HPL Electric & Power: This multibagger stock locked in 10% upper circuit on robust Q3 earnings

HPL Electric & Power, a leading electrical equipment manufacturer in India, saw its shares lock in a 10% upper circuit limit at ₹345.05 apiece in today's trade after the company posted a robust set of numbers for the December-ending quarter.

On Wednesday, the company reported an 87.14% YoY growth in its consolidated net profit, reaching ₹11.95 crore. It registered a robust performance YoY, with revenue growth of 21.22% in Q3 FY24 to ₹366 crore as compared to ₹302 crore in Q3 FY23.

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In the Metering & Systems segment, revenue grew by 28% YoY to ₹215.92 crore from ₹168.79 crore in Q3 FY23. The company believes that the high growth in Metering & Systems is set to continue with a strong execution cycle in place in line with a growing order book.

Consumer & industrial segment revenue, on the other hand, increased by 13% YoY to ₹149.65 crore in Q3 FY24 from ₹132.79 crore in Q3 FY23.

"Although volumes have been consistent and growing in the consumer & industrial segment, a value erosion for price (as an industry-wide phenomenon) is taking place in the lighting product lines due to a change in technology causing sales de-growth. This is expected to stabilise in Q4 FY24," the company said in its earnings report. 

Its EBITDA grew by 35.16% YoY in Q3 FY24 to ₹49.71 crore, while the EBITDA margin expanded by 140 basis points YoY, reaching 13.60%. 

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As of February 13th, the company order book stood at ₹2,400 crore, signalling revenue visibility for the short and medium term. The company has positioned itself very well in the smart metre market and is receiving good traction from customers. 

The current meter order book has 87% smart meters and company expects it to further rise. Smart meters attract higher realisations, thereby resulting in increased revenue and enhanced profitability. The consumer and industrial segment contribute 13% of the current order book.

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Incorporated in 1992, the company is among India’s leading electric equipment manufacturers, with a formidable presence across two major segments: metering and systems and consumer and electrical. It currently commands a market share of 20% in the domestic meters market with an installed capacity of 1.1 crore meters per year.

In the metering & systems segment (which is largely institutional and B2B), the company is involved in the manufacturing of smart and conventional metres, while in the consumer & electrical segment (which is largely B2C), it is engaged in three sub-segments: switchgear, LED (light-emitting diode) lighting, and wires & cables.

Over the last one-year period, the company shares have gained 271% and in last 3 years, they soared nearly 800%. 

Looking ahead, positive policy initiatives and a favourable industry outlook are expected to boost demand for HPL’s products, especially switchgear & meters. According to the estimates, the Indian switchgear market is projected to grow at a 15% CAGR over 2019–23.

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