HFCL bags Rs 2,329 crore contract; multibagger stock slips

Shares of HFCL Ltd slipped in Tuesday's early trade even after the telecom equipment and optical fibre cable maker announced a three-year supply agreement worth an estimated Rs 2,329 crore with a global multinational platform.

At last check, the stock was down 1.23 per cent at Rs 245.80 on BSE. However, it has surged 256.80 per cent so far this year, delivering multibagger returns on a year-to-date (YTD) basis.

HFCL contract details

HFCL said in a BSE filing that its overseas wholly-owned subsidiary has entered into a three-year supply agreement with a global multinational platform for the supply of high-quality, high-fibre-count Optical Fiber Cables (OFC).

Under the agreement, HFCL will supply multi-million fibre kilometres of OFC in each calendar year from CY27 to CY29.

"The total value of the contract over its tenure is estimated at ~$244 million equivalent to ~Rs 2,329 crore," the company said in the filing.

HFCL said the agreement reinforces its ability to secure strategic long-term engagements and reflects its technological capabilities, operational execution and customer relationships.

About HFCL founder Mahendra Nahata

Mahendra Nahata is the founder and managing director of HFCL. He has also been associated with Reliance Industries Ltd's (RIL's) telecom business.

Nahata holds a 0.54 per cent stake in Jio Platforms Ltd, according to available disclosures cited in reports. He acquired the stake for Rs 48 crore in 2020.

According to estimates by Motilal Oswal Financial Services (MOFSL), Jio Platforms is valued at $114 billion. Based on this valuation, Nahata's 0.54 per cent stake would be worth around $611 million, or nearly Rs 5,800 crore.

This implies an estimated notional gain of about Rs 5,752 crore over the original investment.

Jio Platforms IPO

Jio Platforms, a subsidiary of RIL, was incorporated on November 15, 2019. The company filed its draft red herring prospectus (DRHP) on June 19 for a proposed issue of 270 million new shares.

The proposed issue is expected to reduce Reliance Industries' holding in Jio Platforms from 66.43 per cent to 64.5 per cent, according to the filing.