HFCL Ltd
NSE:HFCL
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
82.75
161.61
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
HFCL Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the HFCL Limited Q4 FY '2024 Earnings Conference Call hosted by ICICI Securities.
Before we begin, I would also like to read the disclaimer statement. Statements made during this call may be forward-looking in nature based on management's current beliefs and expectations. They must be viewed in relation to the risk that HFCL business faces that could cause its future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. Investors are therefore requested to check the information independently before making any investment or other decisions.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Mohit Lohia from ICICI Securities. Thank you. And over to you, sir.
Yes. Hi, good evening, everyone. Thank you, Neha. Thank you for joining us today for quarter 4 FY '24 earnings call of HFCL Limited. First of all, I would like to thank management for giving us opportunity to host this call. From the management side, we have Mr. Mahendra Nahata, Chairman and Managing Director; Mr. Vijay Jain, Chief Financial Officer; Mr. Manoj Baid, Company Secretary; and Mr. Amit Agarwal, head of Investor Relations.
So without further delay, I would now like to hand over call to Mr. Mahendra Nahata for opening remarks. Thank you, and over to you, sir.
Thank you so much, Mohit, and thanks, everybody, for joining our call. So time is very valuable, and I am thankful that you also join our quarterly call for quarter 4 of financial year '24, 2024, as scheduled. I'm delighted to welcome you all to HFCL earning call for the fourth quarter for the year ended financial year 2024. A test that we've got a chance to go through our financial results, press release and investor presentation, which are available on the website of the company and also on the website of stock exchanges.
So friends, it is a matter of great satisfaction that despite the tough global macro environment, Indian economy is having robust growth and India is poised to become the third largest economy by 2027 as per IMF, third party in Japan and Germany.
During the interim budget of 2024, the Union finance minister underscore the forthcoming 5 years as a period poised for unparalleled development aligning with region of Viksit Bharat at 2047. So highlighted their technology alongside the telecom sector, it play a pivotal role in India's transformative journey. The Indian telecom sector is undergoing the transformative change and will continue to on its succession of history fueled by liberal government policies, proactive government initiatives focused on national priorities, including BharaNet Phase 2 program and PLI schemes.
Government's initiative of converting semiconductor manufacturing in India will also flow a long-term growth of telecom sectors. Hyperscaling of data centers, increased smartphone usage, strong customer demand for high-speed internet connectivity, and 5G network expansion will further fuel growth of the telecom sector. The economic impact of 5G in India GDP could reach at USD 450 billion by 2040, according to Deloitte Technologies, Media and Telecommunications Prediction Report 2023.
Financial year '24 has ended proven to be pivotal year for HFCL. Our strategic investments in research and development have indeed significant returns presenting in the introduction of the comprehensive range of 5G connected dissolutions and products to add specifically for telcos and enterprises, both in India and across global markets. Led by innovation in financial year 2024, HFCL successfully launched the first made in India 5G fixed wireless access customer premises equipment portfolio. Then on [indiscernible] unlicensed band radio, also IP/MPLS routers and introduce innovative 1,728 high-fiber intermittently bonded ribbon cable.
Our 5G fixed wireless access equipment, this market-leading performance in delivering higher throughput. We have introduced high capability features in our routers making them valid to us in world areas in [indiscernible] BharatNet. And overall, I view the result of our R&D team has achieved is milestone showing we have talent and capability to deliver latest technology products. We believe demand for 5G fixed wireless access customer premises equipment is at an inflection point and has become an important use case for 5G monetization, both in India and globally.
With 5G network rollout continuing to streamline, monetization has been a key focus area for operators. Industry reports indicate FWA connections worldwide are projected to reach to 350 million by the end of 2029. As a transition to 5G continues and newer technological standards gain traction, telco are projected to invest USD 342 billion in their networks in 2027 alone as per the PwC report. Every country has different price of specifications for fixed wireless access, customer premises equipment, our company has been able to develop different variance types of this equipment and is uniquely positioned to manufacture and supply, both for India and international markets. HFCL has already received orders for 6 flat year of this equipment.
One of the landmark success of HFCL R&D efforts has been designed and manufactured of point-to-point unlicensed band radios. We achieved record market share for this product in India. More than 500,000 of these radios have already been supplied by HFCL and are working to the full satisfaction of telecom operators for network backhaul and enterprise connectivity. HFCL is not only the largest supplier of these radios in India but also can be counted among the leading suppliers around the globe. We are continuously receiving strong feedback from our customers for its low power consumption and zero spectrum costs.
It is also worthwhile to mention that through its R&D and collaborative efforts, HFCL has created full solution of enterprise networking products. These source include WiFi access funds, routers, switches, backhaul radios and network management system. Having established this name in telecom service provider's market, HFCL basis enterprise product range is now aggressively moving into enterprise market of telecom network and products.
Distributors and channel partners are being appointed throughout the country to reach to a wide spectrum of enterprise customers, both in government and private sector. Opening of these new customer segments will provide higher system opportunity to our revenue. With the introduction of new products and markets, our revenue from telecom equipment segment is expected to rise substantially. We expect that the revenue from this segment during financial year '25, we reached to approximately INR 2,000 crores from INR 150 crores only in the year financial year '24.
Driving growth through innovation in fundamental trend in digital economy. The trends are bringing very large opportunities for innovation and growth, not only for HFCL, but for the entire ecosystem. Similarly, the optical fiber cable market remains a significant opportunity both in India and globally, driven by high speed internet penetration, 5G network and expansion, growth in data centers, BharatNet Phase III, demand for fiber-to-home and global opportunities in key markets coupled by government policies. Development and manufacture of 1,728 fiber base optical fiber cable will open new market opportunity for sales to hyperscale data centers.
In alignment with our strategy of expanding capacities and geographical access, HFCL has announced the setting up of an optical fiber cable management plant in Poland to address the increasing optical stable demand in European markets. Mirroring the trends in the Indian optical fiber cable market, the European countries are also on a significant digitization drive as national priority.
Committed to meet this growing demand and contribute to Europe's digital future, HFCL has committed an initial investment of EUR 15.9 million, that is INR 144 crores all in solid optical fiber cable manufacturing plant has a initial annual capacity of 3.25 million fiber kilometer, which is further scalable to 7 million fiber kilometer per annum capacity.
Our fiber and fiber optical manufacturing facilities in India are producing world-class cable and fiber. Our fiber manufacturing plant has set new standards of productivity. One of the most anticipated opportunities on the horizon. So government's ambitious BharatNet Phase III under which BSNL has already floated approximately INR 60,000 crore tender for CapEx to be incurred in the next 3 years, followed by additional O&M opportunity INR 40,000 crores over a period of 10 years. BSNL's BharatNet Phase III project tender presents a huge opportunity to HFCL as it will strengthen the demand for optical fiber cables, telecom networking products, system integration services and annuity revenue through O&M, all of which are in alignment with HFCL's core strength.
HFCS is uniquely positioned to offer end-to-end solution that meet BharatNet [indiscernible] requirements. We foresee good prospects for us given our vertically and horizontally integrated manufacturing capabilities in optical fiber cable, its accessories, telecom equipment and [indiscernible] of our good company, coupled with vast experience of laying more than 2,00,000 kilometers of optical fiber cable for various telecom operators.
We are optimistically looking forward to securing a substantial price on these opportunities. Explore our products is going to be our cornerstone for increasing revenue. HFCL is already excluding this manufactured fiber optic cable to more than 40 countries with its own design network connectivity solutions including 5G networking solutions, HFCL is now poised to start export of these products to a number of countries, capability to customize their products to customers' requirement and also low cost base provides positive outlook for HFCL. With a release of every new version of software due to customers' requirement we improve our product performance.
I think these opportunities are the tip of iceberg and there are far more opportunities to come. We are confident of durability of demand drivers for industry and our own capability to take advantage of increasing our sales and market share.
Driver by version -- driven by region to fortify national securities and contribute to India's defense sector. HFCL envision significant opportunity for itself in defense sectors with innovation and tie with leading international companies. India accounts for 3.7% of global military spending, making it the third largest military spender in the world after U.S. and China. This presents a significant market opportunity to HFCL. The alignment with government's Make In India policy, HFCL has already developed defense products like electronic fuzes, high-capacity radio relay and thermal weapon sights, all of which have good demand in Indian and international market. HFCL at its 90% owned subsidiary Raddef has developed a state-of-the-art ground surveillance radars, which is an important component of modern surveillance systems. This radar designed by Raddef vast improvement in technology over the current generation of radar being used in India.
Our ongoing R&D initiatives extend the diverse range of radar technologies including development of drone detection radars, Doppler weather radar, LTE-based passive radars, fog and foliage penetration radars, coastal surveillance radars and avalanche detection radars.
We have also successfully cleared a user trial readiness review for BMP 2 armor upgrade project of the Indian Army, further demonstrating our commitment to meeting a defense sector requirements. This is due to more opportunity and prospects for HFCL in defense sector. We are also exploring opportunities for development of more products in defense sectors and we are confident that we will be able to further grow and contribute to India's defense sector with our own development and new alliances. I am of strong belief that in the current year, we will have good growth in the defense sector and it will achieve a state velocity.
During FY '24, the company added an incremental order book of INR 3,725 crores, comprising products worth, orders worth more than INR 1,500 crores and system integration order worth INR 2,225 crores. Our total business has secured a purchase order of INR 623 crores for the supply of indigenously manufactured 5G networking equipments. It's first order for 5G networking equipment based on any Indian company by any telecom service provider. This strategic [indiscernible] is a testimony of HFCL vision of designing and manufacturing high technology telecom equipment in India.
HFCL has been building -- investing in building portfolio of 5G networking equipment, which transforms telco's access and transport in last-mile networking requirements. HFCL also secured a purchase order worth INR 141 crores from BSNL to supply indigenously designed and developed unlicensed band radios in 5-giga sequencing band and 1 Gdps capacity. This landmark deal aims to base their 4G network infrastructure and sharing cost of [indiscernible] by minimizing equipment expenses and eliminating half of the spectrum fee charges. This significant began win solidify HFCL position as leader in indigenous 4G and 5G backhauling solutions. System integration order book comes from prestigious order valued at INR 1,127 crores from Bharat Sanchar Nigam Limited to transform the optical transport network infrastructure across BSNL's pan-India network and position the telco for the future in anticipation of 5G services.
HFCL also secured INR 1,015 crores orders from Madhya Pradesh Jal Nigam, which encompass system integration services, including provisions for laying optical fiber cable on critical and important groups. Further, having had a strong share record in deploying communication network for various railway projects globally and domestically. HFCL all also secured worth INR 80.92 crores from Delhi Metro Rail Corporation. These substantial wins underscore HFCL sustained momentum and solidifies its position as its trail vision in advanced communication technology solutions.
Our order book now stands at between INR 7,685 crores as of 31st March 2024 as compared to INR 7,010 crores last year. I must tell you that behind these number is relentless effort and work done the entire team for development of new features and product innovation. We are very structured in our approach to business but product and sales teams are working closely than ever. We remain increasingly focused on sales and growth of our market share.
Further, as HTL Limited, one of our subsidiary company has successfully secured various prestigious orders in it wire harness business during financial year 2024, which is focused on automotive, aerospace and defense sectors. As you know may read that this segment is of lower CapEx and high revenue generative segment. We strongly believe that this wire harness business can grow many fold in the years to come. Given that HFCL had received an approval to avail the incentive participation in Production Linked Incentive scheme. The company will start receiving PLI benefits in the current fiscal year on production of telecom and networking products.
Friends, let me now give you on the key performance metrics of the quarter 4 and the whole year. For the 12 months ended 31st March 2024, the company reported consolidated revenue of INR 4,465 crores as against INR 4,743 crores in financial year 2023. EBITDA of INR 682 crores as against INR 666 crores in FY 2023. Profit before tax of INR 454 crores as against INR 431 crores in FY '23. And profit after tax of INR 338 crores as against INR 318 crores in FY '23. Revenue of quarter 4 FY '24 stood at INR 1,326 crores as compared to INR 1,032 crores in quarter 3 of FY '24 and it is INR 1,433 crores in quarter 4 '23.
EBITDA for the quarter stood at INR 209 crores as compared to INR 163 crores in quarter 3 of FY '24 and INR 160 crores in quarter 3 of FY '23. EBITDA margin stand at 15.78% for quarter 4 in FY '24 as compared to 15.83% in quarter Q3 of FY '24, and 11.74% in quarter 4 of FY '23.
Profit before tax for quarter 4 of FY '24, we stood at INR 149 crores as compared to INR 108 crores for quarter 3 FY '24 and INR 109 crores in quarter 4 FY '23. That margin stands at 11.2% in quarter 4 as compared to 10.45% in quarter 3 of FY '24, and 7.6% in quarter 4 for FY '23. For quarter 4 of FY '24, profit after tax stands at INR 109 crores as compared to INR 82 crores in quarter 3 of FY '24, and INR 79 crores in quarter 4 FY '23.
PAT margin stands at 8.25% in quarter 4 of FY '24 as compared to 7.99% in quarter 3 of FY '24 and 5.49% in quarter 4 of FY '23. Segment revenue for telecom products during the quarter stood at INR 362 crores, that is 27.33% on quarter 4 revenue as compared to INR 362 crores, 35.24% of FY '23 revenue.
FY '23, '24 has witnessed slight decline in year-to-year revenue due to softening in demand of optical fiber cables. This temporary decline is in line with the worldwide trend. It is attributed to inventory buildup with its major operators resulting in an overall reduction in revenue in absolute terms. Our growth is driven by three independent drivers, which all are working together. These are robust investment in research and development that was the integration with capacity expansion and expanding national and international business.
With these growth initiatives, we've been able to significantly improve our revenue mix, product mix, geographical experience and customers mix and showing sustainable growth in times to come. We remain confident of opportunities ahead and execution of our long-term strategy. We're confident that OFC demand will be restored in time quarter 2 of financial year '25 onwards in both India and key global markets.
Furthermore, we are confident our continued effort in designing and developing innovative and geographies specific optical fiber cables for international markets along with the introduction of new 5G telecom networking equipment and defense products, will lead further lead results in coming quarters. These efforts are expected to provide impetus to both revenue growth and profitability along with the potential of increasing our margin. Our outlook is very bright, and we look forward to a very strong year ahead.
Thanks -- thank you once again for your keen participation. With this, I conclude my opening remarks and open the floor for a question-and-answer session. Thank you.
[Operator Instructions] The first question is from the line of Parth Meta, an individual investor.
Sir, I have a couple of questions. The first one is, this time, we have executed services turnkey services worth from INR 990 crores. So I wanted you to shed some light on that as in we have done better on services margins front as compared to products? And is it the way forward? Or are we going to -- is it a one-off kind?
Look, we have executed INR 964 crores of services in the current quarter and margins have also been good. These margins, I cannot give you a definitive answer that this is trend would continue or there will be different because it is all depends on contract to contract. Sometimes contracts are there, which are of high margin, high profitability. Sometimes they are of lower margin and lower profitability. So there cannot be any definitive answer to this but yes, we look for reasonable margins to continue in our contracts and we are not taking contracts, which are with a lower amount.
Okay. So is this anything to do with the orders that we have got from BSNL worth INR 1,100-odd crores? Is it execution from -- on that front or?
No, no, no. Execution of that order would be in the current year. That execution has not even started significantly.
Okay, that would start in this quarter, June quarter? Or it will take some more time?
Starting in the current quarter, in the June quarter.
Okay. And the mix of products and services would remain 70-30 going forward whenever as and when the optic fiber cycle turns.
I think this year, there will be very transformative change. One of the important factor, which is going to happen, as I said in my opening remarks, last year, the revenue from telecom products are only about INR 150 crores. So this year, we are expecting revenue of INR 2,000 crores from the telecom products. So that INR 150 crores reaching to INR 2,000 crores.
Is that INR 2,000 crores OFC or?
No without OFC, that's what used our telecom products. Now, OFC also, we are expecting revival of market this year globally and India also, and also globally, and we expect a revenue again more than INR 2,000 crores in the current financial year from optical fiber cable business. So there is a potential of product business reaching to INR 4,000 crores plus in the current financial year. This would mean that this -- our revenue would consist of more than 2/3 of the product driven and less than 1/3 of purchase driven. And this trend is expected to continue the future.
If you recall that I have always been saying that our effort is always to develop the product business, not [indiscernible] the product business. Last year was an aberration because of lower demand of fiber optic cable and new products had not been sent to market, there were undergoing stress [ price ] and all that. With the new telecom products, which have been designed, we are already in the market now and also fiber optic cable demand picking up, and both these segments given the revenue -- possible revenue of INR 2,000 crores each in the current year. This will hugely a very, very transformative change. There is almost 70% of revenue coming from product business, which is cable and the telecom products. But the important point is first time we would such a high revenue coming from telecom products.
Okay. So my last question is, have we executed anything from Madhya Pradesh Jal Nigam order that we have received?
A very small portion, probably about INR 50 crores, so it's around less than -- little less than INR 50 crores.
And the BSNL order that you have INR 1,100 crores order, that is mix of products and services, right?
Yes, it's mix of products and services.
The next question is from the line of Balasubramanian from Arihant Capital.
Sir, my first question regarding, like we have seen a lot of strong tower additions by one of tower infra players, so majorly led by rural expansion and 5G rollout. And so what kind of demand and business opportunities we have in this tower rollout? And share all in -- what kind of business share we have from telecom player Jio, Airtel, Vodafone and BSNL?
Look, tower rollout companies like Indus or these companies do not any major demand opportunity for us because tower is more of a construction of towers, which we don't do so much and also not so much of fiber optics cable and all that. So that does not represent any great demand opportunity for us for tower per se. When you asked about telcos, who's are themselves building towers, like Jio, for example. There will be demand opportunity for us because they connect all their towers with fiber optic cables or wireless, both these areas, we are present and we supply equipment to telecom operators, whether it is fiber optical cable or whether backhaul radios. There really the demand opportunity transformers because typically tower operators do not provide transmission, neither fiber nor wireless. They just provide a tower and the equipments are fitted by operators. So our segment is the telcos, not the tower operators. So if there is a increase in towers with telcos, there is strong demand opportunity for us, and where we will continue to receive orders.
Okay, sir. Sir, on the press release, like you've mentioned, inventory built up will clear from Q3 FY '23 onwards, so what is the triggers are there to clear those inventories on operated levels? Especially you can share what kind of environment in Europe, U.S. and China and other markets?
Look, inventory would get cleared up with this increase in demand of fiber optic cable. With this demand increasing, this inventory will automatically get down.
Sir, the price levels are for optical fibers and optical fiber cables. Earlier, you have mentioned in the call around -- optical fiber is around INR 250 per 5-kilometer and OFC...
No, no, no, INR 250 was the fiber -- cable.
Yes, fibers and OFCs are at INR 950 level. So what is the price range right now? And have you seen any improvement?
This fiber price remains around the same INR 250, INR 260 per kilometer, almost. You can depending -- say that INR 250 to INR 275, depending upon who is the manufacturer and how good is quality and all that. And fiber, as far as this is concerned -- cable is concerned, it is around INR 1,000. Some will have a little bit more, some would have a little bit less. But it is around INR 1,000 per fiber kilometer of cable.
Okay. Sir, under the Poland plant, you mentioned it's around 15.9 million, it's a euro or dollar terms?
Euro, euro, euro.
Euro terms. Okay. So sir, in this 3.2 million fiber kilometer capacity, what kind of peak revenue potential in those plants?
About INR 350 crores.
INR 350 crores. And this scaling up of to 7.5 million execution, when it's expected sir, with 3.2 million and 7.5 million execution, any timeline?
I could not understand your question. Be a little clear when you speak to us.
Sir, like execution time line for those capacity completion.
Yes. So 3.25 million capacity, we are targeting to start manufacturing from April of next financial.
Okay, sir. Sir, and the overall, we have seen that when we can expect this large order inflows from new telecom products and the defense side? And could we have...
We already have significant order book for our new product -- telecom influence products. Of the INR 2,000 crores revenue I'm expecting, we have more than INR 1,500 worth of order already in our hands, more than that, about INR 1,700 crores. So expectation of INR 2,000 crores of revenue from this telecom influence product is not a problem at all. In fact, we will be much higher than INR 2,000 crores, which I'm not projecting but when you have INR 1,700 crores of worth of order in hand, a whole year is there, 11 months of the year are still left. You can definitely expect more orders, which would be executed in the current year itself.
So there's already a robust order book. And I expect as we start supplying of some equipment like fixed wireless access equipment, as a mentioned, of INR 600 crores is order, I assume more orders to come. And also export is a good potential for these equipment. They're also reasonably good orders. So order book is already there. But we will -- as we supply, we keep on getting more orders.
Got it. Got it. Sir, on the balance sheet, we have seen capital work in progress around INR 154 crores. And how much CapEx we have spent in this financial year? And how much we are planning for '25 and '26?
So we have already spent about INR 140 crores of CapEx in this financial year. And total CapEx expected to be this year and the next year or 2 years, now I'm talking about, is about INR 900 crores.
Okay. Got it, sir. One last question. Any plans to enter in interconnect cable?
Sorry to interrupt sir. I request you to come back for a follow-up question.
The next question is from the line of [ Himanshu Jain ] from Tiger Assets.
Am I audible, sir?
Yes, you're audible, Himanshu, perfectly audible.
Congratulations on great set of numbers, sir.
I have two questions. One, what is the expected order book completion time line? And the second one being, what is the expected rollout time according to you for 100% 5G rollout in India?
Expected timeline of order is different in different orders. There are so many orders. It's not one order. So for example, this out of our fixed wireless access, we expect about 5 months' timeline to complete that, about 5 months now. Now, this can be 6, this can be 4. For BSNL order for INR 1,100 crores, we take at least 8 to 9 months time for completion. Second, orders for this turnkey contracts, we expect about a year to complete. So different time lines are there for different orders. The BSNL order for UBR, we expect a timeline of 3 to 4 months to complete. So this extends from 3 months to 12 months in different orders and different timeline.
And your second question was when would the 5G network deployment will get completed. Himanshu, this is -- network deployment never gets completed, it always continues. As the subscriber increases, more numbers of towers are required, more numbers of hill stations are required, more connectivity solutions are required, so this keeps on going on. And while this is going on, they are changing technology, like 4G happened and then 5G has happened, earlier 3G was, 4G came, 4G, after that 5G has come, 5G is there, now 6G will come. So this will ever continue. This is not really change at all.
And this is good for us. Imagine there was nothing after 4G, there's only 4G. Then the demand would be much less, there would be no demand of new equipment, new technologies, new equipment. So 5G has come, there is all of a sudden increase in demand of equipment, there is increase the amount of services, 6G, will income, it will further increase the demand and demand for equipment and services Both. So this cycle will keep on continuing forever.
The next question is from the line of Siddhant Singh from Green Portfolio.
I am audible, sir?
Yes, Mr. Siddhant, you're very audible.
My first question is regarding your defense products? So could you provide an update on the current status of the defense products that are under development? And what we can anticipate a about contributing them as a top line of our business?
Siddhant, let me answer your first question on products. We have electronic fuzes, which are now completely ready. We have already produced 200 fuzes for trials testing in army firing ranges. We have already deposited almost INR 2 crores to buy ammunitions for trial and we are asked for firing range, it needs to be fired with the Bofors guns and similar kind of runs. So you need a firing range of 30, 40, 50 kilometers without hesitation. So we expect that to be given to us sometime either end of this month or the next month, and a test firing will happen by the Indian Army.
And we see very good potential for this product in India, but more than in India and export market. And I'm not really budgeted anything in my projection for the next year or the current year. But still, though not budgeted in IOP but I still see a very good future for this product for export even in the current financial year. I think as people have come to know that we are going to produce fuzes, I already received -- started received inquiries for lakhs of fuzes. For a lakhs of fuzes, I'm already receiving inquiries.
So there is a sure demand potential for these fuzes from export market, which would be revenues to INR 100 crores. I'm already receiving inquiries, which I am not responding back right now except -- general discussion. First I want fuze to be tested and all approved, which is certainly going to happen. But demand potential is very high, more outside India than in India because of the global geopolitical environment, which is happening as you know very well.
So I have a huge demand opportunity for fuzes in my head, number one. Number two, thermal weapon sights, which is [indiscernible] night vision devices for short rifles, machine guns, and rocket launchers. We have participated in a number of tenders, which are undergoing trial right now when the trials are over, then, of course, tenders will be opened, and we expect to receive some orders for that.
Then we have radars, high-capacity radio relay. Radars, as I mentioned in my presentation, is developed by our subsidiary, 90% owned subsidiary Raddef located in Bengaluru, those radars have been designed for various kind of applications. And this ground surveillance radar, for example, is a real breakthrough in technology. Currently, the radars of similar kind of in used are weighing 30 to 35 kg. What we are designing with better features and better performance is weighing only several 7 or 8 kgs, one man can lift and take it away. So you so can imagine the kind of technology innovation we have done.
Now the ground surveillance radars have got with different variations also, coastal surveillance radars, we are talking to many of the defense established fund for the supply of that, I cannot name them now but we are talking. We have another radar coming up in the next 6 months' time or so, drone detection radar. How important the drone warfare has coming --- becoming current times, whichever fight you'll see happening -- war happening anywhere in the world, drones are becoming the important method of attach. Now, therefore, detecting income drone is a major issue. So our drone detection radar, which is under development and is in final phase of software development, that will again have the ability to look into 10 kilometers and 100 objects can be detected simultaneously. So that is happening.
Radio relay is another equipment, which is required by army, high capacity radio relay. And with a defense, we have just installed new machines in our fiber optic cable manufacturing facility in our subsidiary HTL, which is going to -- these two machines are going to produce special type of fiber optic cable required by defense sources. If even a INR 10 crores over that table, nothing happens to that. So that kind of a cable we'll be manufacturing. This is for technical fiber optic cable will used in the field.
So these are some of the defense products I've just mentioned. Apart from that, in our system integration business for defense services and defense electronics, we've already gone through user trial readiness review by army for upgradation of armored personnel carrier BMP-2, and we are completely successful in that. Now tender would come, we will participate, trials will happen, then only we'll see the face of the order receiving. But yes, these are the opportunities ahead of us. And as I said, as much are opportunities in Indian market, India has been the third large spender of defense with about $90 billion of spending every year.
There are huge opportunity in the export market also. So I look forward to defense business quite optimistically but we have -- I have not projected any revenue from that in the current year but I certainly hope we will get revenue in the current year, it will not be very big because this trials and all these things are going to happen. But next year onwards, I expect defense revenue to reach to higher 3-digit numbers.
Okay, sir. And sir, do you have a confirmation for ammunition fuzes for the delivery in next month? Sorry.
No, no, I didn't say next month. I said trial in next month. Not delivery.
Okay, okay, okay.
Trials and we're ready.
Okay, okay, sir. And what is the average? Can you give me the average price of a fuze -- per fuze?
That's very difficult. There are 9 different kind of fuzes, 9 different kind of prices. There is no single price and prices also vary market to market. In India it's something, in export it is something else. So -- but in general, I can say they are from INR 5,000 to INR 20,000.
And sir my last question is that you have any plan onto backwarding...
Sorry to interrupt you, sir. I request you to come back for follow-up questions.
[Operator Instructions] The next question is from the line of Rajesh Agarwal from Moneyore.
Sir, when will the substantial part of telecom products or new products will come into revenue?
So this will start from this quarter but from quarter 2 onwards, it will be a substantial part coming up.
Okay. It will be optic fiber or the new products?
No, no, as I said little earlier, it is going to be equally divided in optical fiber and equipment both. It is going to be -- our estimation is that it will be INR 2,000 crores on optical fiber cable or a little more than INR 2,000 crores and similarly INR 2,000 crores of equipment. This is going to be very transformative this year, Rajesh. First time we'll have 4 digit number on equipment business in the company.
And the combined margins, will combine margin goes 18% to 19%, no?
I am not -- you are talking about net margin, gross margin.
Only EBITDA margins.
EBITDA margin would be something like, I would say, 15% or so. 15% to 17% depending upon order to order hedging the situation.
And there was a contribution from turnkey projects also what we did in this quarter?
What was the question?
This quarter, there's a substantial revenue from turnkey projects. So going forward also, the turnkey projects also will contribute?
Yes, current year, we are looking at turnkey projects of about INR 1,250 plus INR 500 crores, about INR 1,750 crores to INR 2,000 crores.
So the combined revenue for '24, '25 may be INR 5,000 crores, INR 6,000 crores.
I would not do any forward guessing but at least I can tell you we can expect INR 2,000 crores from equipment business, about same from fiber optic cable business and again, some from turnkey. Within that order for INR 1,700 crores are already in my hand for equipment business, cable orders keep on being receiving in small sums. It never comes to INR 1,000 crores or INR 1,200 crores or something like that. But with the revival of market INR 2,000 crores plus seems to be quite certain.
And on the turnkey side, a little demand. On turnkey business, we already have orders worth of about INR 1,200 crores in hand. And then the regular business of one of our customer, which is from last 10 years, it is coming INR 500 crores every year, that should continue. So that INR 2,000 crores is more or less assured. So if you count all these 3, 2, 2, you can guess the number.
Sir, what is the reason you're so bullish on the optical fiber side but the traction has not been coming for the last 1 or 2 years?
No 1 or 2 year, only one year. Last year was very good, revenue's of INR 2,400 crores. This year, what happened, in anticipation that the demand would be very high, the operators and distributors have accumulated stocks and demand did not go up that high for geopolitical reason, overall situation and all that. As a result of that operators as well as distributors had a lot of stock with them. So that reduced the demand in the current year with a lower consumption and stocking, and it reduced the demand.
Now that section has started coming back again. In U.S. demand has already increased. If you have seen a statement Kearney pretty recently 2, 3 days ago, they are also seeing the same thing, and we are also looking at the same thing in the global market. And in India, demand would be very substantially increased, which is BharatNet, which is going to be announced in the next 1 or 2 weeks. Tender is already there, clarification started to be given. And I think another month or 45 days' time tender has to be submitted. So that would be huge demand opportunity in terms of fiber optic cable for Indian companies.
So I was reading recently article by the telecom minister. He was saying there are a lot of companies because we don't want to import telecom equipments. So a lot of companies which have come under the PLI scheme will [indiscernible] from them. So when I understood Tejas, whether the products are the same or not, they got a lot of patented products and if you see this quarterly, how Tejas has completely turn around the back log of orders. So same thing can happen with us also?
They've orders, Tejas and Tata company and the major order is from BSNL for this -- on this 4G networking equipment, which is good, they have been good. And have also got good order as I said. It's a reasonably good opportunity for all of us. And if the minister statement is right and that is good for Indian companies, from India only, so good for Indian company like us.
Sir, how is the bidding pipeline?
So bidding pipeline is good. The BharatNet if would be INR 50,000 crores.
Okay. So that tender already is opened?
No. That is to be submitted, I believe, in about 45 days' time, then it will get open. And finalization of that is expected in some time in August.
So can we see the R&D facilities or no? Can we visit the R&D facilities?
Yes, it is Bangalore, we can certainly visit with the prior appointment.
Okay, sir. And sir so this time, the presentation was very good, [indiscernible].
This is our factory -- if you're going to the Hyderabad factory where we produce fiber and cable both with a prior appointment you will be most welcomed to visit that also.
The next question is from the line of Darshil Jhaveri from Crown Capital.
Hope I am audible?
Yes, yes, you're.
Okay. A lot of my questions have been answered. But just wanted to ask something about our CapEx and our debt. So currently, we're expecting INR 900 crores CapEx in the next 2 years. So what will be our debt level? How are we planning to fund it currently? So could you just give some color on that?
My CFO, Mr. Vijay Jain would answer that.
The CapEx plan is around INR 900 crores during this financial year and part will go to the next financial year. And this entire CapEx will be funded by internal accruals and some equity rates, which we have already done and the money is lying with us and part to that. So that equity ratio, which is currently 0.24, it will remain in the same range. I mean, 0.242, maybe 0.27, and max it be will 0.30, no more than that.
Okay. Okay. So sir, after the -- so when can we maybe see debt reduction because interest cost is also a substantial cost...
Debt is a Very low, 0.28 is no debt itself.
So majorly, it is working capital debt, which is required for various project execution and all that. And most part of that is in the form of LPs and bank guarantees. So the interest cost that the finance charge improves the charges of BGs and LPs as well. It is not entire by interest cost.
[Operator Instructions] The next question is from the line of Sanjeev Damani from SKD Consulting.
Am I audible?
Yes, yes.
My two questions are, one is regarding our debt that is INR 2,200 crores, so almost it is coming to 50% of our sales. So if you are going for INR 7,000 crore sales, then will our outstanding be and debtors will be as high as 50% and what is...
No, no, no, I tell you why. So debtors are when we do turnkey projects. And when you are rightly saying that next year revenue, we are forecasting INR 4,000 crores coming from cable as end products, which are not having that large year period for recovery. So they may be more like 60 to 90. 60 to 90 days, 60 to 90 days, maximum 90 days. So it will not be in a level what you are just saying, it would be much more than that.
And who we will be recovering all this whatever is outstanding? Will we be getting it cleared by this quarter end?
Say that again, I missed your question.
Will we be able to realize most of the money by this quarter end of our data?
Not this quarter, it will coming up in phases, the major part is on NFS, network for spectrum [indiscernible] for Indian Army. So part of that would be about take, I would say, more than a year or so after completion of the project. And rest of the debt, we will keep on realizing as we go by in time. Some are 60 days, some are 90 days, so something like that.
Second question is regarding my -- making my understanding better about the fact that our minister sir have said that we are introducing 6G also very soon. And all this will be and is being manufactured within India. So can I take it this way that the Himachal Futuristic is the only supplier of all these telecom exchanges and facilities of...
No, no, no, we are not the only supplier. We are one of the supplier for telecom equipment. So we are not the only supplier. Nobody can be only supplier, number one.
On a listed place, sir, only you are listed who are supplying all these equipment and exchanges and all these things?
No, no, no, Mr. Sanjeev, Tejas is there, we are supplying. We are there. There are a number of companies who are there but yes we're number one.
But we are also equipped to completely supply the exchange and facilities to BharatNet?
Exchanges these day, [indiscernible] exchange these day, that time is gone when you call core and access and that kind of a transport that kind of a network, but we are supplying not the whole network but a part of the network. We are more on the access side and the transmission side, not on the core side. Core is -- we don't have core and no Indian company has core rather. So we are having access and transmission. And that there are other companies also who are doing the same business access and transmission. But at the same point of time, 6G -- to answer your 6G question, 6G development and effort have started, really, if you see to become commercial, it is at let 4 or 5 years away.
The next question is from the line of Saket Kappor from Kapoor & Company.
[Foreign Language]
[Foreign Language]
Sir, when we look at the order books pit up, we find as a breakup in your presentation, INR 475 crore is the network services, INR 890 crore is the product and INR 2,037 crores is the O&M. So under this network services, there is a combination of both turnkey and the product?
Yes. For example, this INR 1,100 crores of orders for BSNL for equipment has been clubbed into that what you are seeing INR 4,700 crores. It is more a product less of services but it has been clubbed into that because it improves some part of services.
Okay. So the turnkey order book, the core turnkey order book is [indiscernible] .
Core turnkey order book would be something like out of INR 7,000 crores should be something like -- about INR 4,000 crores plus something like INR 4,000 crores plus. I didn't what get you said.
I'm talking about only the turnkey project, [indiscernible] product?
Only turnkey portion of the project, that's what you're saying?
Yes.
Yes. So that should be same.
That is INR 4,000 crores?
So turnkey portion [indiscernible] portion of the project will be around INR 4,000 crores.
I think I'm getting mistaken on that front. But I take it off the line from Jain, sir. On the O&M part -- on the O&M part, INR 2,037 crores, how that will start accruing the same? And how much have you booked for this financial year?
If we take about 7 years, Mr. Saket, 7 years.
Right. And from the next year itself, we will start or when will this start taking in?
They started already. Some of it already started. It will continue through this year also.
Okay. Jain sir, I have a question on this other intangible asset and intangible assets under development. If you could just explain to us what are these two line items? There's a significant increase in intangible assets under development from INR 200 crores to INR 315 crores and other tangible assets have risen from INR 18 crores to INR 118 crores. So what are these? Are the related to R&D? How are we going to benefit? This is a large sum of money strategy?
Saket, we are developing a lot of products as part of telecom and defense. So whenever any product is ready for launch or it has been launched, so that part of the R&D spend is capitalized and remaining is shown intangible under development. Once it is commercialized and capitalized, then it is amortized over a period of 5 years.
Right, sir. And lastly, sir, on this -- the successful IPO for Vodafone. Does this give the impetus to the entire ecosystem and a new CapEx cycle can be envisage going ahead that the confidence that the investing community has [indiscernible] on the Vodafone?
A very good question. And in fact, I use this to talk about in my opening remarks. This definitely gives very good impetus to instrument manufacturers in India. So with the new operator, not a new operator, old operator getting active now in the equipment business, which was not active earlier because of the money issue and all that. With the IPO and today's news item that INR 18,000 crores, they are doing the base of banks, which makes it almost INR 40,000 crores of CapEx by them, it is really good now. With that kind of CapEx new demand would be generated for fiber optic cable, equipment and everything. And some share will be available to us also, of course. So we are really happy about it. With the revival of VI as well as ever revival of the BSNL and continued growth of and Jio and Airtel.
Right. And do you have any dues from them?
No, no, the very minor do is maybe from regular supplies we do, but there is no overdues.
And on closing, sir, Exicom issue was also -- public issue was also a grand success and HFCL holds a minority stake in Exicom. So what's the road map ahead? And what are the synergies with Exicom, the other listed company for the HFCL group?
Road map as far as investment is concerned, that is there. But there is synergy definitely. Synergies, they also produce apart from easy carriers, they produce critical telecom power supply equipment. So wherever we have customers for critical power supply equipment and turnkey service online, you can source certainly from Exicom and that would give us more competitive and more complete product range.
Jain, sir. Then the INR 120 crores income tax has been paid for this year. So does this include for this year also or prior period also? And what is our current tax rate?
No, no, income tax is charged year-on-year. So part the regular tax and part is soon as part of deferred tax, current and deferred tax. It is segregated in two parts.
[Foreign Language] Under cash flow, income tax paid is mentioned as INR 120 crores, 1-2-0.
[Foreign Language]
Okay, okay, got it. Thank you, Nahataji. This is one of the very transformative call from HFCL whereas your -- we have infused lot of confidence among the investing community in your remarks in terms of this product sales and again, OFC then the turnkey, and then the entire ecosystem getting charged up. So we hope for a transformation and exponential growth next year, and we hope as in future reality.
There are 3 things in revenue. One is equipment business becoming very robust, INR 2,000 crores is expected and INR 1,700 crores orders are already there, INR 2,000 crore plus an optical fiber cable and defense business, don't forget. Though I have not put anything in the estimated revenue but defense business has a huge opportunity coming up in a sense that fuzes, for example, so much of demand. If I start production today, I'll be booked for 1 year. That's the kind of demand coming up for fuzes. Even before I have got it tested, the demand of lakhs of fuzes in front of me. So defense fuzes business has also got very high potential, including the upgradation of BMP-2, again, a very huge potential. So defense business also is very huge potential and that will be a very transformative change for HFCL apart from his defense business.
And this will be last question, so I can [indiscernible] as.
As there are no further questions, I would now like to hand the conference over to Mr. Mahendra Nahata for closing comments.
Well, gentlemen, some of the questions would remain not answered as I can see. So kindly send emails to us for your questions and we would be very glad to answer, to our Investor Relations Officer, Mr. Amit Agarwal, he will be very glad to answer those questions.
But as a concluding remark, I would say that we are looking forward to this current year with a lot of optimism and lot of growth in our revenue in equipment business as I said, from INR 150 crores to INR 2,000 crores, which will give coupled with fiber optic cable together, the growth in product business itself will be substantial, which is roughly about INR 4,000 crores, that is what is the best expectation of the management is on the basis of order book and as well as the kind of orders we are expecting to receive in fiber cable. Moreover order for turnkey Projects are also in hand for INR 1,250 crores or so, and more orders, such are expected. So my expectation of INR 2,000 crores of orders from that part of business is also quite robust expectation, not based on estimation but based on realistic expectation. So we look forward to the current year with a lot of robustness and expectation of good revenue coming up.
And our R&D efforts are certainly going to throw in more number of products in defense as well as the telecom sector. That would be -- this kind of R&D and development of products would be really an impetus for our long-term strategy for keeping on increasing revenue through products and not so much from services. So we are very optimistic about growth with the growth of telecom sector, growth in the defense sector, and the export also, we are very optimistic for the future. Thank you very much, gentlemen.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.