Representation image | Photo credit: IANS
- The co’s margins and cash flows should improve gradually. The future of HFCL linked to the future of the telecommunications industry
- 4G opportunity with regards to the maximization plans of all operators and 5G based on Open RAN, offers great opportunities to all players
- PLI, Atmanirbhar, BharatNet are a big push for companies in the telecommunications infrastructure space
Mr. Mahendra Nahata, Managing Director of HFCL Limited, spoke with ET NOW earlier today on a range of issues regarding the industry, product line, 5G plans and company performance during the course. of the last fiscal year and the possible benefits of the current fiscal year. .
Regarding the growth and future of HFCL, Mr. Nahata clarified that the growth will largely depend on the growth of the telecommunications industry. To elaborate on the desirability, Nahata explained how Airtel and Jios would establish internal 5G plans would provide tailwind for the company, in addition to the large-scale 4G maximization plans of all operators. He added that expansion through BharatNet and demand for Fiber to Home across the country would require cables, infrastructure and fiber optics and given that HFCL is the largest fiber optic manufacturer in the country, this would continue to grow. promote growth.
Mr Nahata believes that the government’s Atmanirbhar programs and the PLI program would encourage operators to buy locally while helping local businesses to be cost competitive. In this regard, HFCL has invested heavily in R&D on 5G on macro and small cells for indoor and outdoor equipment, routers, etc. He also highlighted the great export opportunity in this space.
Regarding HFCL margins, Mr Nahata believes they were depressed in FY21 mainly due to higher depreciation and higher interest. He believes that as revenues and demand increase, given the company’s advantage in R&D and the like, margins will improve. Another key metric to look for is the large trade receivables the company has accrued largely due to turnkey defense contracts that faced covid-related delays. Since project payments are largely milestone-based, they have been recorded as receivables. Mr. Nahata assured that they were all good debts from AAA rated customers.
Among other things, Mr. Nahata updated that the promoter has pledged shares, on the basis of which HFCL took out loans, should be resolved in a few weeks and, although he remained without commitment on the trajectory. growth of the company, he believes it continues to grow at the same rate as in recent years.