Shares of HFCL climbed as much as 9% to Rs 190 on the BSE on Friday, extending gains for a second straight session and rising 17% over this period. The stock has been on a strong run in 2026, surging 170% year-to-date.
On Wednesday, the company received a purchase order worth around Rs 135.09 crore from RailTel Corporation of India for the annual maintenance contract (AMC) of the Secure Operations (OPS) Network project for data centres used by Indian defence forces. The scope included setting up a secure defence communication network comprising hardware, software, data centre infrastructure and AI-enabled network security systems.
What made HFCL shares rally 170% in 2026?
At the heart of the rally is one powerful theme: the world’s AI expansion needs enormous amounts of high-speed connectivity infrastructure, and optical fibre is becoming the backbone of that ecosystem.
For HFCL, the March quarter marked a significant turnaround. Revenue nearly doubled YoY to Rs 1,824 crore, EBITDA swung from negative territory to Rs 315 crore, and PAT moved from a loss of Rs 83 crore to a profit of Rs 184 crore within a year.
“The structural shift is real — product revenue has grown from 27% of the mix in FY21 to 59% in FY26, and exports now account for 41% of revenue. That's a business fundamentally changing its character,” said Balaji Rao, Research Analyst at Bonanza said.
Rao believes HFCL offers a more diversified play when compared with Sterlite Tech, a multibagger competitor in the space. Along with optical fibre cables, the company is building a defence and aerospace franchise through Defsys, developing a large ammunition complex in Andhra Pradesh and expanding aggressively into data centre interconnect solutions.
“While valuations look stretched, with STL trading at relatively higher valuations, there are still some structural gains for the next 3-5 years for HFCL, provided a healthy correction comes first,” Ravi Singh of Master Capital Services said.
“From a risk-reward perspective, HFCL is preferable after the rally due to better diversification, relatively lower valuation stretch, and strong order visibility,” added Santosh Meena of Swastika Investmart.
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Analysts say both stocks now sit firmly in the high-risk, high-reward category. Whether the extraordinary gains sustain from here will depend on future order inflows, execution capabilities and the ability of both companies to convert the AI and data centre boom into durable earnings growth over the long term.
