HFCL share price hits 52-week high amid Exicom Tele-Systems IPO buzz; stock up 31% YTD

HFCL share price jumped over 5% to touch a 52-week high on Tuesday's trading session amidst the buzz around Exicom Tele-Systems' IPO, in which it holds 8.19%, and the company's robust order wins. HFCL share price today opened at ₹107.80 apiece on BSE. HFCL stock price touched an intraday high of ₹113.25 apiece and a low of ₹107.40. 

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Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, highlighted that the HFCL share price is in a strong uptrend; however, during the initial part of the February month, we witnessed wild swings on both sides with low volume; however, the primary uptrend seems to have resumed with an increase in volume and prices breaching recent highs. HFCL stock price is already up 10% for the week and 31% for the calendar year, as bulls seem to be in cruise control. In the near term, the stock prices can extend its up move towards ₹120.

Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities, advised that, technically, charts show a multiyear breakout showing a bullish trend. Hence, traders can hold the counter with a stop loss below ₹104 and a target of ₹140–150 in the medium term.

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HFCL Order Book

Speaking of order book, the domestic telecom equipment supplier received an order from state-run Bharat Sanchar Nigam Limited (BSNL) on Tuesday for the provision of 4G and 5G network equipment, for a total of ₹179 crore.

The order book increased to ₹7,678 crores in Q3FY24 from ₹7064 crores in Q3FY23.  According to the company, the new order for 5G telecom networking equipment, which totalled ₹623 crores, was the first of its kind for an Indian company.

“The trigger was on the deal as the company secured a deal with Indian telecom BSNL to provide 4G, 5G gear worth ₹179 crore and also said it will also partner with Finnish vendor Nokia to deploy the OTN gear over the next 18 months,” said Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities.

However, for the quarter that ended December, the company's consolidated profit after tax slumped 18.88% on year to ₹82.43 crore from ₹101.62 crore in Q3FY23. Sequentially, rose 17.47 % from ₹70.17 crore in Q2FY24. 

The company's revenue for the quarter ended December, fell 4.93% on year to ₹1,032.31 crore from ₹1,085.84. Sequentially, slumped 7.12%.

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Exicom Tele-Systems IPO

As per Exicom Tele-Systems IPO's draft red herring prospectus (DRHP), HFCL Ltd holds 8.19%. Common promoters of HFCL and Exicom Tele-Systems include Vinsan Brothers, NextWave Communications, and Anant Nahata. In addition, the IPO is scheduled to launch later this month and unveil its price band soon. Consequently, experts believe that these could be the driving force for the stock's upward performance.

As part of the promoter group of the Exicom Tele-Systems IPO, NextWave Communications Private Ltd holds 71.45%, Vinsan Brothers Private Ltd holds 14.06%, and Mahendra Nahata holds 1,200 equity shares. 

As per HFCL's shareholding pattern for the quarter ended December, NextWave Communications Private Limited owns 15.39% stake in the company, promoter Anant Nahata holds 0.19% stake, and Mahendra Nahata holds 0.09%.

According to DRHP, the IPO consists of fresh equity share offering valued at up to ₹400 crore and an offer for sale component of up to 74 lakh equity shares by the promoter, NextWave Communications.

Monarch Networth Capital Limited, Unistone Capital Private Limited, and Systematix Corporate Services Limited are the BRLM to the issue, and the Link Intime India Private Limited is the registrar to the offer.

According to news reports, Exicom Tele-Systems Ltd filed preliminary papers with capital markets regulator Securities and Exchange Board of India (SEBI) in September of last year in order to raise funds through an IPO.

Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities, explained that HFCL the leading global telecom technology company is in action on multiple trigger points one would be the group family company Exicom Tele-Systems plans to raise ₹400 crore plus from secondary markets of which ₹330 crore is earmarked for the fresh issuance of shares, the company aims to channel these funds strategically. Exicom Tele is an electric vehicle charging solution providing company, poised to become the first company to go public in this sector.

"We also see the little bit of risk of the IPO process of Exicom Tele-Systems if it underperforms market expectations there would be negative implications on the HFCL trend," added Tapse.

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