💰 Financial Performance

Revenue Growth by Segment

The Electronics segment showed the most significant growth, increasing 2.98x in FY24 due to railway signaling and Kavach orders. Overall revenue grew 18.2% YoY in Q1FY26 to INR 621.41 Cr, driven by the railway segment. Industrial batteries remain the primary revenue driver, while the telecom segment saw a marginal reduction in 9MFY25.

Geographic Revenue Split

Exports grew by 40% in FY25, supported by the addition of new OEM clients. While specific regional percentages are not provided, the company is a net exporter, which provides a natural hedge against foreign exchange fluctuations.

Profitability Margins

Profitability has seen a sharp upward trend: PAT margins improved from 7.15% in FY23 to 12.56% in FY24, and reached 23.06% in Q1FY26. This improvement is attributed to better sales realization in industrial batteries and higher-margin railway/export orders.

EBITDA Margin

PBILDT (EBITDA) margin significantly improved from 11.64% in FY23 to 19.19% in FY24. It further expanded to 21.96% in 9MFY25 and reached a peak of 34.04% in Q1FY26, representing a YoY increase of over 2,300 basis points from Q1FY25's 11.00%.

Capital Expenditure

The company is funding expansion through internal accruals, including setting up a Lithium-ion battery division and infrastructure for electronic fuzes. It prepaid ~INR 50 Cr of term loans in FY24. Scheduled repayment obligations for FY25 are INR 20.79 Cr.

Credit Rating & Borrowing

Long-term bank facilities are rated CARE A+ with a Positive outlook (revised from Stable in October 2025). Short-term facilities are rated CARE A1+. Borrowing costs are low due to negligible reliance on fund-based limits and a low debt-to-equity ratio of 0.06x.

⚙️ Operational Drivers

Raw Materials

Lead (including Lead Calcium and Lead Sub-oxide) is the primary raw material, accounting for approximately 60% of total battery manufacturing costs. Total raw material costs represent 50% to 60% of the Total Operating Income (TOI).

Import Sources

Raw materials are sourced from both the domestic Indian market and through imports, though specific countries of origin are not detailed in the provided documents.

Key Suppliers

Not specifically named in the documents, but the company maintains integrated operations to manage multiple processes in-house.

Capacity Expansion

Current expansion includes setting up a new Lithium-ion battery division and infrastructure for electronic fuzes and charging hubs. Specific MTPA or unit capacity figures are not disclosed.

Raw Material Costs

Raw material costs fluctuate with global lead prices. The company faces risk from price escalations as lead is a volatile commodity, impacting margins if not passed through to customers.

Manufacturing Efficiency

Increased sales volume in industrial batteries has led to better cost optimization and operational efficiency, contributing to the margin expansion from 11.64% to 19.19% in FY24.

📈 Strategic Growth

Expected Growth Rate

18-20%

Growth Strategy

Growth is targeted through the rollout of Vande Bharat trains and the implementation of Kavach (Train Collision Avoidance Systems). The company is also diversifying away from telecom reliance by expanding its export footprint (40% growth) and investing in new technologies like Lithium-ion and electronic fuzes.

Products & Services

Industrial batteries (Ni-Cad, Lead Acid), Defence and Aviation batteries (Silver Zinc, Submarine, Lithium), Railway Electronics (Kavach/TCAS, TMS, Signaling), and Electronic Fuzes.

Brand Portfolio

HBL Engineering (formerly HBL Power Systems).

New Products/Services

Launch of Lithium-ion batteries and Electronic Fuzes for the defence sector are expected to be major future revenue contributors.

Market Expansion

Expanding presence in the global OEM market for industrial batteries and increasing participation in Indian Railway's safety infrastructure upgrades.

Strategic Alliances

Investments in associate entities Tonbo Imaging India Private Limited and Naval Systems and Technologies Private Limited, totaling INR 86.71 Cr as of March 31, 2025.

🌍 External Factors

Industry Trends

The industry is shifting toward advanced railway safety systems and Lithium-ion technology. HBL is positioning itself by transitioning from traditional lead-acid batteries to electronics and advanced battery chemistries to capture the growing railway modernization market.

Competitive Landscape

Operates in an intensely competitive industry with volatile raw material costs, competing with both domestic and international battery and electronics manufacturers.

Competitive Moat

Moat is built on in-house developed technology, long-standing relationships with government entities (Railways/Defence), and high entry barriers due to stringent safety certifications (RDSO). These are sustainable due to the company's 30+ years of experience and established compliance track record.

Macro Economic Sensitivity

Highly sensitive to government spending on railway infrastructure (Kavach/Vande Bharat) and the health of the telecommunications sector.

Consumer Behavior

Shift in demand from telecom-led battery requirements to high-tech railway safety and defence electronics.

Geopolitical Risks

Trade barriers could affect the 40% export growth; however, the company's diversified sector exposure (Defence, Aviation, Railways) provides a buffer.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to stringent environmental regulations regarding lead toxicity and mandatory RDSO (Research Designs and Standards Organisation) approvals for all railway-related products.

Environmental Compliance

Strict adherence to pollution control norms for lead manufacturing. The company is ISO 14001:2015 and ISO 45001:2018 certified.

Legal Contingencies

No specific pending court case values provided; documents state the company has consistently maintained compliance with requisite standards.

⚠️ Risk Analysis

Key Uncertainties

Volatility in lead prices (60% of cost) and potential delays in government project execution (Kavach) could impact revenue by more than 10-15% in a given fiscal year.

Geographic Concentration Risk

While expanding exports, a significant portion of revenue remains concentrated in the Indian domestic market, particularly government contracts.

Third Party Dependencies

Dependency on RDSO for product approvals and Indian Railways for order flow.

Technology Obsolescence Risk

Risk of traditional lead-acid batteries being replaced by newer chemistries; mitigated by the company's move into Lithium-ion and electronics.

Credit & Counterparty Risk

Strong receivables quality from reputed clients like Indian Railways and Indus Towers; liquidity is strong with INR 234 Cr in free cash/bank balances.