HFCL (HFCL)

FairStock Score: 48/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Debt/equity is a modest 0.37, so the balance sheet is not highly levered.
• Piotroski F-Score of 8/9 indicates recent accounting and operational strength despite the profit fall.
• Latest quarter net profit of ₹102 Cr on sales of ₹1,211 Cr shows the business can still generate a positive quarter.
• Book value at ₹26.65 per share provides some asset backing, though price is far above it.

Concerns

• P/E of 202.40 and EV/EBITDA of 205.74 are extreme relative to declining earnings.
• Sales growth is -14.47% and profit growth -85.96%; ROE 1.27% and ROCE 7.55% show poor capital efficiency.
• Free cash flow is negative at ₹-122 Cr, offsetting reported profit quality.
• Graham Number of ₹14.07 vs price ₹97.75 leaves a -387.03% margin of safety; promoter holding only 28.29% is low.

AI Analysis

Let me begin with the most important lesson: price is what you pay, value is what you get. At ₹97.75, HFCL has a market cap of ₹10,486 Cr, but the trailing earnings justify nothing close to that. The P/E is 202.40, while sales have contracted 14.47% and profit has collapsed 85.96%. Return on equity is only 1.27%, and ROCE is 7.55% — this is not a business compounding capital, it is destroying it in real terms. The balance sheet is not an immediate concern with debt/equity at 0.37, but free cash flow is negative at ₹-122 Cr, so reported profits are not converting into cash. The latest quarter’s net profit of ₹102 Cr on sales of ₹1,211 Cr is interesting, but one quarter cannot offset the annual trend. Graham would insist on a margin of safety. The Graham Number is ₹14.07, meaning the current price offers minus 387% safety. Trading at 3.67 times book value, while earning just 1.27% on equity, makes no sense for a value investor. EV/EBITDA at 205.74 is absurd. Even the Piotroski F-Score of 8/9 only indicates clean accounting mechanics, not economic quality. Altman Z of 2.06 places the company in a grey zone. The FairStock Score of 19/100 labels it risky. Promoter holding is just 28.29% — not a strong alignment. This is a cyclical telecom infrastructure business caught in a downcycle; it may be an asset play someday, but at this price the risk-reward is terrible. I would only watch it, not own it. I need evidence of sustained growth, positive free cash flow, and a much lower price before considering it.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer