HFCL Shares Slip After 212% Rally: Is This Multibagger a Buy on Dips?

After delivering an extraordinary 212% return to become the year's best-performing smallcap stock, HFCL is currently witnessing a cooling-off period. Investors are now questioning whether this recent price correction represents a strategic entry point or a sign of exhaustion for the telecom and tech player.

Profit Booking Amidst Fundamental Strength

HFCL shares recently hit an intraday low of Rs 201 on the BSE, marking a decline of approximately 6.6% over four consecutive trading sessions. This downward movement follows a massive rally fueled by the AI and 5G boom. However, market analysts suggest that this weakness is primarily driven by profit-booking rather than deteriorating fundamentals.

The company is currently undergoing a significant earnings turnaround. This growth is being propelled by improved capacity utilization and a much richer product mix, allowing HFCL to transition from a domestic component manufacturer to a globally diversified technology entity.

Technical Outlook: Support Levels and Momentum

According to Virat Jagad, Senior Technical Research Analyst at Bonanza, the stock is facing resistance in the Rs 210–220 zone. Despite the immediate dip, the long-term trend remains robust, as the stock continues to trade above its 20-, 50-, 100-, and 200-week moving averages.

From a technical standpoint, the weekly Relative Strength Index (RSI) has cooled from "overbought" levels, suggesting that the momentum is merely easing rather than reversing. Key technical levels to watch include:

  • Immediate Support: Rs 185, followed by a stronger floor at Rs 170.
  • Resistance/Breakout: Sustained trading above Rs 220 could pave the way for a rally toward the Rs 240–250 range in the medium term.

A Massive Order Book and Diversification Strategy

The most compelling argument for HFCL’s long-term growth lies in its record-breaking order book, which has reached an all-time high of approximately Rs 21,200 crore. The company has set ambitious targets, including a goal to achieve Rs 10,000 crore in total revenue and a guided revenue growth of 20–25% by FY27.

Monarch Networth Capital has highlighted HFCL's aggressive expansion into high-margin sectors:

  • Defence and Aerospace: The company is bolstering this vertical through a 1,000-acre facility in Andhra Pradesh and a manufacturing unit in Hosur, supported by an export order book of Rs 1,930 crore in these sectors.
  • Global Footprint: HFCL is successfully pivoting toward international markets. Export revenue is projected to climb from 11% in FY24 to nearly 41% in FY26, with a management target of exceeding 50% by FY27, backed by a confirmed export order book of over Rs 12,000 crore.

Key Takeaways

  • Healthy Correction: The recent 7% dip appears to be profit-booking following a 212% rally, with technical indicators showing the stock remains in a long-term bullish trend.
  • Robust Growth Drivers: An all-time high order book of Rs 21,200 crore and massive expansion into defence, aerospace, and data centres provide strong fundamental backing.
  • Global Pivot: HFCL is rapidly transforming into an export-oriented powerhouse, aiming for international markets to contribute over 50% of its total revenue by FY27.