Rating: Unrated | TP: NA

AGM Highlights

• Strong focus on TCAS and TMS; high-growth electronics segment.
• The company continues to have a debt-equity ratio of <0.1x.
• Only Indian company in the market to have high powered Pure Lead Thin Plate (PLT) battery.

Key Takeaways

HBL Power continues to focus on indigenous development of its products, with no foreign collaboration.

The company aims to improve its technology and some of the R&D work in progress is expected to show the benefits from FY27F.

HBL Power continues to have a healthy working capital and debt-equity ratio of <0.1x.

In the industry batteries segment, demand for Ni-Cd batteries remains strong.

The company will focus on improving productivity and reducing costs as Ni-Cd batteries will co-exist with Pb (lead) batteries.

4G-5G towers still use lead-acid batteries.

Prices of Ni-Cd batteries have fallen over the past few months, and their sales are expected to rise in volume terms.

HBL Power also manufactures lithium-ion batteries on a small scale and so far, the company has incurred a capex of Rs700m while it is looking to incur another Rs700m in the next two years.

The company has supplied to the defence sector for meeting the needs of its naval and underwater bases.

HBL Power has been awarded a contract by NSTL/ DRDO to develop prototype modules for lithium-ion batteries for submarine application.

However, there is demand emerging from Indian Air Force.

The demand from them will be met in the next few years.

HBL Power prefers to stay away from capital-intensive products like electric vehicles or EVs due to intense competition.

The company also makes PLT batteries, which are likely to be exported for meeting the needs of Russian helicopters.

Indian Railways’ track length is expected to increase by 30,000km over the next few years, which will provide a good opportunity for the TCAS (Kavach) system to be implemented.

Management said the implementation of Train Management System (TMS) is in progress in the Sealdah division of Eastern Railways.

Also, type testing and field trial of the Electronic Interlocking System is also likely.

The company makes in-house advanced software but does not sell them.

The advanced software system is being utilized in TMS currently.

Demand for TMS master control system is expected to increase from FY24F.

However, the business will garner a low revenue of ~Rs2bn.

The company aims to supply and install Kavach system in 23 Vande Bharat trains.

So far, 20 Kavach systems have been delivered, and eight have been installed in four Vande Bharat trains.

HBL Power expects strong demand for its electronic fuses by FY24F, with 100% in-house technology, for use in grenades and other ammunition and artillery.

Grenades made by HBL Power have been approved by the Ministry of Home Affairs.

HBL Power is the only Indian supplier of electronic fuses, and it can also supply to companies making the rest of the grenade.

The approval of the Indian Army to use the company’s products in its grenades is awaited in FY24F.

The company is making efforts to ramp up capacity and increase sales by FY25F.

Torpedo batteries by HBL Power are the only ones which are approved for use in Varunastra.

Management said the cost of these batteries is ~Rs30mn.

The battery, motor and homing head unit constitutes ~60-65% of the cost of a torpedo.

The company has made a bid for Tonbo Imaging and the technical evaluation is going on currently.