HFCL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.8
| Stock Code | HFCL | Market Cap | 10,580 Cr. | Current Price | 68.9 ₹ | High / Low | 105 ₹ |
| Stock P/E | 3,918 | Book Value | 26.1 ₹ | Dividend Yield | 0.15 % | ROCE | 7.90 % |
| ROE | 5.00 % | Face Value | 1.00 ₹ | DMA 50 | 67.1 ₹ | DMA 200 | 76.5 ₹ |
| Chg in FII Hold | 0.00 % | Chg in DII Hold | -4.50 % | PAT Qtr | 56.2 Cr. | PAT Prev Qtr | 61.4 Cr. |
| RSI | 56.9 | MACD | 0.22 | Volume | 2,59,88,180 | Avg Vol 1Wk | 2,41,55,051 |
| Low price | 59.8 ₹ | High price | 105 ₹ | PEG Ratio | -335 | Debt to equity | 0.34 |
| 52w Index | 20.0 % | Qtr Profit Var | -28.4 % | EPS | 0.00 ₹ | Industry PE | 16.6 |
📊 Analysis: HFCL shows weak fundamentals with ROE (5.0%) and ROCE (7.9%) far below ideal levels. The stock trades at an extremely high P/E (3,918 vs industry 16.6), which is distorted due to negligible EPS (₹0.00). PEG ratio (-335) further highlights unsustainable valuations. Dividend yield (0.15%) is minimal, offering little income support. Current price (₹68.9) is below 200 DMA (₹76.5), reflecting bearish sentiment, though RSI (56.9) indicates neutral momentum. The ideal entry zone lies between ₹60–₹65 for speculative investors only. For long-term investors, this stock lacks strong profitability metrics. If already holding, consider exiting on rallies near ₹90–₹100 resistance levels, as long-term compounding potential is limited.
✅ Positive
- Low debt-to-equity (0.34) provides some financial stability.
- Strong trading volumes (2.59 Cr vs avg 2.41 Cr) indicate liquidity.
- Price near support zone (₹59.8) offers short-term trading opportunities.
⚠️ Limitation
- Extremely high P/E (3,918) due to negligible EPS.
- Weak ROE (5.0%) and ROCE (7.9%) limit long-term attractiveness.
- PEG ratio (-335) signals unsustainable valuations.
📉 Company Negative News
- DII holdings decreased (-4.50%), showing reduced domestic institutional confidence.
- Quarterly profit declined (₹56.2 Cr vs ₹61.4 Cr), with -28.4% variation.
📈 Company Positive News
- Stable FII holdings (0.00%) indicate no foreign exit pressure.
- MACD (0.22) shows neutral-to-positive momentum in short term.
🏭 Industry
- Telecom and optical fiber industry has long-term demand potential.
- Industry PE (16.6) is far lower than HFCL, highlighting valuation mismatch.
🔎 Conclusion
HFCL is highly speculative with distorted valuations and weak profitability metrics. Ideal entry is around ₹60–₹65 only for short-term traders. Long-term investors should avoid fresh entry. Existing holders may consider exiting near ₹90–₹100 resistance levels, as long-term compounding potential is limited.
Would you like me to prepare a peer benchmarking overlay (Sterlite Tech, Tejas Networks, ITI Ltd) so you can compare HFCL’s valuation and profitability against its closest telecom/optical fiber peers?