HFCL Limited (NSE: HFCL) Q2 2025 Earnings Call dated Oct. 22, 2024
Corporate Participants:
Mohit Lohia — Analyst
Mahendra Nahata — Promoter and Managing Director
Vijay Raj Jain — Chief Financial Officer
Analysts:
Chandan Mishra — Analyst
Manish Ostwal — Analyst
Aakash Rampuria — Analyst
Jinesh Shah — Analyst
Hardik Vyas — Analyst
Sukant Garg — Analyst
Unidentified Participant
Kriti Tripathi — Analyst
Shubham Sethi — Analyst
Tushar Pandey — Analyst
Saket Kapoor — Analyst
Priyanshu Gupta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to HFCL Q2 and H1 FY ’25 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’s 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 Limited. Thank you. And over to you, sir.
Mohit Lohia — Analyst
Yeah. Hi. Thank you, Palak. Hi. Good afternoon, everyone. Thank you for joining us today for quarter two and H1 FY ’25 earnings call of HFCL Limited.
First of all, I would like to thank management for providing us opportunity to host this call. From the management side, we have Mr. Mahendra Nahata, Promoter and Managing Director; Mr. Vijay Raj Jain, Chief financial Officer; Mr. Manoj Baid, Company Secretary; and Mr. Amit Agarwal, Head of Investor Relations.
So without further delay, I would now hand over the call to Mr. Nahata for opening remarks. Thank you. And over to you, sir.
Mahendra Nahata — Promoter and Managing Director
Thank you, Mohit. Good evening, ladies and gentlemen. I’m delighted to welcome you all to HFCL’s earning call for the second quarter and half year of financial year ’25.
I trust that you got a chance to go through our financial results, press release and earning presentations, which are available on the website of the company and also on the website of the stock exchanges.
Friends, India’s digital infrastructure is advancing rapidly in order to support the country’s accelerated development aspiration with the deployment of 50 lakh kilometer optical fiber cable, 70% tower to be fiberized and village connectivity. The acceleration in 5G monetization, the initial thrust of 6G globally, Industry 4.0, hyperscaling of data centers, increasing smartphone adoption and BharatNet Phase III are some growth drivers of the Indian telecom industry. Artificial intelligence and machine learning are reshaping the telecom industry, with GSMA estimating these to be $680 billion opportunity over the next 15 years to 20 years.
Additionally, implementation of fiber-to-home globally and the PLI scheme alongside initiatives of promoting semiconductor manufacturing in India will fuel long-term growth and encourage indigenous manufacturing. We recently participated in Annual India Mobile Congress 2024 held in New Delhi, which is a premier exhibition in the telecom space. HFCL launched two revolutionary unlicensed band radio products at this exhibition. This included 1 gigabit per second small form-factor unlicensed band radio and 2 gigabit per second point-to-multipoint unlicensed band radio designed to meet the growing data demands of modern networks. With over 5 lakhs UBR deployments across India, the U.K., Europe and the Middle East and Africa, these Made in India solutions deliver fiber-like speeds at a fraction of the cost of conventional wireless backhauling methods.
With power efficiency and significant capex and opex savings, our new UBRs paired with unified Element Management System represent a leap forward in last-mile connectivity, reaffirming HFCL’s leadership in 4G and 5G wireless backhauling solutions. With an aim to continue our market leadership in this space, we are making high-technical advancements in our new range of products while offering cost effectiveness to our customers. It gives me great pleasure to inform you that HFCL has successfully deployed one of the world’s largest advanced broadband network gateway with control and user plane separation architecture for BSNL. This enhances network efficiency, delivering superior high-speed data for fiber-to-the-home and enterprise applications, significantly boosting capacity and reliability.
Additionally, this deployment will serve as the Internet Gateway of BharatNet project, supporting 2.5 lakh Gram Panchayats. As a trusted BSNL partner, we look forward to further collaborate with BSNL, while HFCL playing a key role in BharatNet Phase-III. India’s defense sector holds a lucrative opportunity of $130 billion market over next decade amid the escalating demand for defense equipment, technological and services, offering significant prospects for companies engaged in defense technology, development and manufacturing. The quarter end review has been crucial for HFCL in demonstrating its defense capabilities and entering strategic partnerships with global players.
One such significant development that underscores HFCL’s technical prowess and commitment is that a company has been selected to develop and supply critical subsystem for General Atomics Aeronautical Systems Incorporated of USA for their advanced unmanned aircraft systems. This partnership marks a milestone in HFCL’s journey, as it becomes a key contributor to one of the world’s most sophisticated unmanned aerial vehicles. Further, in line with the Atmanirbhar Bharat Abhiyaan, HFCL has indigenously designed and developed various cutting edge defense technologies, including electronic fuses, thermal weapon sights, thermal cores and ground and coastal surveillance radars for various engine applications and high-capacity radios amongst others.
The geopolitical situation presents India with new opportunities to expand its role in the global defense industry. With strong R&D capabilities, HFCL is positioned to tap into both domestic and international defense markets. As mentioned in the last call, we have successfully initiated the field trial of our several variants of radars during Q2 and expect to make it commercially available from Q4 FY ’25 onwards. We have also been shortlisted to participate in the tender for modernization of infantry combat vehicles of Indian Army. The broadband industry is gearing up for 2025, and we anticipate a lot of fiber deployments. We anticipate an acceleration in fiber-to-the-home demand in USA post the elections and new government’s likely focus on Build America, Buy America and Broadband Equity Access and Deployment Programs.
To meet this rising demand, we specifically designed and developed product line for the U.S. market consisting of high-density single-jacket single armor Intermittently Bonded Ribbon cable with 144 to 1728 fibers for which we engaged and backed by ISE Innovators Award. HFCL also expanded its award-winning Nano Thin product line of loose tube microcables of 10.6 mm diameter consisting of 864 fibers. With these innovative cable solutions, HFCL will cater to changing demands for network deployment driven by growth in data centers, metro networks and FTTx in North America.
With the U.K. being another key global market for HFCL, we showcased our comprehensive range of sustainable products. These offerings will enable U.K. operators to connect customers more quickly, cost effectively and sustainably. These new additions will further expand HFCL’s extensive optical fiber solution portfolio, paving the way for advanced fiber infrastructure and faster broadband rollout in the U.K., targeting Building Digital U.K. initiative. Further, in order to meet the growing global demand and increased revenue through expansion in international markets, HFCL B.V., a wholly owned subsidiary HFCL Limited in the Netherlands, established a wholly owned subsidiary company named HFCL U.K. Limited in the U.K. Incorporating a company in the U.K. will enable the company to cater to the demand in U.K. for its products and expand its business operations there. This move aligns with company’s strategy to increase revenue from export markets, augmenting its presence in fostering growth opportunities.
We are targeting a significant increase in export revenue from our optical fiber segment, aiming for up to 70% of revenue to come from international market in next three years. Additionally, we plan for 40% to 50% of our telecom segment revenue to be export driven within the next three years. The European Commission, while its verdict given on the 11 October, 2024 has exempted us from definitive anti-dumping duties on optical fiber cable by which we have gained a competitive edge in the European market, we are now focusing on expanding our fiber and telecom business in North America market in a major way.
Apart from our cable solution, HFCL has emerged as an end-to-end solution provider by increasing its business and market share for passive connectivity solutions for optical fiber cable networks. On the back of its massive growth potential, HFCL expects to grow passive component business to INR750 crores in next two years to three years. Moreover, BharatNet presents a significant opportunity for us. BSNL has already floated a tender for approximately INR65,000 crores for capital expenditure over the next three years, followed by an expected additional INR40,000 crores for operations and maintenance over 10 years.
Funded by the Government of India through the Universal Service Obligation Fund, the BharatNet Phase-III project aligns with HFCL’s core strength, boosting demand for optical fiber cables, accessories, telecom and networking products, system integration services and O&M annuity revenue. HFCL’s integrated manufacturing capabilities, extensive experience in laying over 2 lakh kilometers of optical fiber cable and end-to-end solution positions it well to secure a substantial share of this opportunity. HFCL has already submitted bids, with a technical evaluation in advanced stage. We expect the fiber market to revise from the first quarter of fiscal 2025 to ’26. We are seeing signs of rework and recovery as more tenders and inquiries are coming up nationally and internationally. Our total order book now stands at INR6,151 crores as on quarter two of financial year 2025.
Friends, let me now brief you on the key performance metrics of Q2 of FY ’25. Revenue of Q2 FY ’25 stood at INR1,094 crores as compared to INR1,158 crores in Q1 of FY ’25 and INR1,111 crores in Q2 of FY ’24. EBITDA for the quarter stood at INR172 crores as compared to INR185 crores in quarter one of FY ’25 and INR150 crores in quarter two of FY ’24. EBITDA margin stands at 15.71% for quarter two of FY ’25 as compared to 16% of quarter one of FY ’25 and stood at 13.47% in Q2 of FY ’24.
For Q2 of FY ’25, profit after tax stands at INR73 crores as compared to INR111 crores for Q1 of FY ’25 and INR70 crores in quarter two FY ’24. PAT margin stands at 6.71% in quarter two FY ’25 as compared to 9.55% in Q1 of FY ’25 and 6.31% of Q2 of FY ’24. Segment revenue for telecom products during the quarter end stood at 46.46% as compared to 61.42% in Q1 of FY ’25 and 42.63% in Q2 of FY ’24.
In conclusion, India stands at the brink of transformation with a rapid rise of artificial intelligence and other cutting-edge technologies. This presents a significant opportunity for organizations like ours to innovate and drive this change. We remain committed to R&D and expanding our product portfolio across telecom, defense, optical fiber, cable and passive connectivity solutions to capitalize on future opportunities. Our growth will be powered by strong order book with robust order pipeline, execution capabilities, capacity expansion, backward integration, customer base growth and entry into new markets, all driving revenue growth, margin improvement, efficient use of working capital.
Thank you, ladies and gentlemen, for your continued support. Thank you very much.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]
The first question is from the line of Chandan Mishra [Phonetic], Individual Investor. Please go ahead sir.
Chandan Mishra
Sir, good evening, sir.
Mahendra Nahata
Good evening.
Chandan Mishra
Thank you for giving me the opportunity to ask question, sir. Sir, my question is related to, sir, execution of order. As we have seen very less in quarter two compared to last year whereas we have large orders that is INR6,151 crores, first question is what is completion for this order? And secondly sir, you have also guided for 25% to 30% for next few years during last con call. So what causes this less execution in this quarter and can we expect this to ramp up in next quarter?
Mahendra Nahata
Mr. Mishra, I could not understand your questions properly. Would you please repeat them?
Chandan Mishra
Sir, my first question is we have order book of INR6,151 crores. What is completion time for this?
Mahendra Nahata
Okay.
Chandan Mishra
And the second question is, sir, during last con call, you have guided for 25% to 30% for next few years in revenue. So, what causes us this less execution in quarter two and can we expect this to ramp up in next quarter?
Mahendra Nahata
Yeah. Mr. Mishra, the INR6,151 crores order, out of which roughly about INR1,500 crores to INR1,800 crores of order is for O&M, which would continue for next five years or six years. Rest orders, which are roughly about — more than INR4,000 crores ought to be executed in next, let us say 12 months to 18 months’ timeframe.
Chandan Mishra
Sure, sir.
Mahendra Nahata
And as far as growth is concerned, we are very sure about the overall growth of the company. Quarter-to-quarter, it may differ because of the market situation. For example, fiber optic cable market has been very depressed worldwide since last about three quarters. So, you would see the fiber optic cable revenue of every company in the world has gone down drastically. So, we cannot be different than the worldwide situation. So, fiber optic cable demand has gone down and revenue has gone down from that. But now, we are seeing that the fiber optic cable market is coming up again in India and abroad. So the growth will come back into the market and the company also.
So overall, I believe, remain really very bullish with the growth opportunities, not only from telecom, but also from defense sector also, for which we have got several products which are under trial, which are getting approved one by one. And once commercial marketing of these starts, which we expect to start from either end of this financial year or beginning of the next financial year, that revenue will also come up. We are very — we have a strong belief in the management. The growth of the company would be on track, except sometimes like fiber optic cable situation comes up where the growth of that particular segment goes down. But as I said, this is also coming back now. And for the next quarter onwards, we see a fiber optic cable market is going to come back to the better situation than what it is now.
Chandan Mishra
Sir, then can we expect, as per your, sir, last con call, which we have guided, you have guided for 25% to 30% growth in revenue? That is except — excluding from…
Mahendra Nahata
In three years’ timeframe, we should reach to something like INR10,000 crores of revenue. And I quite believe that we should be able to do that. As far as the current year is concerned, we are on track of our revenue projection except in fiber optic cable business, which has seen the downtrend, which was not expected to that level of downtrend in the fiber optic cable market by any company in the world. So as I said, we cannot be different than the other companies in the world. But again, this market is now improving. So as far as our growth is concerned, except fiber optic cable market, which is a market situation worldwide, we are on track to reach to the numbers, which we have thought of.
Chandan Mishra
That means this year will be like subdued revenue due to optic cable slowdown.
Mahendra Nahata
So, I’m not saying it would be subdued. In the case of optical fiber cable, it may be subdued. Rest, I’m not saying it is going to be subdued.
Chandan Mishra
Sure, sir. Thank you.
Operator
Thank you, sir. The next question is from the line of Manish Ostwal from Nirmal Bang Securities Private Limited. Please go ahead, sir.
Manish Ostwal
Yes. Thank you for the opportunity. My question is on both the BharatNet and the BSNL opportunity in the domestic market as well as the international market. You said in your initial remark, the inquiry and pipeline is very, very strong. So first, what is the size of opportunity both with respect to BSNL as well as BharatNet for us in next two years to three years? And how much order we can — visibility have on the domestic market?
And secondly, international side, we have a lot of capability built over the time. And now when we can see a meaningful order inflow for us to have a sizeable revenue from international market at consolidated level?
Mahendra Nahata
Mr. Ostwal, thank you very much. Very good questions. Fiber optic cable market up to last year, it was doing very well. Then all of a sudden, because people had build up stocks, operators and everybody and offtake could not take place as much as expected, so stock — finishing of stock was what was going on. Now, what has happened? We have started seeing that those stocks have gone and new opportunities have come up and the operators are coming up with the new tenders, new inquiries. Now, as far as opportunity size is concerned, BharatNet itself presents an opportunity of roughly about the present tender. And then some more tenders are to come from the different state governments, which are implementing the BharatNet Phase-III by themselves rather than through BSNL. Total demand, I expect this about going to be 20 lakh fiber kilometers.
Now, you more or less, more or less, it may be little bit less, little bit more, you multiply it by INR1,000 per fiber kilometer. So, that is going to be the opportunity for fiber optic cable in next three years just BharatNet alone. Apart from that, for the private operators, I see other opportunity on a yearly basis of roughly about, I would say INR700 crores to INR800 crores of private operators’ opportunity in the Indian market itself. So, this is as far as an Indian market opportunity is concerned.
Now, coming to international market opportunities, total market opportunity, I’m excluding China from this. I’m excluding China from this because China fulfills its own demand and it doesn’t come out. The total market opportunity is roughly about 350 million fiber kilometers, which had gone down by some 23%, 30% last year, is going to come back to roughly about 350 million fiber kilometers. So, that’s going to be the opportunity for the international market, again, roughly multiplied by INR1,000 per kilometer of fiber. That’s going to be the total market opportunity for fiber optic cable.
Now, as far as exceptional is concerned, we are concentrating one on Indian market, where we right now have almost 50% market share and with BharatNet coming and these private operators reviving their fiber optic cable requirements, I believe that should be a strong — next year should be a strong year for us in the fiber optic cable business, which this year was not so strong, first two quarters, because of less demand worldwide. As far as international market is concerned, our concentration is in European market, where we have got good opportunity because we have not been imposed countervailing duty as others have been, Chinese suppliers have been. So, we have a competitive edge and now we are concentrating quite a lot on the U.S. market also. The U.S. market is also coming up with a very big demand for fiber-to-home, the government incentives being given. We are concentrating quite a bit on the U.S. market also. So what we see that starting from the fourth quarter of this financial year, this market of fiber optic cable would pick up significantly and will come back more or less to the old levels, which it was.
Manish Ostwal
Okay. Secondly, sir, on the margin side, since our product revenue is — you indicated the product revenue will increase over the medium term. So current margin, which is actual number is 15.86%. So, where do you see the medium-term margin settled down? Or even for the full-year F ’25, what is your guidance on the margin side?
Mahendra Nahata
Mr. Manish, your voice was muffled in between. Please say — what did you say, margin? Voice was muffled. Can you just bring the microphone near to you?
Manish Ostwal
Yeah. Yeah. So my question, sir, in the H1 F ’25, we have reported a EBITDA margin of 15.86%. The question is since we are increasing our revenue from product side over the medium term, so that will have an impact on the margin. So where does the margin settle down over the medium term? That’s the medium-term question, sir. And the short-term question is for this particular financial year, what is the margin guidance at a consolidated level?
Mahendra Nahata
Look, I believe that the margin as far as this company, the current short-term is concerned, I think it should remain same as it is there in the first two quarters. It should not change much. On the medium term, again, as the product revenue increases, as we have been trying to increase the product revenue, margins should remain — become a little bit better, little bit better only.
Manish Ostwal
Thank you.
Mahendra Nahata
And another point. The backward integration which we are doing in expanding our capacity in fiber, that should also help us in increasing our margin. Right now, we buy a lot of fiber from outside. So once you do backward integration project which is under implementation is complete, that should also help us in enhancing our margins.
Manish Ostwal
And I believe we have submitted bids in BharatNet. So when those bids will be out, sir? Any timeline or any indication?
Mahendra Nahata
Sir, those bids are being evaluated. And as I understand — as much as we understand from what is happening, they are in advanced stage of technical evaluation. Technical evaluation, what — again, this is government. I can only express what I understand or what best of my opinion is. Technical evaluation should get completed mid of November, sometime mid of November looks like. It may get delayed by few days here, there, because the government processes, we all understand. And bids should be opened thereafter. And if all going well, contracts should be awarded. Sometime financial evaluation will also take time, sometime beginning of next quarter.
Manish Ostwal
Okay. Okay. Thank you, sir. Thank you.
Operator
Thank you, sir. The next question is from the line of Aakash Rampuria [Phonetic] from Dron Capital. Please go ahead, sir.
Aakash Rampuria
Hi. So, I just wanted to ask, what are the signs of revival for fiber optic cable and what is the current capacity utilization?
Mahendra Nahata
What did you say? First was, what was the size of…?
Vijay Raj Jain
What are the signs of revival of fiber optic cable business?
Mahendra Nahata
What are the signs of revival of fiber optic cable business? That’s what the question, Mr. Rampuria?
Aakash Rampuria
Yes, yes.
Mahendra Nahata
Signs is that more inquiries are coming, more RFPs are coming from international customers. From local customers also, more inquiries have come and we have seen them giving higher projections for their requirement than what we were getting from them in the last quarter or previous quarter before that. So all that indicates, once the customers are indicating that their requirement would be so much and so much times more than the last quarter, some of my customers who did not purchase even a single fiber kilometer of fiber cable in the last quarter are now coming up with very reasonably good demands.
So all that put together, when customers come up with the projections that this is going to be our demand in the next two quarters, or when we see that more RFPs or tenders coming from the international customers, that shows that the requirements are there, which was not happening for last two quarters. Such kind of demand opportunities or tenders or RFPs was not our projections. They’re now coming, which is a very heartening sign, which means now the requirement has come up. And when we go to the international market, talk to the various customers, everybody is saying that, yes, we are now going to start purchasing, going to start purchasing from the next quarter or quarter next to that. So, those things do indicate that the demand is increasing.
Aakash Rampuria
And sir, what is the current capacity utilization and what is the current price of fiber optic cable right now?
Mahendra Nahata
Fiber optic cable business, the current capacity utilization is about 45%, which we expect to improve from the next quarter as I said.
Aakash Rampuria
What would be the estimates?
Mahendra Nahata
Well, I cannot say that how much improvement would be there exactly, but I think this 45% should easily go up to 80% or so.
Aakash Rampuria
Okay.
Mahendra Nahata
Or maybe more also possibly, but I can’t commit to that. But as I see, it has to be something like that. 80% at least, maybe more.
Aakash Rampuria
And what is the price of fiber optic cable and how do we see it going forward?
Mahendra Nahata
Fiber optic cable, I can talk to you about the price in terms of fiber kilometer, kind of a price per fiber kilometer. Just give me a second. Yeah, it is — at the moment, the realization is about INR900 per fiber kilometer. To be precise, INR890 for fiber kilometer.
Aakash Rampuria
Okay.
Mahendra Nahata
Hello?
Operator
Mr. Rampuria, are you done with the question?
Aakash Rampuria
Yes.
Operator
Okay. Thank you, sir. The next question is from the line of Jinesh Shah from RSPN Ventures. Please go ahead, sir.
Jinesh Shah
Yeah. Hello? Is my voice audible?
Mahendra Nahata
Yeah. You are audible. You are audible.
Jinesh Shah
Yeah. Okay. So, thanks for the opportunity. So, my first question would be regarding the capex. Actually, the company was trying to planning to do capex for approximately INR900 crores in the couple of years.
Mahendra Nahata
Jinesh, you voice is very loud and it is echoing. Speak little slowly, little low voice, little slow.
Jinesh Shah
Yeah, yeah. Sure. So my first question was that company was planning to do a capex of approximately INR900 crores in the next couple years, right, in order to build new capacity in Poland, an extension of OFC. So it is funded majorly via debt. So, I just wanted to understand like…
Mahendra Nahata
Your voice is completely unclear. We just can’t understand A, B, C, D of this. Operator, can you see how the voice can be made better? It’s completely very much echoing.
Operator
Okay, sir. I’m checking.
Jinesh Shah
Is it okay now?
Mahendra Nahata
It is now okay. Now it is okay.
Operator
Sir, it’s okay now.
Jinesh Shah
Okay. So, my first question was that the company was planning to do capex of INR900 crores in next two years, I guess. And majorly, it was funded by a debt, right? So is company planning to do much more borrowings in, like, the next half of the financial year? Because I can see that in September balance sheet, as well the borrowings have been increased significantly. And also, if you can share about, like, vague idea about the repayment schedule, so that in order to reduce working capital pressure, working capital cycle in the future?
Vijay Raj Jain
So capex, which we have planned, everything is tied up by way of equity, debt and internal accruals. So our debt equity ratio is likely to remain in this range of 0.25 to 0.30. There is not going to be much borrowings. It’s quite comfortable.
Jinesh Shah
Okay. So whatever you might have like, raised that in this first half of the financial year, so that is likely to remain stagnant, right?
Vijay Raj Jain
Yeah. Yeah. So there are repayments also. If there are suppressed borrowings, there are repayments also happening. So it is likely to remain in the same range. And the entire capex is being funded by way of equity, which we have raised in past and then some internal accruals and also by way of debt.
Jinesh Shah
Okay. Fine. Thanks a lot. And so — okay, my second question would be regarding the BharatNet Phase-III project, for which the budget is approximately INR65,000 crores. So, I just wanted the breakup of allocation of the funds. Like, what amount of funds would be in OFC equipment, EPC services, so that it sums up to almost INR60,000 crores, INR65,000 crores.
Mahendra Nahata
So the INR65,000 crores is the total cost of the capex. Now, how much would be cable and how much would be that? I would suspect cable and cable-related activities, when I say 15 lakh fiber kilometers would be — roughly, you can say about INR5,000 crores would be roughly about cable and INR5,000 plus crores would be cable and cable-related activities and then equipment would be there and services like road digging, those kind of services would be another INR5,000 crores, INR7,000 crores, then the duct will be there on the similar numbers. Equipment would be there around INR8,000 crores to INR10,000 crores. This is the way it would be divided. I don’t have the exact numbers, but more or less, I’m saying.
Jinesh Shah
Okay. Fine. But still it doesn’t sum up to like INR60,000 crores. That is like a huge number if I go with that. But I’m saying that it still doesn’t add up to INR65,000 crores.
Mahendra Nahata
No, it doesn’t add up to INR65,000 crores. It doesn’t add up. So, there are a number of other services. I’ve just given you, more or less, this is going to be the requirement. Roughly about — but I have to make exact calculations. 15 lakh fiber kilometers multiplied by 1,000, how much it is?
Jinesh Shah
So out of that, if you can say what would be the TAM of HFCL in this overall project?
Mahendra Nahata
HFCL’s expected market share out of INR65,000 crores?
Jinesh Shah
Yeah. You can say that or opportunity, you can say.
Mahendra Nahata
No, opportunity — our opportunity comes from two directions. One, the places where we have participated directly. In the five different sectors, we participate directly. Second, what we expect as orders for equipment and cable from other winners, not only what we get from directly, but other winners who are going to win, they are also going to buy our fiber optic cable, routers and UBR and those kind of equipments. So as I have said, we are more or less expecting somewhere between INR5,000 crores to INR8,000 crores. That is my best estimate at this point of time. I cannot commit to that because we don’t know how the tenders open up or who wins. But reasonably, we are expecting INR5,000 crores to INR8,000 crores of opportunity for HFCL.
Jinesh Shah
Okay. Fine. Thanks a lot. And one more question from my side that if you can just state that till now what all the projects that we have already bidded for, and also if you can mention the winning ratio of HFCL at this point of time?
Mahendra Nahata
Look, we have been bidding various projects and we are winning quite a lot. For example, BSNL, whatever projects we have bid, I think more than 50%, 60%, we have won. 50%, 60%, we have won. BNG, we have won. OTN, we have won, UBR. So, quite a good success rate is there.
Jinesh Shah
Can you quantify the overall amount if you have that number?
Mahendra Nahata
Overall amount for BSNL has been about INR800 crores has been for OTN. UBR was roughly about INR200 some crores, and this one has been about INR40 crores. So, BSNL has been roughly about INR1,000 crores plus, something like INR1,000 crores. And private operators, there is no bid as such. These are all negotiations, which take place. So wherever negotiations are there, which are our established customers, we are taking 100% of them, more or less. Internationally, yes, winning ratio could be something like 20%, 30% — 20%, 25%.
Jinesh Shah
Okay. Fair enough. And also, just you mentioned in the opening commentary that you are like participating in the BEAD program that is in U.S., right? So — and I’ve heard that the states have now like started with the sub-grant process in order. And they are likely to submit the final proposal by this year itself. So, can you just stick even like estimate about like what is the like status — what is the status of HFCL in it like?
Mahendra Nahata
But the purchase has not yet started. Look, there are two kind of opportunities in U.S. One is BEAD and one is non-BEAD. BEAD is going to be roughly about 30% of the opportunity. Rest 70% is non-BEAD. Not everything is going to be under BEAD and BABA and all that. So the market opportunities come from overall spread of FTTH in U.S.A. So, non-BEAD also is a very big opportunity. BEAD program purchase has not yet started, as you’re rightly saying. But apart from BEAD, operators are doing their own work also for many, many areas in fiber optic cables. So non-BEAD opportunities, we have already started receiving inquires. We are already participating in that. So it’s not only BEAD, but non-BEAD opportunities are also quite large.
Jinesh Shah
Okay. So, I can conclude that the BEAD program, you have just submitted the proposal, but it’s not yet out and…
Mahendra Nahata
No, we have not submitted any proposals because there are no inquiries as yet.
Jinesh Shah
Okay. Okay. No worries. Okay. Thanks a lot.
Mahendra Nahata
I never said that we have submitted any proposal. We just said that, that kind of demand would come up.
Jinesh Shah
Okay. Okay. No worries. Thanks a lot for your time.
Operator
Thank you, sir. [Operator Instructions] The next question is from the line of Hardik Vyas from Economic Times. Please go ahead, sir.
Hardik Vyas
Sir, I had a couple of questions. Out of the total product revenue that we have recorded this quarter, I wanted to split between telco products. [Speech Overlap]
Operator
Sorry to interrupt, sir. Mr. Vyas, please use handsets to ask question.
Hardik Vyas
I’m using handset only. Sir, can you split the contribution of revenues from the telecom products and OFCs for the quarter?
Mahendra Nahata
It’s roughly about 50-50. Roughly about 50-50.
Hardik Vyas
Okay. And as guidance is roughly INR2,000 crores for telecom products for the current financial year, are we on track to do that because…
Mahendra Nahata
Yeah, we are. I think we should be able to do that. There shouldn’t be any problem.
Hardik Vyas
Okay. So the guidance for the OFC business has been lower, but the telco business remains the same?
Mahendra Nahata
Telco business remains almost there, but OFC world market has gone down significantly. So, we are part of the world market. We can’t change that. So it’s not any guidance. That was our expectation, but the market demand has not picked up as we thought it would pick up. So as a result of that, OFC revenue has gone down considerably. But as I said, I expect this market to pick up from next quarter. That is our best expectation in India and internationally, both. In India, once the BharatNet tender is awarded by the end of this financial year, maybe quarter next to that, it should pick up more significantly. But otherwise, also market is expected to pick up from next quarter.
Hardik Vyas
Okay. And sir, the order inflow in terms of — is the execution of Madhya Pradesh and Uttar Pradesh Jal Nigam is a part of the turnkey revenues this year — this quarter or are we expecting…
Mahendra Nahata
No, it is a part of it. It’s the overall consolidated sales.
Hardik Vyas
How much time do we see till we finish those two orders?
Mahendra Nahata
I think this should be, one, Uttar Pradesh should be finished by end of March, and the other one should go into the mid of next year.
Hardik Vyas
Okay. And sir, do we see any new orders from the service business?
Operator
Hello, sir, Mr…
Hardik Vyas
Last one.
Mahendra Nahata
No, no. Service business — BharatNet is going to be a large order if it comes, sir.
Hardik Vyas
Okay. That you said in the first — the last quarter.
Mahendra Nahata
Yes. Sir, you are in Economic Times, the government orders, you can only give your best expectations. So, our best expectation is it should come up in the next quarter. But government is government. The time may take more or less.
Hardik Vyas
Okay. That’s all, sir. Thank you so much.
Mahendra Nahata
Thank you. Thank you, Mr. Vyas.
Operator
Thank you, sir. The next question is from the line of Sukant Garg from Equible Research Private Limited. Please go ahead, sir.
Sukant Garg
Hi. Sir, my question is majorly regarding the top customers. So, what is the revenue concentration between the top three or top four customers? Could you please provide that?
Mahendra Nahata
Top three or four customers would account for, I think, sir, about more than 60% of revenue.
Sukant Garg
And that revenue is from both the telecom and optic fiber cable or it’s majorly from the telecom sector?
Mahendra Nahata
Telecom and optical fiber cable. Yes.
Sukant Garg
Okay. Okay. That’s all. My most of the questions been answered. Thank you, and congrats for the numbers.
Operator
Thank you, sir. The next question is from the line of Nikhil Purohit [Phonetic], Findeed Asset Management [Phonetic]. Please go ahead, sir.
Unidentified Participant
Hi. Am I audible?
Mahendra Nahata
Yes. Yes.
Unidentified Participant
Yeah. Sir, I wanted to ask that does the business face any seasonality as such, such as H2 being stronger than H1 or anything like that?
Mahendra Nahata
Sir, repeat your question, your voice is again, I think…
Unidentified Participant
Yeah. One second. One second. Is it clearer now?
Mahendra Nahata
Yes. Very much clearer.
Unidentified Participant
Yeah. So does the business face any seasonality as such, H2 being stronger than H1?
Mahendra Nahata
Yeah. Seasonality, yes. Okay. Okay. Seasonality is always there in Q2. If you see the history, more or less every time you find Q2 has a seasonality because of rains. Because of rains, what happens — as it is fiber optic cable, demand has been lower, but on account of rains, it becomes even lower because the installation and commissioning work of fiber optic cable does not happen at that speed because of rains, water logging and all that. So, there is a seasonality element in the EPC business, turnkey business and which also impacts the fiber optic cable business also.
So as it is fiber optic cable, market was down, coupled with the seasonality, this happened even to a greater extent. So Q2, generally, you expect seasonality because of rains. That’s the more or less, my experience last 20 years, I’ve been watching that. Maybe barring in between a couple of years, some variations have been there. But more or less, the seasonality is — quarter two is a seasonal — seasonality is there in quarter two. And if you look at international markets, some of the countries where you have very, very heavy snowfall, you will find the months of December, January, February, there would be less implementation of the network resources because of the very, very high snowfall.
Unidentified Participant
Understood. Understood. I have two more questions. Sir, can you give the bifurcation for revenue within the product sector…
Operator
Sorry to interrupt, sir. May we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn.
Unidentified Participant
Okay. Sure.
Operator
The next question is from the line of Kriti Tripathi from NVS Brokerage. Please go ahead, ma’am.
Kriti Tripathi
Yes. Myself Kriti. So my question was that for the Q2, the profit is around INR73 crores and the EPS is around INR0.52 on a face value of INR1. Although the top line of the company is growing, the profitability is very reasonable. And even if I make arithmetic estimation based on that, the full-year EPS is coming around to be INR2 or INR2.5. So given the current price and the PE is going around 55 times to 60 times. And even the correction is that this is the condition. So, where are the investors seeing the appreciation in the value? This is what I wanted to ask.
Mahendra Nahata
Well, whether the appreciation of the stock market would be there or not, share price, I can’t comment on that. These are not for the management to comment.
Kriti Tripathi
Yeah. But at least like EPS figure, how the company is planning to improve on the profitability part and how the management is seeing that this investor returns can be rewarded to investors?
Vijay Raj Jain
So, this EPS will certainly improve with the increasing revenue as we have planned and have a vision that our revenue should be INR10,000 crores in three years’ time. So definitely, profitability will improve and EPS will also improve. So whatever endeavors we are taking now for capability buildup or this capacity buildup, it will convert into revenue and this performance from coming year — from next financial year onwards.
Mahendra Nahata
Kriti, we can only comment about the performance. About the investor return, market, these are not the issues which we can comment.
Kriti Tripathi
Okay. Okay, sir. Thank you.
Operator
Thank you, ma’am. The next question is from the line of Aakash Rampuria from Dron Capital. Please go ahead, sir.
Aakash Rampuria
Hi. So, I just wanted to ask that what are the….
Operator
Sorry to interrupt, sir. Can you please use your handset?
Mahendra Nahata
Rampuria ji, you have to again either be near the speakerphone or whatever. Your voice is never clear.
Aakash Rampuria
Hello?
Mahendra Nahata
Yes.
Aakash Rampuria
Hello. So when can we expect the revenue coming in from electric fuses and the defense business?
Mahendra Nahata
These are under trial at the moment. And I sincerely believe that from the next year onwards, this revenue would start coming up.
Aakash Rampuria
Okay.
Mahendra Nahata
There are lot of inquires — a huge number of inquiries are there for these electronic fuses. There are a number of inquiries. So, this trial should get completed and then we believe that — I expect reasonably good amount of revenue from that.
Aakash Rampuria
How big is the market currently?
Mahendra Nahata
Market currently, I don’t have an estimation of the world market with the geopolitical situation being what it is. But the number of inquiries we are receiving, market should be in lakhs of fuses. It should be in lakhs of fuses. We have inquiries worth few lakhs, few lakhs of fuses — not rupees.
Aakash Rampuria
Okay. So that was all from my side.
Operator
Thank you, sir. The next question is from the line of Shubham Sethi from Logical Investing [Phonetic]. Please go ahead.
Shubham Sethi
Hello, sir. Sir, my question is regarding the INR2,000 crores of telecom and network product basically guidance that was given. So, how much is the order book for the networking products? And are we on track to achieve that INR2,000 crores?
Mahendra Nahata
I’ll tell you one thing. Right now, the order book would be something like, I think, INR800 crores or INR900 crores, current order book should be there. But telecom products like any equipment or like UBR or Wi-Fi or fiber optic cable, you keep on receiving orders. Not that you always have orders in your hand or a huge quantum, but yes, right now, the orders should be something in the range of about INR800 crores — INR900 crores.
Shubham Sethi
Okay, sir. Are we on track for INR2,000 crores?
Mahendra Nahata
Out of that, part of the revenue has already happened. INR800 crores, INR900 crores are pending order in our hands.
Shubham Sethi
Okay. So sir, overall, I think, how is the traction for our products in the market?
Mahendra Nahata
Traction is good. Traction is good. For example, 5G products like fixed wireless access, the UBR, unlicensed band radio, there’s good traction. Good traction. Traction has no problem.
Shubham Sethi
Okay. Thank you, sir. That was the only question I had.
Operator
Thank you, sir. The next question is from the line of Saket Kapoor from Kapoor Co. Please go ahead, sir. Mr. Kapoor, please go ahead. Your line is in talk mode.
As there is no response, we’ll go in for next question. The next question is from the line of Keval Navin Doshi [Phonetic] from OMG [Phonetic]. Please go ahead, sir.
Unidentified Participant
Hello?
Mahendra Nahata
Yes.
Unidentified Participant
Am I audible? Can you hear me? Can you hear me, sir?
Mahendra Nahata
Yeah.
Unidentified Participant
Okay. My question was since our focus is now getting more on products, can you just give some idea about in the next three years, which would be the top three or four products on which you would be focusing on, whether it is in telecom or whether it is defense, all the factors put together?
Mahendra Nahata
Look, both. Telecom as well as defense. In telecom, if you look, 5G has got good demand attraction at this point of time. Out of the INR900 crores order of the telecom equipment I talked about, there’s only one equipment before which we have INR600 crores order, which is 5G equipment and we expect to receive more such orders. And again, as we move forward, technology keeps on improving. So, we are continuously improving our technologies. And unlicensed band radio, I talked about, we have supplied 5 lakhs plus radios in the country. It started with 300 mbps, megabit per second capacity. Today, we are doing 2 gigabit per second capacity, six times, seven times enhancement of the capacity.
Then earlier we were doing point-to-point. Now, we are working on point to multipoint radios. So, focus is always there on telecom products, including fiber optic cable also is a part of telecom, only improving the size of cable, number of fibers, thickness of cable, thickness of fiber, all those kind of things are improving. So definitely, telecom has been our core business and focus on telecom is going to be there. But simultaneously, we are focusing a lot on the defense products also by building our own IPR and also working on participation or collaboration with foreign companies also in the defense electronic field, both areas we are working. And that is also our focus area to build up our revenue from defense electronics.
Unidentified Participant
Okay. So roughly, sir, what kind of — if you have to break up in your mind, would you say that out of the turnover from products, 50% could be defense, 50% could be telecom products?
Mahendra Nahata
Yeah. I would say, it should be 2:1. Two from telecom. One from defense. Something like that in some timeframe. But these ratios can keep on changing, sir, depending on market situation and all that.
Unidentified Participant
Right. And sir, how competitive is our pricing compared to…
Mahendra Nahata
Pricing is competitive. Unless you have competitive prices, you are not going to get orders.
Unidentified Participant
So do we have some advantage because of Make in India for the telecom products?
Mahendra Nahata
Yes. Definitely, because of Make in India, you have advantage because once you’re manufacturing in India, your cost is low. Your ability to design the products as per the requirement of the customer is there. Your delivery is quick. So, those advantages are definitely there. But a number of other companies are also manufacturing in India. We are not the only one. And another benefit is the PIL, performance-linked incentive that has been announced by Government of India. We’re recipient of that also. So, that is another advantage.
Unidentified Participant
And our product would qualify?
Mahendra Nahata
Yeah, yeah. Sure, sure. It has already been approved.
Operator
Sir, may we request you to return to the question queue?
Unidentified Participant
Okay. Thank you so much. Thank you for this opportunity. Yeah. Thank you.
Operator
Thank you, sir. The next question is from the line of Manoj Dhulia [Phonetic] from Dhulia Asset Management [Phonetic]. Please go ahead, sir. Manoj, your line is in talk mode. Please go ahead.
The next question is from the line of Tushar Pandey [Phonetic] from Individual Investor. Please go ahead, sir.
Tushar Pandey
Hi, sir. Can you hear me?
Mahendra Nahata
Yeah, yeah. Sure.
Tushar Pandey
Hi, sir. Last time around in the con call, you mentioned — it was not a formal guidance, but you mentioned that you kind of expect 25% to 30% revenue growth in this year. So, sir, can we still see or if you would like to tweak that guidance?
Mahendra Nahata
Look, it was not a guidance, estimation what we had at that point of a time. And that was hardly predicated upon our revenue in fiber optic cable becoming about INR2,000 crores. What we see, fiber optic cable market having been not so good. Rather, it has been very sluggish in the current financial year. That revenue has — probably will come down. It will not be INR2,000 crores. Rest all the estimations are more or less on track. Except fiber optic cable, I think we are on track to achieve our numbers.
Tushar Pandey
Sir, why I asked this is because you had already mentioned that OFCs was facing a lot of headwinds because of the oversupply. So, wouldn’t this be already accounted for in the expectations that you mentioned that 25% to 30% is achievable?
Mahendra Nahata
See, AOP of the current financial year, that was not the situation there. At that time, we had so much orders where we were overflowing with the orders and the capacity utilization was almost 100%. So, we had not taken this into account, which happened all of a sudden, the demand went down and there were hardly any inquiries. If we had known that, then we would had taken that in account. So at that time, estimation was based upon what was the best situation what we could foresee.
Tushar Pandey
Okay. Okay. Okay, sir. And the second question is, you mentioned that you had already developed…
Operator
Sorry to interrupt. Sir, may we request you…
Tushar Pandey
This is my second question. Please let me ask this.
Mahendra Nahata
Okay. Go ahead. Go ahead. Go ahead. No problem.
Tushar Pandey
Sir, last time around, you mentioned that you had already developed 1,764 fibers in one optical fiber cable. And you were planning to develop 3,400 fibers in one optic fiber cable. So, sir, how is that planning out?
Mahendra Nahata
1,764 is already there. We are now starting marketing that. The second one, development is going on, which is why — which is quite complex. 3,000 fibers in one cable and keeping the diameter low, so that’s quite complex, but we are doing it. I think it would take a couple of — two to three months more to finalize that.
Tushar Pandey
There are any competitors in 3,400 fibers?
Mahendra Nahata
Yeah. There would be competitors, absolutely. There would be at least 10 manufacturers in the world who would be doing that.
Tushar Pandey
Okay. Sir, Indian competitors I was talking about.
Mahendra Nahata
So, India, I think there would be only Sterlite. I don’t believe there is anybody more than that. Maybe Birla, VTL could be there maybe. I’m not aware, but Sterlite is there.
Tushar Pandey
Okay. Thank you so much, sir, and wishing you all the best.
Mahendra Nahata
Thank you.
Operator
Thank you, sir. The next question is from the line of Saket Kapoor from Kapoor & Co. Please go ahead, sir.
Saket Kapoor
[Foreign Speech] Nahata ji. And thank you for the opportunity. Sir, when we look at our first-half performance, there is the increase in the interest cost outgo and also the employee cost that is not commensurate with the increase in the revenue. So if you could give us some color how are things shaping up with respect to these two line items?
And secondly, about the BharatNet part of the story, sir, I think so — it is taking longer than what anticipated or according to you, things are in line, and we can expect the awarding of orders by this quarter and then a clear picture would emerge, sir?
Mahendra Nahata
Look, Saketji, BharatNet has taken longer than expectations, definitely because tender was to come, I think, two months to three months before when it came. And if it had come at that point of time, it could have been possibly decided by now, possibly. Tender came late. So that process of evaluation is going on, which is going on a reasonably good speed, reasonably good speed. Looking at the government processes and all that, it is going on a reasonably good speed. And I believe that, again, my estimation, again, you never know, government may delay, government may do faster, you don’t know really. But in my opinion, they should be able to award the contract in the first quarter of the next calendar year, last quarter of this financial year, industry should be able to see the orders. But the government being government, one has to wait. One cannot be definitive of the timeframe.
Saket Kapoor
It is also the urgency of the issue, sir. Whether — how important it is to get things done and get the order rewarded. That is also…
Mahendra Nahata
Look, I can tell you. Urgency on the one fact, the Prime Minister himself has announced the program from Red Fort on Independence Day. That itself tells you that how important the program is. If the Prime Minister announces from the Red Fort on the Independence Day that we’ll connect all the villages by fiber optic cable, it’s an important project if Prime Minister announces it twice. So I believe — and it is part of that what government says, PRAGATI revenue — PRAGATI programs, which are reviewed by Prime Minister’s office very periodically, it is part of that also, I believe.
So it is important. And anyway, connecting villages by fiber optic cable is not an issue only in India. It’s worldwide. So, India has taken a good lead in that. It’s quite an important program. And more important fact, as an important fact, I tell you. Money is available. If money is not available, then it becomes a low priority. Money comes from USO fund. USO fund is already having money for implementation of this program. And every year, more money comes in by the virtue of revenue share by the operators, which is compulsorily given in to USO fund. So, money is not a constraint and Prime Minister himself has announced it. So the importance is there, definitely, from these two, three facts you can understand.
Saket Kapoor
Right. And on the employee cost and the finance costs, they are trending higher, sir. And they are not commensurate to the revenue growth and thereby…
Vijay Raj Jain
So, Saket ji, there is hardly any variation in employee costs. It was INR88.70 crores in last quarter, which is INR89.45 crores in the current quarter. And similarly, the finance cost is also — it was INR42.31 crores in the last quarter, which is INR44.88 crores in this quarter. So, there can be some variation because of some LCs getting opened or some bank guarantees [Foreign Speech].
Saket Kapoor
Sir, I’m looking at the first half, sir. When we look at the first half, first half to first half, the INR30 crores that is done, finance cost that was INR71 crores last year and similarly, for the employee cost, INR176 crores [Foreign Speech] INR178 crores. So, I was referring to the entire first half in terms of the finance cost rising up.
Vijay Raj Jain
So [Foreign Speech] that profile was completely different, which has changed from second half of the last financial year. If you compare Q3, Q4, Q1 of the preceding quarters, it is in alignment. And secondly, see, we are building up the organization for the next journey. So, a lot of new hirings are there in various divisions. Mainly, defense or telecom, optic fiber cable, some international markets. So there may be some variations, which will convert into revenue and result in coming quarters.
Saket Kapoor
[Foreign Speech].
Operator
Sir, may we request you to return to the question queue.
Vijay Raj Jain
[Foreign Speech] maybe INR30 crores, INR40 crores or so. O&M revenue [Foreign Speech].
Saket Kapoor
INR32 crores?
Vijay Raj Jain
INR80 crores to INR100 crores.
Saket Kapoor
INR80 crores to INR100 crores.
Vijay Raj Jain
First half [Foreign Speech] INR40 crores, INR50 crores. [Foreign Speech] INR80 crores to INR100 crores. O&M is not much.
Mahendra Nahata
But from the year ’27, it will go to INR300 crores to INR400 crores.
Saket Kapoor
Okay, sir. Sir, we have to do a lot of catch-up, sir, with our earning profile now for the second half because as one of the participants did mention, there’s a lot of expectation that has been built up with investors and somehow or the other because of conditions, not in our hand, that expectation is not matching with the performance. So, we hope that we can walk the talk going ahead with this improved set of earnings going ahead.
Mahendra Nahata
Like I said, except fiber optic cable, nowhere else we will have problems. Fiber optic cable market worldwide, there has been a recession. We cannot be away from that. We have to go with the market. Now as far as fiber optic cable market is concerned, I have repeatedly said that I’m expecting it to improve from the next quarter. So, I think we will definitely try our best whatever our investors expect from us, we are able to fulfill that. Maybe a quarter or two here or there can happen because of market conditions. But overall, this is — I’m pretty sure that kind of effort the company is doing, we will fulfill the expectations of our investors.
Operator
Thank you, sir. The last question is from the line of Priyanshu from Frontline Capital Services. Please go ahead, sir.
Priyanshu Gupta
Yeah. Hi. May I know the revenue [Technical Issues].
Mahendra Nahata
Priyanshu ji, we are not able to hear you properly.
Priyanshu Gupta
Yeah. I will speak again. Sir, may I know the revenue and the profit guidance for FY ’25?
Operator
Mr. Priyanshu, can you use your handset? Your voice is breaking.
Priyanshu Gupta
Yeah. I’m saying, may I know the profit and the revenue guidance for FY ’25?
Mahendra Nahata
Well, I can’t give any guidance at this point, Priyanshu. There’s no guidance possible. I’m only saying that our expectation is that we should do well.
Priyanshu Gupta
Okay. Okay. Sure. Thank you.
Mahendra Nahata
So, thank you very much, ladies and gentlemen. Thank you for your participation in this call of today.
And I again reiterate that the company is working very hard to see that the growth in revenue and the profitability both by doing more product-led revenue, by doing more and more in the export market, by going into different areas of defense equipment. And I hope that we will have a very — because of the market conditions are turning out to be better now from what we have seen in the last two quarters, we expect that telecom sector and defense sector both should do well in the country and internationally, and that should be impacting our company also positively. Thank you very much. Thanks a lot.
Operator
[Operator Closing Remarks]