HFCL's Q2 margin rises 6.57 points as revenue outpaces costs
Consolidated revenue grew +143.62% YoY, while management said it is moving away from low-profit turnkey work.
Filed 19 Oct 2026, 11:57 IST · HFCL Ltd (HFCL)
Key takeaways
- Consolidated revenue grew +143.62% YoY in Q2FY27, outpacing expenses at +124.06% and lifting operating margin by 6.57 percentage points.
- Net profit rose +448.14% YoY, but the 5.56-percentage-point fall in the tax rate also aided the increase.
- Operating margin reached 24.81%, 1.78 percentage points above the 23.03% median for four reported telecom peers.
Price around the results
Revenue growth drove operating leverage
HFCL's consolidated revenue grew +143.62% YoY and +32.73% QoQ, while expenses rose more slowly at +124.06% YoY and +27.34% QoQ. That gap lifted operating profit by +231.29% YoY and +52.26% QoQ. Net profit growth was faster still, at +448.14% YoY and +60.49% QoQ.
Margin gains came despite higher financing and depreciation costs
Operating margin expanded by 6.57 percentage points YoY and 3.18 percentage points QoQ because revenue grew faster than expenses. Interest expense rose +7.29% YoY and depreciation increased +49.51%, but these costs did not offset the operating improvement. The tax rate fell 5.56 percentage points YoY, flattering net profit, while other income accounted for 5.04% of pre-tax profit.
Q2 margin was the highest in the reported five-quarter run
Operating margin improved from 17.21% in Q4FY26 to 21.63% in Q1FY27 and 24.81% in Q2FY27, marking two consecutive quarterly increases. HFCL was 1.78 percentage points above the 23.03% median operating margin of the four telecom peers that had reported.
Management links growth plans to capacity and mix changes
Management said it expects FY27 revenue growth of at least 80% and plans to invest approximately Rs 1,800 cr in optical fibre, cable and preform manufacturing to expand capacity and integration. The company also said it is deliberately moving away from low-profit turnkey work as its revenue mix changes. These comments provide context for the margin improvement but remain management statements about the future.
Past result-day reactions have been evenly split
The current filing has no market reaction to assess yet. Across eight prior results, the stock rose after four and fell after four, with a median absolute move of 3.08%, showing no consistent directional pattern.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,542 cr | ₹1,915 cr | +32.73% | +143.62% |
| Other income | ₹27 cr | ₹31 cr | -12.88% | +111.21% |
| Expenses | ₹1,911 cr | ₹1,501 cr | +27.34% | +124.06% |
| Operating profit | ₹631 cr | ₹414 cr | +52.26% | +231.29% |
| Operating margin (%) | 24.81% | 21.63% | — | — |
| Interest | ₹65 cr | ₹62 cr | +4.58% | +7.29% |
| Depreciation | ₹54 cr | ₹51 cr | +4.82% | +49.51% |
| Profit before tax | ₹539 cr | ₹332 cr | +62.46% | +406.49% |
| Tax | ₹144 cr | ₹86 cr | +68.12% | +319.47% |
| Net profit | ₹394 cr | ₹246 cr | +60.49% | +448.14% |
| EPS (₹) | ₹2.37 | ₹1.49 | +59.06% | +404.26% |
Operating margin of 24.81% compares with a Telecommunication sector median of 23.03% across 4 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- HFCL expects revenue growth of at least 80% in FY27.
Expansion
- HFCL plans to invest approximately ₹1,800 crore in optical fibre, cable and preform manufacturing.
Problems & risks
- HFCL is deliberately shifting away from low-profit turnkey work as its revenue mix evolves.
What to watch
- Whether operating margin holds above 24.81% as management shifts away from low-profit turnkey work.
- Revenue growth against management's stated FY27 floor of 80%.
- Progress on management's planned Rs 1,800 cr investment in optical fibre, cable and preform manufacturing.