcontractor at 26%. Can you give some color on the type of demand you’re seeing? Are you seeing higher fiber count because of data center rollout, which is sort of flooded? Some color on the volume growth, where it’s coming from, how the price is trending. That’s my first question. The second question would be the market performance on the overall business has been pretty good in this quarter. Are there any side levers or downsides to those numbers? These are my two questions. Thank you.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: Mr. Pranav, I can’t do any color. I can tell you whatever it is. You know it’s simple. There is no coloring. Okay. You know exports have increased definitely to 38%. If you measure the growth of fiber cable, and within optical fiber cables, yes, data centers are contributing a lot because that’s a new market opportunity which has opened up. Telcos are also contributing a lot. They’re exporting a lot. Telcos also. We have been able to get entry in Tier 2 telcos in America. Here too, we are not able to supply to Tier 1 operators. Now we are getting to Tier 1 operators also, which is a very good thing. That will provide stability and increase in exports.

If you ask me, if I look at the current market situation of optical fiber cables, what I see happening in the next years in terms of increasing AI usage, increasing OTT usage, machine-to-machine integration, and all those kinds of things which are happening, particularly AI. I think the next three to five years, demand of data centers or in telcos for high fiber count demand is going to be very, very high because their capacities are increasing massively. I just heard one figure. The United States is just less. As a single country, millions of new servers are being put every year, millions. In India, they’re talking about a lakh every year. There’s data needs every year. That kind of growth in data centers is happening. We are able to capitalize on that growth. That growth doesn’t mean they’re supplying to data centers alone.

Telcos also carry data center traffic. When data centers, many places data centers are interlinking by themselves. Many places that are carrying their traffic on telco networks. Their demand is coming from telcos. It is data centers and telcos both, which are giving us this outlook. High fiber count cable is in the usual both of them. It is a mixed number that it is only data centers. It is telcos and data centers both. In India, as the demand grows, the capacity requirement of carrying data will be part of telco. Telcos will be buying more fiber. It is the kind of a situation where data centers increasing data consumption is increasing the demand of optical fiber cables. Maybe by telco, maybe by data centers. That is one.

Second, the price, you know, price costs of the optical fiber cable realization has improved from previous realization of optical fiber cable in terms of fiber per kilometer, which was roughly about INR 850 per kilometer in the last quarter. Just the last quarter, it has gone up to about INR 950 per kilometer or so. INR 100 per kilometer has been increasing the realization of per kilometer of fiber for optical fiber cable. It has gone up by about INR 100. That is how you see the increase in the margins. I’m sure you know a good demand trend for optical fiber cable will continue for three to five years at least. You know our strategy of increasing our capacity for fiber, which was already taken to 28 million fiber kilometers per year, and capability will very soon become 45 million fiber kilometers per year.

We have shown results, and it is going to keep on showing better and better results for the next three to five years because of continuous increase in demand. As far as the company overall is concerned, not only this, but demand for defense products, which we are now on the verge of receiving better orders. Also, at the same point of time, government-led programs, something like BharatNet, for example, where we have already got massive orders, a number of circles are still being followed. We expect to receive reasonably good size of orders either directly by participating in the tenders or from the companies which participate in the tenders and win the contracts from them for supply at different times.

The future is, in my opinion, increasing demand in export, increasing demand locally, and then at the same point of time, defense is on the verge of explosion, now I would say, in the country in terms of increasing demand. We expect a very good future.

Just a small follow-up here. Can you talk a little bit about how is the capacity utilization being this quarter? I understand that you are expanding capacity, but currently, whatever capacity you have, how much is the capacity utilization?

90%.

Okay. Fantastic. Thank you so much. I wish you all the best and wish you a happy New Year.

Thank you, Pranav.

Conference Moderator: Thank you. The next question from the line of Ajaran Bafna from Sunidhi Securities. Please go ahead.

Congratulations for quarter of numbers, sir, after a lot of last two quarters. It is very much evident that demand for both fiber and cables is going to extrapolate to not only the telecom side, but also from the AI and data center side. When you’re guiding for these margins or the capacity population development across the globe scenario consideration, can we think of the prices of both fiber and cables are also going to hinge upward due to this massive upsurge in demand and consider the demand supply scenario going forward? If you could guide on that front, it will be appreciated.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: That is good, sir. You know, pricing is always a question of demand and supply. If I’m asking in general whether optical fiber cable price is going to go up, say yes and no, sir, because there are different kinds of optical fiber cables. Some have excess capacity, some have low capacity. Also, the demand of high-volume optical fiber cable went up much in advance. As a result of that, we developed those high fiber count cables up to 700 fiber count we have already developed. We are on the way developing another cable of 3,400 fiber optic cables. Those kinds of cables, which are very difficult to produce, only few people are able to produce. They are more and more required, and there is a capacity to supply.

I expect not only capacity to be filled up quickly, but also at the same time, there could be some increase in the pricing also. Another thing I would like to say, today there is a rush for capacity by the buyers. We have a situation where buyers are asking us for three years’ grant to supply a particular quantity. We are not able to do that kind of a commitment. We don’t want to do that kind of a commitment because we expect better pricing in the future. We’ve been rapidly integrated into a level of supply of manufacturing fiber and different other raw materials. That’s a natural advantage of economy of scale also. We are kind of getting a clear commitment to the price. We have one office for data centers as well as telcos.

One of the leading telcos is asking us three years’ commitment for supplying the quantity they want to book or capacity, which we are not willing to do at this point of time. That’s the kind of a situation. I am sure that kind of a democratized situation for a specific type of specialized cable, which is not only cable is specialized, but fiber is also specialized. When you want 1,700 fiber cable in a particular diameter, you have to have a very good technology to pack those many fiber in a small diameter. We are able to do that, and that limits the number of suppliers. We have this demand. That will not only boost our capacity for all our expansions we are doing. Maybe we will have to consider expansion at some point of time very soon.

At least we definitely expect, yes, you’re right, some increase in the pricing in months to come.

Got it, sir. Just one extrapolated question. Now we are going to go towards 45 fiber kilometers capacity next year onwards. How do you see, you know, considering this kind of significant surge in demand over the next three to five years, this capacity is going to build up? Are we going to see the 80% sort of utilization in FY2028?

More than that. More than that. More than that. As I said, people are asking for three years’ commitment of reserving the capacity. Where is the question of our fulfilling the capacity? Capacity, if I want, I can fill it up immediately. We are not doing that because right now, we are looking at the kind of demand scenario. Prices may become better. Why should I book orders for three years? There is absolutely no issue. Absolutely no issue.

Just a broader thought process that if 45, we are able to utilize 80% to 85% utilizing 28, we’re talking about almost, you know, assuming INR 1,000 sort of realization, INR 3,500 crore out of top line, and with 20% margin, this itself can be INR 700 crore plus EBITDA within two years’ timeframe. Is my understanding?

This is your F/A calculation on the basis of the current results. I would not give any such a forward-looking statement, which you know prohibits me from doing so.

I got it, sir.

Your calculation, which is you are an intelligent person. I would only say that.

Got it, sir. China is a factor. They have always done the suppressing the pricing side for the entire sector. Now there is an emergence where the U.S. or Europe, they don’t want these Chinese cables to come into their usage. How do you see that China is a factor for the overall context, global context, and for our company?

Look, you know China is not a factor in many of the developed markets. Europe and the U.S., most of the U.S., not at all. Europe, most of the countries don’t use Chinese cable because telecom as such, they don’t want to use Chinese because of geopolitical reasons, not for any other reason. Chinese quality is always a suspect, of course. I don’t say that China cannot produce good cable. They can also. For geopolitical reasons, they don’t want to use. I don’t find China is a big threat in our current market opportunities. When we go to the markets which are Chinese-dominated markets, at that time, we will see. Right now, we don’t intend to do that because in our own markets where we are supplying, there is enough demand for us where we don’t have to compete with Chinese.

Okay. Got it. Thank you, and all the very best, sir.

Thank you, sir.

Conference Moderator: Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we strictly restrict you to two questions per participant. The next question comes from the line of Harzik Vyas from ED. Please go ahead.

Good afternoon, sir. I had a question. I wanted a breakup of 5G products in optical fiber and other 5G products.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: No, no, no. There is nothing called 5G products in optical fiber cables. Optical fiber cables are used for 2G, 3G, 4G, 5G, 6G, for everything.

Optical fiber cables revenue and other 5G products revenue, that is the formation that I’m looking at.

It has been 82 and 18, roughly about 80/20, you can say. 80% have been optical fiber cable and 20% has been other products. The reason you know 5G product revenue in this quarter was low, but we had a problem in supply of chipsets from one of the big chipset vendors. I don’t want to name a company. We had a supply problem from them. Otherwise, it would have been higher by another 10% to 15%. Because of the chipset supply being delayed, this became a bit lower. Otherwise, it could have been much better.

Okay, that problem has been rectified now, and we can have a better revenue in the coming quarter’s time?

Yes, that problem has been rectified. We have started receiving those chipsets from last week. This will certainly improve this quarter. As a %, it could improve some, but if optical fiber cable revenue further goes up, the % may not improve that much, but the absolute amount will improve.

Okay. My second question is pertaining to IBR cables. We’re presuming that the pricing of IBR cable would be substantially higher than normal optical fiber realizations of roughly INR 952,000 that we are getting for optical fiber cable. IBR would be substantially higher than that.

I wouldn’t say substantially, but some percentage it would be because newer technology machines are very costly. Not many people are able to produce it. You have to have a development capability to design these kinds of cables, which are very difficult to design. When there is a demand-supply gap where the supply is lower than the demand, prices tend to become a little tight, tight in a sense that they become a little higher than normal loose tube cable where capacity is immensely high, but the demand is not that much.

Okay. Okay. Sir, my last question is pertaining to the PCS revenue. This year for telcos and data centers, we had put the number at 400 each, if I’m not wrong.

No. This year, we said total 400. Next year, we said 900 to 1,000, both put together.

Conference Moderator: Thank you. We take the next question from the line of Agam from RSEN Ventures. Please go ahead. Agam, if you can please unmute from your end and proceed with your question.

Yeah, I have two questions from my side. Am I audible?

You are audible, but not very well. Please continue.

Yeah. Have we tried to develop any facilities in the U.S. for getting to the BEAD demand?

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: No, not at this point because BEAD funding itself has not started to a great extent. Without BEAD demand, we have a varied demand coming up from the U.S. There is no reason why we should be increasing our capacity for BEAD, which itself is, you know, BEAD funding has not been to the extent in the current U.S. legislation what it was expected to be in the last regime, what was expected this regime that has not happened. BEAD demand is very little. In any case, whatever capacity we have, it has been fully used in Europe, U.S., and our other Middle East and other markets. There is no reason for us to unnecessarily invest to gather that very little demand in U.S. for the BEAD.

Okay. I just wanted to understand better beyond tariffs. What is the current effective tariff rate that is applicable to us, and how are we mitigating the impact of tariffs? You said that the impact is very minimal. What is the effective rate and not the methodology from which we are able to reduce the impact?

That’s a very confidential question. I would not give you a straight reply to that of the % and all that. At least I can say it is a minimal impact, and it has been mitigated by an absolutely lawful way of doing the thing. The impact is minimal, that much I can say. A % and all that, I would not go into that detail at this point of time. Yes, I don’t say there is no impact. Small impact might be there, but there’s not a large impact.

Conference Moderator: Thank you. We take the next question from the line of Nikhil Pluhot from Fidant Asset Management. Please go ahead.

Hi, am I?

Yeah, Nikhil.

Yeah, thanks.

Sir, what was the household facility CapEx that we got till now?

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: Can you repeat? I couldn’t follow.

The CapEx of the household facility, the defense facility?

Not much. It is around INR 15 to 20 crore.

Okay. What is the CAPEX that we are planning to do there at the max, and what are the asset terms there?

Household we are talking about?

Yes, correct.

About INR 50 crore more. INR 50, 50 crore more, we expect to do maximum.

Okay. What are the asset terms in this, like the peak revenue that we can do?

Oh, it all depends. One of the major programs we have participated in is the BMP2 upgradation. If that happens, whether that will happen or not, I don’t know. This is a tender, and we may win, we may lose. If that happens, it may reach, at a peak, a few thousand crores per year. It can reach a couple of thousand crores per year also. Without that, I’m not taking that aberration into account. Househood facility itself has the capability to give INR 400 to 500 crores per year.

Conference Moderator: Thank you. We take the next question from the line of Aman Vij from Prosecute Investment Management. Please go ahead.

Good evening, sir.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: Good evening.

Yeah, yeah. My questions are on the defense side. First, on the fuse side, on the last call, you were expecting the trial to get over in August, I believe.

October.

The trial.

October was the timeframe. I can tell you even without going into detail. The range was DRDO, sorry, DGPO agreed for testing. The ammunition, which was supplied by MIL, Munition India Limited, because they are the only producer of this kind of ammunition. One particular type of ammunition, which is a part of testing, got delayed by them. That was supplied only at the beginning of October. After that supply of that particular ammunition in October, they were applied for test range to DRDO, which is in Balasor. Our fuses have already been not only tested, they reached Balasor. Munition ammunition has reached Balasor. Now we are just waiting for the quotation from DRDO for the use of that test range. Once we receive quotation, we will make the payment, and they would give us a date for at which time this testing will take place.

I think it should be done within August. It has got delayed by two months, one, delay in ammunition supply. As a result of ammunition supply delay and their holidays and all that, DRDO is yet to give us quotation, which I am expecting immediately after Diwali. November testing should be complete. Our fuse ammunition, everything is in Balasor now in possession of DRDO.

Sir, just adding to your point, last time also there was this testing and tenders, and for whatever reason, every order got to the public sector companies and others. This time, are you seeing anything different? First question is that. Secondly, do you expect the result and orders within the next two to three months? That is very fast. All those winter, summer trials, all these things are done? Finally.

No, no. I never said two to three months for the fuses. Fuses, this trial which is happening now, this is summer winter trial, everything. There is no further trial to be done for these fuses. There is a very good demand for these, not only for India, but the export market also. Once the fuse trial is over, yes, I think order bookings should be pretty quick because there is no separate winter summer trial for this. You know, when the DRDO trial is the final trial which is going to happen, and export markets, these are acceptable trials. After you receive orders in every batch, testing takes place, whether by India or abroad. Our other products, which are under trial, you know, radars and all that, we expect orders to come for that, definitely, which are already under trial for the last month.

Sir, just to finish the third point, there are just two key players that are there.

Conference Moderator: Amit, I do apologize to interrupt you. Your audio is not clear.

Aman, we can’t hear you.

Is this better?

Yes, please go ahead.

My question was that there were two, three players apart from us who were going trial. How confident are you that we will be among the two, three players who will clear it? Sir, the question was also that there are a lot of tenders.

Sir, talk about the fuse, of which product you are talking about.

Fuse. Fuse. Fuse. Fuse.

I don’t know any other player who is going for trial at this point of time. I have no idea. I know ourselves. We are very confident our trials should be successful.

Thank you. We take the next question from the line of Sakith Kapoor from Kapoor & Company. Please go ahead.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: Namaskar, Gur Sahib.

Conference Moderator: Sakith, please unmute from your end and proceed with your question.

Namaskar, sir. Thank you for this opportunity. I hope I am audible, sir.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: बिल्कुल ऑडिबल है, साहब। बिल्कुल ऑडिबल।

हाँ, साहब। नमस्कार, साहब। धन्यवाद, सर, इस अवसर के लिए। Sir, firstly if you could just give some understanding how our turnkey business execution is progressing and also on the receivable front, where are we? How is the contribution from ONM currently? I think we have a closing order book closer to INR 3,000 crore. What is the contribution for the first half? Going ahead, how is ONM going to play its role?

ONM’s major work is going to start from the next year. ONM is very little at this point of time. ONM contract’s major contribution will start coming from the next financial year, and the margin will descend about 20% or so. Margin should always be there in ONM. That’s what we think. That was one of your questions. What was the second question?

For the turnkey nurse, what is the receivable and how should this shape up for this quarter? We did renew of INR 530 crore. For the first half, I think so we are.

Mr. Kapoor, let me relate to you. Receivable is more or less 180 days. You know, overall, this is the working capital cycle. Working capital cycle, you know, inventory, execution, WIP, receivable is about 180 days. It’s more or less the working capital cycle in EPC business. As far as EPC business is concerned, how is it going? You know, we are addressing, you know, we are doing Punjab, execution for BharatNet, for example, which is doing very well. I think Bharat Sanchar Nigam Limited has acknowledged to me personally that they have no complaints as far as Punjab is concerned, and it is doing very, very well. Other EPC, like Reliance’s EPC project, of course, whatever number we are doing at this point of time, they are doing very well. There is absolutely no problem.

The UP Jallian and those projects, yes, there are problems because of the non-payment by the state government authorities because they are not receiving funds from the central government. There is a payment problem at that end. As a result of it, execution also has slowed down. Two days back, the Honorable Chief Minister had taken a meeting in Uttar Pradesh, and he has put funds to be released from the state government, even if funds are not received from the central government. We expect that to be picked up once the payments are released by the state government authorities. Otherwise, Punjab, your Jio, whatever we are executing, are doing very well.

Conference Moderator: Thank you. We take the next question from the line of Abhishek Kumar Likha, who is an individual investor. Please go ahead.

Many thanks for the opportunity. Happy to be with you, Mr. Nahata, and the members of the HFCL team. Congratulations for the good setup. मेरे को एक ही समझना था कि इंटरेस्ट काफी हैवीली बढ़ रहा है। I understand काफी expansion वगैरह भी हो रहा है। How do we plan to address the funding and have still enough money for like जो आंध्र प्रदेश का भी हमारा जो बैंक अलग-अलग है। We have plans for expansion of those facilities as well. How do the company has the views on that?

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: Look, you know, interest costs increased because expansion and CapEx and because working capital requirement having been increased. With all profitability happening, profits coming, internal revenue generation, fund requirement will also come down. The receivable will also go down because the NFS, particularly NFS, the receivables, which are still INR 300-400 crore, is expected to be totally mitigated by the middle of next financial year. Once that happens, working capital requirement will go down, and naturally, the interest costs will also go down. That’s what we expect. When you do the Andhra Pradesh, for example, no DPR has been prepared at this point of time. I don’t know how much investment will happen. It is yet to be decided. If expansion happens, interest costs go up, but resultantly, revenue will also go up and profitability will also go up. That should not be a setup.

Okay. Fine. No, please.

Very low debt/equity ratio.

Sorry.

0.35 is the debt/equity ratio. There’s nothing to worry about.

The only thing was it was INR 116 crore of interest element that was going. Basically, profitability is going down because of the interest element. I was looking for, क्या हम इसको कैसे और अच्छे से address कर सकते हैं?

हाँ, हम discuss कर रहे हैं ना। एक तो internal generation जो हो रहा है और दूसरा आप receivable जो काफी जैसे मैं आपको UP का बताया, NFS का बताया, ये receivable अभी आने ही चालू हो जाएंगे। Once the receivable comes, interest costs will automatically go down.

Conference Moderator: Thank you. We take the next question from the line of Satya, who is an individual investor. Please go ahead.

Hello. Namaste Nahataji.

Hello.

Nahataji, the question is on the side of 5G products. Optical fiber cables side par itna traction dikh raha hai, globally bhi demand ho raha hai. What is the availability in 5G products? What traction are you seeing globally, in India, in exports?

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: देखिए, क्या the 5G products का सवाल है ना, एक cable को भी आपको part of 5G समझना चाहिए। क्यों? 5G के साथ data requirement बढ़ी है, data consumption बढ़ा, fiber optic cable का consumption बढ़ा है। 5G cable cannot be separated out from 5G as such. In any case, 5G के जो specific products हैं, जैसे आप लीजिए, fixed wireless access। हम तो केवल एक ही product बनाते हैं, 5G का, which is fixed wireless access, which worldwide the demand is there. India is another country which is the highest usage of fixed wireless access, काफी use हुआ है। Demand is there. One writer, I would say, the prices have to come down a little bit more because at the current price and current R2, operator needs more EBITDA.

With the kind of spectrum requirement is there in 5G fixed wireless access, it doesn’t give a very good economic proposition to operators. They are also looking at prices to come down. I’m sure prices will come down by a few, you know, $20, $30. At that point of time, this demand will increase further. Operators have already started looking at 6G also now. 6G की तरफ देखना चालू कर दिया लोगों ने। 6G जब आने वाला है, तो उसमें कितना investment होगा, कब होगा? 5G का investment होगा, अभी expansion बहुत होना है। ये नहीं है कि नहीं होना है। There is going to be expansion on 5G. Expansion is more going to be on an incremental basis. Incremental in a sense that large part of the country has already been covered by operators like Jio. It is going on an incremental basis.

Incremental demand अच्छी रहेगी अगले दो-तीन साल तक। Operators are looking at reduction in the price also.

Right. Sir, what about UBR? UBR में we were developing this point-to-multipoint, उसका development का status क्या है और अभी उसमें क्या visibility है?

देखिए, छोटा UBR का point-to-multipoint हमने develop किया only already 7 subscribers per base station. That is not enough. We believe that it has to be more than 7. You know, it should be at least 20 to 30 subscribers per base station. We are already working on that concept. The development, we believe we should be able to start in a month’s timeframe so that you know we can link more than 20, 30 subscribers per base station. We are already conceptual stage पे हैं। Development समझिए, महीने भर के बाद चालू करेंगे।

Conference Moderator: Thank you. We take the next question from the line of Lakshmi Narayan from KCM Wealth Private Limited. Please go ahead.

Hi, sir. Thank you for the opportunity. Could you just throw some light on IBR and optical and tactical fibers, sir? These have like more cables specifically made. Also, could you talk about margin processing?

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: IBR, so I talked quite a lot. You know, the IBR is 800, 64 fibers, 1,728, 3,400. Those are all there, and which are being used by telcos and data center operators both for long-haul connectivity. Telcos are also using for carrying more data. Tactical cable is a different cable. This is used by defense forces. This has multiple layers of metal protection over it, you know, metal protection, and with flexibility. They are put in the rolls of 100 meters, 200 meters each. A soldier can keep on walking, and the cable is laid down from a roll which he carries on his back. This can be rolled back and then put into somebody else, some other place. It is kind of a battlefield communication cable, which can be used at different places multiple times. It is very strong.

Even if a tent goes above that, it will not break. That kind of a cable is required by defense forces. We already won a contract, INR 100 crore or so. Most of this will be supplied during the next financial year. Most of this will be supplied this financial year itself. We are also increasing our capacity. We have three machines at the point for tactical cable. We are increasing to five. We also want to backwardly integrate in terms of manufacturing those steel tubes also, which are required as a production layer. We want to go backward, buy the sheet and make that tube internally rather than buying the tube, which would give us better competitiveness.

Conference Moderator: Thank you. We take the next question from the line of Kaushik Jawar from AK Investor. Please go ahead.

Thanks for the opportunity. Sir, I want to understand. I understand we are doing a lot of stuff in defense, optical fiber. You see a long runway of growth. Where do you see it’s a longer-term question. I won’t have any shorter questions. Where do you see HFCL, the things which are planning on? I mean, there is a lot of learning curve. For the last five years, we have been longer versus maybe defense and EPC companies that are resilient in a positive thing. Where do you see the next three to four years for players as a HFCL, I mean? Can you put some weight on this? That’s all.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: I couldn’t understand Kaushik’s question. Your voice is not very clear. What is the question again?

I’m asking her as a long term, where do you see HFCL Ltd in three to four years? In the past, last four to five years, we have been into this defense, optical fiber cables. We have, I mean, have good experience on MEB and technology, EPC services. Where do you see from this juncture to next three to five years as a HFCL Ltd?

Okay. I’ll tell you. One, optical fiber cable is going to remain a very strong area as we have already discussed. Defense is going to be another strong area because we are coming up with a lot of new products in defense and new alliances also, which when happens, you will come to know. Of course, EPC is going to be another area where we would be working on because a large number of EPC projects like BharatNet are already there and which we are working. These are the three areas, major areas if you look at, you can say. Telecom products, of course. When I say OFC, I take it as a product of products. So OFC, telecom products, defense, EPC, these are the four areas the company is going to be concentrating.

Okay. One more thing, I have a question on defense. When you say, I mean, there are a lot of tie-ups which are happening in the defense space. There’s a lot of attraction, right? You are saying that since we have done the R&D and you are saying next year INR 500 crore and the next year is INR 1,000 crore, I mean, it looks like a very ambitious number. I mean, for HFCL, I mean, we’ll be able to do?

Mr. Kaushik, I said next year INR 500 crore, not INR 1,000 crore. Huh? I said INR 500 crore. Yeah, next to that, it looks like we should be able to reach INR 1,000 crore. That’s not very ambitious. INR 500 crore is what? It’s nothing. Even if I win one or two tenders, it can reach to INR 500 crore easily. If I win something like BMP2, it can be multiple of INR 1,000 crore. You know, so INR 500 crore or INR 1,000 crore is not big. You know, one should be able to get it with some good effort, you know, with some good effort. When we are designing locally, please remember that you know local design is more competitive, more acceptable. In today’s environment, when the country is talking about army rebellion, it is much more acceptable to army.

Yes, local, when you design something, you are designing for the first time. It’s unlike some foreign company which is using that kind of products since the last five years. You are doing it the first time. When you do it for the first time, you put up for trial, it is bound to have some problems. You know, you cannot expect some very next-generation product designed and first instant itself, it will work for all. It doesn’t happen that way anywhere in the world. It takes some time. Once it is proven, then the demand is there. Like, you know, our coastal service in Sridhar has been used by Navy for six months. From one, they used six months. Now they have put two more in trial in different working conditions. If they are successful there, then they are going to buy more for their different usage.

Conference Moderator: Thank you. Ladies and gentlemen, due to time constraints, we take that as the last question and we conclude the question and answer session. I now hand the conference over to Mr. Mahendra Nahata for his closing comments.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: Gentlemen, thank you very much for attending this quarter two running call of HFCL Ltd today. I can only tell you that with this increase in data consumption in the world, hyperscalers increase in multifold happening in the world. The demand of optical fiber cables mushrooming, not only in India, but much more so worldwide. Number two, defense being another area of major growth because countries constantly, our Honorable Prime Minister has given multiple times this statement that countries need to be self-reliant. Our strategy of developing products locally, though it takes time, finally, it gives very, very good results. As we have done in optical fiber cables designed locally, and it’s giving the good results. Similarly, defense products, though designed locally, takes time, takes time to prove it successfully because they are high technology.

When it gives results, it gives in multiple, which we have done with cables, which we are expecting to do with defense also. Same order of time, telecom products, demand is picking up. 5G, 6G, this CapEx will always keep on happening in telecom products. EPC contracts, major contracts are coming anyway, BharatNet and all that. Once 6G comes in three to four years’ timeframe, those demand is going to increase. Overall, I can see a very, very good future. I still maintain that revenue growth of about 20%, which we said it could happen. It is definitely going to happen. Profit margins, what we have seen in this current quarter, 19% or so EBITDA. I’m sure we will be able to maintain that in the next two quarters of the current year also.

Revenue growth is quite expected with the increase in cable capacity, fiber capacity, and better demand, not only demand, better supply of telecom products. I see the commitments given by us to the shareholders in terms of revenue and profitability. Companies should be able to do very, very well in the next two quarters. Thank you very much. For any follow-up questions, investors can reach to Mr. Amit Agarwal, our Head of Investor Relations. He would be glad to answer any further questions you have. Thank you, gentlemen.

Conference Moderator: Thank you. On behalf of ICICI Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.

Mahendra Nahata, Promoter and Managing Director, HFCL Limited: Thank you.

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