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HFCL shares decline 6% after subdued Q2FY25 earnings

Stocks
2 min Read Oct 22, 2024
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HFCL Ltd’s shares dropped by 5.96% to ₹117.51 on the NSE following its Q2FY25 earnings report. Investors interested in investing in stocks are closely watching HFCL, as the telecom infrastructure company posted a revenue decline of 1.62% year-on-year, down to ₹1,094 crore from ₹1,112 crore in the same quarter last year.

Key highlights from HFCL’s Q2FY25 performance

HFCL’s consolidated net profit grew by 4.28% to ₹73 crore year-on-year. However, on a quarterly basis, net profit dropped significantly by 33.73%, from ₹111 crore in Q1FY25. This lower-than-expected profit weighed on investor sentiment, contributing to the share price decline.

For those who invest in stocks, HFCL’s earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 19.54% to ₹172 crores year-on-year, with EBITDA margins improving to 15.71% from 13.47%. Despite these positives, the quarterly profit drop has raised concerns.

Market reaction to HFCL’s results

In addition to the lower net profit, HFCL’s revenue declined sequentially by 5.5%, from ₹1,158 crore in Q1FY25 to ₹1,094 crore in Q2FY25. While the company has strong positions in telecom infrastructure, system integration, and optical fibre cable (OFC) manufacturing, its recent financial results suggest challenges in maintaining consistent growth.

What this means for investors

For investors who invest in stocks, HFCL’s stock performance following the Q2FY25 earnings is a reminder of the importance of evaluating financial results before making investment decisions. HFCL has a strong foundation, with a market capitalisation of ₹17,091.34 crore and a diversified telecom product portfolio. However, the recent profit decline and revenue contraction highlight the volatility that can arise from external market factors.

Invest safely

While HFCL’s Q2FY25 earnings report showed mixed results, long-term investors may still see value in the company’s strong fundamentals and EBITDA growth. However, the stock's near-term performance is likely to be influenced by investor sentiment. As always, those looking to invest in stocks should consider both the potential risks and rewards of investing in a company like HFCL, which operates in a highly competitive industry.