HFCL shares surge as the telecom equipment maker delivers year-to-date gains of 265.95% in 2026. Nuvama Institutional Equities has initiated coverage with a Buy rating and a ₹380 target price, citing HFCL’s growing telecom and networking products business, AI data-centre opportunities, strong order book and defence expansion.
HFCL shares were last trading 3.40% higher at ₹252.10, according to the report. However, the stock has also been placed under the long-term Additional Surveillance Measure (ASM) framework by the BSE and NSE, highlighting the need for investors to remain mindful of price volatility.
Why Nuvama is bullish on HFCL
Nuvama’s investment thesis centres on HFCL’s transformation from turnkey telecom contracts towards higher-value telecom and networking products. These products accounted for 83% of the company’s revenue in the first quarter of FY2027, compared with 27% in FY2021.
The brokerage believes this shift positions HFCL to benefit from global data-centre expansion, supported by its order book, capital expenditure programme and execution capabilities. It also sees the company’s growing defence business as an opportunity to diversify its revenue streams.
HFCL targets strong earnings growth
Nuvama expects HFCL to record a compound annual growth rate (CAGR) of 39% in revenue, 68% in earnings before interest, taxes, depreciation and amortisation (EBITDA), and 92% in profit after tax (PAT) between FY2026 and FY2029.
The brokerage has set a 12-month target price of ₹380, based on 18 times its estimated enterprise value-to-EBITDA multiple for the third quarter of FY2029. The valuation multiple is in line with global peers, according to Nuvama.
The report also noted that HFCL was trading at 13.1 times its estimated FY2028 enterprise value-to-EBITDA multiple.
AI data centres and telecom projects offer growth opportunities
The expansion of AI infrastructure worldwide is increasing demand for high-capacity connectivity, optical fibre and networking equipment. HFCL’s growing exposure to these areas could support its business as data-centre operators invest in additional infrastructure.
Its turnkey business also remains important. BharatNet has been a key contributor through large-scale fibre network deployment contracts involving engineering, implementation and optical fibre cable supply.
HFCL has additionally secured turnkey projects from private telecom operators, including Reliance Jio, as well as government and institutional customers.
However, Nuvama identified a slowdown in global data-centre capital expenditure and delays in completing HFCL’s optical-fibre preform capacity as key risks to its outlook.
Jio Platforms IPO could boost Nahata family’s investment value
Separately, HFCL promoter and managing director Mahendra Nahata and his family could see a substantial increase in the indicative value of their investment in Jio Platforms following its proposed initial public offering (IPO).
According to the draft IPO papers, the Nahata family and associated entities acquired 37.04 million Jio Platforms shares through the conversion of compulsorily convertible debentures in July 2020, at a face value of ₹10 per share. They later acquired another 10.83 million shares, bringing their total holding to 47.87 million shares, equivalent to a 0.54% stake.
The investment was valued at ₹47.87 crore at face value when measured at ₹10 per share.
Jio Platforms is scheduled to launch its proposed ₹30,200-crore IPO on October 21, with a price band of ₹1,065–₹1,119 per share. At the upper end of the proposed band, the company’s implied market capitalisation is estimated at approximately ₹10.30 lakh crore.
At ₹1,119 per share, the Nahata family’s 47.87 million shares would have an indicative value of around ₹5,356 crore. This estimate is based on the proposed IPO price and does not represent a realised gain.
What investors should watch
HFCL’s sharp share-price rally reflects market interest in telecom infrastructure, AI data-centre connectivity and defence opportunities. Nuvama’s Buy rating points to the brokerage’s positive outlook, but its projections depend on future growth, execution and market conditions.
Investors should also consider the stock’s recent volatility, the surveillance framework and the risks associated with global data-centre spending and capacity expansion. A brokerage target price is an estimate, not a guarantee of future returns.
