HFCL swings to profit, but sequential margin slips as costs outpace sales
Revenue more than doubled year on year, while a lower tax rate helped the sequential profit increase and the stock's reaction exceeded its usual results-day move.
Filed 30 Apr 2026, 12:53 IST · HFCL Ltd (HFCL)
Key takeaways
- HFCL returned to a consolidated net profit of Rs 184.45 cr from a Rs 83.30 cr loss a year earlier as revenue rose 127.81%.
- Sequential operating margin fell 1.63 percentage points to 17.21% because expenses grew 53.68%, faster than revenue at 50.66%.
- The stock rose 8.34% on results day, well above its 3.08% median absolute post-results move across the last eight quarters.
Price around the results
Revenue surge restores profitability
Consolidated revenue rose 127.81% year on year, turning operating profit from a loss of Rs 35.97 cr into Rs 313.93 cr and net profit from a loss of Rs 83.30 cr into Rs 184.45 cr. Sequentially, revenue increased 50.66% and net profit rose 80.18%, extending the recovery from the loss reported in Q4FY25. Management said HFCL secured a five-year global optical-fibre cable supply deal worth Rs 10,159 cr.
Costs checked the Q4 margin momentum
Expenses grew 53.68% sequentially, faster than revenue at 50.66%, narrowing operating margin by 1.63 percentage points. Interest was nearly unchanged sequentially, rising 0.03%, so the main pressure came from operating costs rather than financing. Year on year, however, revenue growth of 127.81% outpaced expense growth of 80.50%, lifting operating margin by 21.70 percentage points.
Tax rate aided the sequential profit increase
The tax rate fell 6.80 percentage points sequentially to 19.08%, which supported the 80.18% increase in net profit despite the margin contraction. Other income accounted for 9.77% of pre-tax profit, so reported earnings also included a meaningful non-operating contribution. The tax rate was 1.53 percentage points lower than a year earlier.
Margin remains below the reported peer median
HFCL's 17.21% operating margin was 2.38 percentage points below the 19.59% median of seven Telecommunication peers that had reported the quarter. It ranked fourth from the bottom on this measure. The multi-quarter trend still shows a sharp recovery from a negative 4.49% in Q4FY25, although margin has now eased from 18.24% in Q2FY26 and 18.84% in Q3FY26.
Management points to product and export mix
Management said it is targeting more than 50% of exports from FY27 onwards and more than 70% of revenue from products in FY27. The company also told investors that global capacity is falling short of accelerating AI demand, while preform expansion cycles take 24-36 months. It flagged a demand glut in China after capacity shutdowns and recent joint-venture closures.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,824 cr | ₹1,211 cr | +50.66% | +127.81% |
| Other income | ₹22 cr | ₹17 cr | +34.58% | +77.51% |
| Expenses | ₹1,510 cr | ₹983 cr | +53.68% | +80.50% |
| Operating profit | ₹314 cr | ₹228 cr | +37.63% | — |
| Operating margin (%) | 17.21% | 18.84% | — | — |
| Interest | ₹63 cr | ₹63 cr | +0.03% | +22.95% |
| Depreciation | ₹45 cr | ₹44 cr | +3.91% | +49.41% |
| Profit before tax | ₹228 cr | ₹138 cr | +65.04% | — |
| Tax | ₹43 cr | ₹36 cr | +21.66% | — |
| Net profit | ₹184 cr | ₹102 cr | +80.18% | — |
| EPS (₹) | ₹1.21 | ₹0.67 | +80.60% | — |
Operating margin of 17.21% compares with a Telecommunication sector median of 19.59% across 7 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +8.34% | +9.08% |
| Next session | +17.68% | — |
| 5 sessions | +31.79% | +31.80% |
| 15 sessions | +38.38% | — |
| 30 sessions | +68.49% | — |
Volume on the results session was 6.11× its 20-day average.
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 is targeting exports of more than 50% from FY27 onwards.
- HFCL is targeting more than 70% of revenue from products in FY27.
New orders
- HFCL secured a five-year global OFC supply deal worth ₹10,159 crore.
Problems & risks
- Global capacities are falling short of accelerating AI demand.
- Preform expansion cycles take 24-36 months, while global leaders are capacity-constrained.
- Capacity shutdowns and recent joint-venture closures have caused a demand glut in China.
What to watch
- Whether operating margin holds above 17.21% after the 1.63-percentage-point sequential decline.
- Whether expenses continue to grow faster than revenue after the Q4 gap of 53.68% versus 50.66%.
- Progress toward management's stated targets of more than 50% exports and more than 70% product revenue from FY27 onwards.