Equity Research Report

August 28, 2015

Himachal Futuristic Communication Ltd

CMP:
Recommendation :
Target Price :

Rs 13.19
BUY
Rs 25

Target Period:

12 Months

Stock Details
Market Cap
52- wk HI/L
Avg.Volume (Monthly)
Face Value

Rs 1629.78 Crore
Rs 24.30 Rs 9.10
3638075.23
Rs 10

About
Himachal Futuristic Communications Ltd (HFCL) was incorporated on
May 11, 1987. HFCL is one of the largest telecom equipment suppliers of

Historical Prices
BSE
Gain/Loss

NSE
Gain/Loss

BSE CODE: 500183

NSE CODE: HFCL
SECTOR: TELECOM- EQUIPMENT

1 week

1 month

3 month

6 month

1 year

14.76
-10.57%
14.75
-10.85%

12.97
1.77%
12.95
1.54%

12.47
5.85%
12.50
5.2%

15.45
-14.5%
15.45
-14.8%

12.98
1.69%
13.00
1.15%

transmission equipment, terminal equipment, access equipment and fibre

optic cable in India. The company is also providing Turnkey services to
various operators and large multinationals operating in the country. Their
manufacturing facilities are located at Solan in Himachal Pradesh, Salcete
in Goa and New Delhi.
The company started with manufacturing transmission Equipment and

Revenue (Rs Crore)

soon they expanded their product portfolio to manufacture Access

2,500.0

2,018.8

Equipment, Optical Fibre Cable, Accessories and Terminal Equipment.

2,000.0

The company is geared up for meeting the new generation access network

1,500.0
1,000.0
500.0

605.4
311.4

86.4

demand in future. The company was incorporated in the State of Himachal

260.7

Pradesh and was promoted by Deepak Malhotra, Mahendra Nahata and

0.0
Sep'10

Mar'11

Mar'12

Mar'13

Mar'14

EBIDTA (Rs Crore)

agreement with Seiscor Technologies Inc, USA, for the manufacture of

400.0

200.5

156.3

200.0

Vinay Maloo. The company entered into a technical collaboration

60.1

98.7

Mar'12

Mar'13

1+1 and 1+7 Analog Subscriber Carrier Systems and signed a

Memorandum of Undertaking with Philips Kommunikation Industries AG

0.0
-200.0
-400.0

Sep'10

Mar'11

Mar'14

of Germany for the manufacture of the Digital Subscriber Carrier System.

Financial Highlights

-364.0

Companys standalone operating profit margin jumps to Rs.186.8

Crore in FY14 against Rs.82.59 Crore in the corresponding period of

Profit after Tax (Rs Crore)

300.0
200.0
100.0
0.0
-100.0
-200.0
-300.0

previous year.
147.5

11.4
Sep'10
-221.1

Mar'11

189.9

Revenue for the quarter rose by more than 300% to Rs.2019 Crore

54.8

from Rs.605 Crore, when compared with the prior year period.
Mar'12

Mar'13

Mar'14

EBITDA was at Rs. 200.5 Crore in Q4 FY14 as against Rs. 98.7

Crore in the corresponding period of the previous year showing
growth of 103%.

For any assistance or help, you may contact us at Phone: (+91) 7411847019, 7411847021, 08123061512 or Email: info@marketindexanalyst.com

Equity Research Report

August 28, 2015

Himachal Futuristic Communication Ltd

Investment Rationale
Ratio Analysis (Standalone)
Investment Valuation Ratios
Face Value
Dividend Per Share
Operating Profit Per Share (Rs)
Net Operating Profit Per Share (Rs)
Profitability Ratios
Operating Profit Margin(%)
PBIT(%)
Gross Profit Margin(%)
Cash Profit Margin(%)
Adjusted Cash Margin(%)
Net Profit Margin(%)
Adjusted Net Profit Margin(%)
Return On Capital Employed(%)
Return On Net Worth(%)
Adjusted Return on Net Worth(%)
ROA Excluding Revaluations
ROA Including Revaluations
Return on Long Term Funds(%)
Liquidity And Solvency Ratios
Current Ratio
Quick Ratio
Debt Equity Ratio
Long Term Debt Equity Ratio
Debt Coverage Ratios
Interest Cover
Total Debt to Owners Fund
Financial Charges Coverage Ratio
Management Efficiency Ratios
Inventory Turnover Ratio
Debtors Turnover Ratio
Asset Turnover Ratio
No.of Days In Working Capital
Cash Flow Indicator Ratios
AdjustedCash Flow Times
Earnings Per Share
Book Value

Mar
'14

Mar
'13

Mar
'12

10.00
2.20
52.23
237.3

10.00
2.00
42.82
222.8

10.00
2.00
41.65
212.45

22.00
18.36
18.44
12.36
12.36
7.71
7.67
22.37
23.77
27.33
6.12
6.12
17.68

19.25
15.55
15.59
10.26
10.26
5.22
5.21
16.92
13.52
17.12
5.09
5.09
10.05

19.60
15.72
15.74
11.11
11.11
5.40
5.40
15.67
10.76
14.47
4.65
4.65
5.83

1.75
1.87
0.46
0.35

2.23
3.12
0.56
0.45

0.72
0.81
0.69
0.52

5.45
0.46
6.05

3.38
0.56
3.99

1.52
0.69
1.97

HFCL has touched new milestones with highest revenue ever Rs 2019
Crore showing growth of 300%. The net profit of the company has risen to
169% as compared to previous year. Returns to stakeholders have
strengthened where EPS grew to Rs. 1.15 against Rs. 0.40 in the previous
year. The returns on equity as well as the return on Capital employed have
more than doubled to 17% over the previous year and during the year,
HFCL enhanced its debt to equity ratio to 0.32 that provides healthy
financial position and increased balance sheet flexibility. The key
initiatives that led to the outstanding performance of HFCL and would
remain the focus to maintain high growth trajectory include:

Turnkey projects for setting up OFC infrastructure networks

System integrator for setting up broadband optical transmission

networks

Fiber to the Home (FTTH) network implementation

Manufacturing of OFC, Optical transport equipment, FTTH

equipment, rural GSM equipment, IP broadband radio, 2G and
3G repeaters

In telecom industry, the modernization of Indian defense telecom network,

involving creation of pan India high capacity transport network, is going to
provide business opportunities in rollout of turnkey OFC network and

turnkey system integration projects. With increased nationwide emphasis

on security and surveillance, HFCL expects the sizable orders out of this
opportunity. HFCL are competent to address city surveillance projects as
such projects are designed around citywide OFC networks, the core of
13.46
7.28
1.93
88.40

18.48
1.98
0.62
285.8

8.10
0.81
0.26
-178.4

1.61
1.05
6.12

3.37
0.44
5.09

9.69
0.09
4.65

competence of HFCL.
Currently, the FDI policy in India for the telecom sector is liberal and
investor friendly, which has led to continuous investment in the telecom
sector in India FDI upto 100% is allowed in almost all telecom services

and manufacturing of telecom equipment. With the rapid growth in

teledensity there has been a vast growth in the network infrastructure in
India. Currently, India spends around Rs. 50,000 crore every year on
telecom infrastructure and equipment of which close to 90% is imported.
This concludes to the good growth perspective for HFCL.

For any assistance or help, you may contact us at Phone: (+91) 7411847019, 7411847021, 08123061512 or Email: info@marketindexanalyst.com

Equity Research Report

August 28, 2015

Himachal Futuristic Communication Ltd

Balance Sheet (INR Crores)

Consolidated
Source of Funds
Total Share Capital
Equity Share Capital
Preference Share Capital

Technical Outlook

Mar14
204.44

Mar13
204.44

123.94

123.94

80.50

80.50

Reserves

429.92

-25.21

Networth

634.36

179.23

Secured Loans

216.71

269.15

83.03

89.48

Total Debt

299.74

358.63

Total Liabilities

934.10

537.86

Mar14
618.31

Mar13
564.11

Less: Accum. Depreciation

387.97

381.29

Net Block

230.34

182.82

0.54

21.74

Investments

313.19

310.45

Inventories

150.06

32.82

Sundry Debtors

281.45

356.76

95.20

49.42

Total Current Assets

526.71

439.00

Loans and Advances

578.76

292.71

0.00

0.00

1,105.47

731.71

672.02

692.86

43.42

16.00

Total CL & Provisions

715.44

708.86

Net Current Assets

390.03

22.85

Total Assets
Contingent Liabilities

934.10
107.74

537.86
86.93

4.47

0.80

Unsecured Loans

Application Of Funds
Gross Block

Capital Work in Progress

Cash and Bank Balance

Fixed Deposits
Total CA, Loans & Advances
Current Liabilities
Provisions

Book Value (Rs)

HFCL 12 month Stock Performance

HFCL Performance Against Nifty

Peer Analysis
Name

Market
Cap.(Rs)
74,167.36

Sales(Cr)

Bharti Infratel

Last
Price
391.10

5,388.90

Net
Profit
2,725.20

Total
Assets
17,963.50

Honeywell Autom

8,750.00

HFCL

13.30

7,736.33

2,403.67

114.20

881.87

1,648.37

2,551.08

189.91

1,108.26

Astra Microwave

111.45

911.94

634.34

60.73

369.10

ITI

24.10

694.08

574.33

-297.13

1,694.73

GTL Infra

2.50

581.29

599.65

-514.71

5,903.33

MIC Electronics

23.15

301.69

158.54

2.20

396.42

GTL

11.15

175.39

2,069.41

-801.29

3,139.34

NELCO

60.00

136.91

102.77

1.29

72.86

Kavveri Telecom

15.70

31.60

2.32

-27.31

262.32

For any assistance or help, you may contact us at Phone: (+91) 7411847019, 7411847021, 08123061512 or Email: info@marketindexanalyst.com

Equity Research Report

August 28, 2015
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