HFCL Rises as Its Arm Lands ₹44.36 Crore Indian Army Contract

HFCL is expected to attract significant market attention on Monday following a major development involving its subsidiary. The company’s subsidiary has secured a substantial contract worth ₹44.36 crore from the Indian Army. This contract win highlights HFCL’s growing role in defense-related projects and reinforces its presence in the telecommunications and technology sector. Investors and market analysts will likely keep a close watch on HFCL’s stock performance as trading begins, assessing the potential impact of this deal on the company’s future prospects and overall business growth.

HFCL’s material subsidiary, HTL, has secured an order to supply tactical optical fiber cable assemblies to the Indian Army. These specialized cables, which are manufactured domestically, are designed to endure extreme conditions, including the heavy loads exerted by armored vehicles. Additionally, they are equipped with military-grade connectors, making them highly suitable for deployment in harsh and demanding environments.

This latest contract win follows HFCL’s earlier success in January when the company secured an Advance Work Order (AWO) worth ₹2,501.30 crore. This large-scale project involves the design, supply, construction, installation, upgradation, operation, and maintenance of the middle-mile network for BharatNet Phase III in Punjab. BharatNet is a crucial initiative aimed at enhancing digital connectivity across rural and semi-urban areas, and HFCL’s involvement in this phase underscores its role in strengthening India’s telecom infrastructure.

The contract will be executed under the Design, Build, Operate, and Maintain (DBOM) model, ensuring a comprehensive approach to project implementation. The construction phase is expected to span three years, during which the necessary infrastructure will be developed and deployed.

Following the completion of the construction phase, the project will enter a 10-year maintenance period to ensure its long-term functionality and efficiency. During this period, operational expenditure (OPEX) has been structured in a phased manner. For the first five years, OPEX will be maintained at 5.5% per annum of the total capital expenditure (CAPEX). In the subsequent five years, the annual OPEX allocation will increase slightly to 6.5% of CAPEX. This structured financial approach aims to support the smooth operation and sustainability of the project over the long term.

From a technical analysis perspective, HFCL’s stock currently has a Relative Strength Index (RSI) of 40.2. The RSI is a momentum indicator used to assess whether a stock is overbought or oversold. According to data from Trendlyne, an RSI level below 30 suggests that a stock may be in oversold territory, while an RSI above 70 indicates overbought conditions. With the stock’s RSI at 40.2, it is positioned between these two thresholds, suggesting that it is neither strongly oversold nor overbought at this stage.

Additionally, the Moving Average Convergence Divergence (MACD) indicator for the stock stands at -4.8, which places it below its centerline. In technical analysis, when the MACD is in negative territory, it is often interpreted as a bearish signal, indicating that downward momentum may be prevailing. Investors and analysts typically use these indicators, among others, to assess potential trends and market sentiment surrounding a stock.

The stock is currently trading below several key simple moving averages (SMAs), including the 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day SMAs. Moving averages are commonly used in technical analysis to assess a stock’s trend over different timeframes. When a stock trades below these moving averages, it may indicate sustained downward momentum or a lack of bullish strength in the short, medium, and long term.

Traders and analysts often monitor these SMAs to gauge potential support and resistance levels, as well as to identify possible trend reversals. A stock trading below multiple moving averages may suggest that it has been under selling pressure for an extended period, while movements above or near these levels are typically watched for potential shifts in market sentiment.

On Friday, HFCL’s stock ended the trading session at ₹83.9 on the Bombay Stock Exchange (BSE), reflecting a gain of 1.05% compared to its previous closing price. This positive movement came despite the broader market showing relative stability, as the benchmark BSE Sensex recorded a marginal decline of 0.01% on the same day.

Looking at the stock’s performance over a longer period, HFCL has experienced notable fluctuations. Over the past six months, the stock has witnessed a decline of 45%, indicating a period of downward movement. However, when viewed over a broader two-year horizon, the stock has delivered a 24% gain, showcasing its ability to generate long-term growth despite short-term volatility.

As of its latest market valuation, HFCL’s total market capitalization stands at ₹12,098 crore, reflecting the company’s overall worth in the stock market based on its current share price and the total number of outstanding shares.