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Ventura Securities
Target: ₹59
CMP: ₹26.55
A number of bullish factors have come together which ensure bright prospects for HFCL in the medium to long term.
The opportunities emerge from: 5G roll-out (₹1.5 lakh-crore-₹2 lakh-crore market opportunity and system integration opportunity); 4G expansion (₹15,000-crore-₹20,000-crore market opportunity; fibre-to- the-home (FTTH) and broadband penetration (₹30,000-crore market opportunity); Bharat Net which is a ₹40,000-crore opportunity; the railway segment which has the potential of ₹50,000 crore over the next 5-7 years; and defence opportunities for communication (₹25,000-crore market size) and electronic products (₹40,000-crore market size).
These are key go-to areas which the company has identified based on its inherent capabilities.
In order to monetise these opportunities, HFCL has already incurred a total capex of ₹350 crore over the period FY18-20 for beefing up manufacturing capabilities in the following areas: expanding OFC capacity from 10 mn fkms to 18mn fkms and also setting up facilities for the manufacturing of OFC accessories; backward integration to manufacture 6.4 mn fibre kms of optic fibre.. With this facility HFCL today has emerged as India’s largest manufacturer of FTTH cables (capacity of 6 lakh cable kms).
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