Hidden Gem - HPL Electric and Power

HPL Electric & Power (HPL), incorporated in 1992, is among India’s leading electric equipment manufacturer with a formidable presence across two major segments, 1) Metering & Systems and 2) Consumer & Industrials. Company has 7 manufacturing facilities (5 in Haryana & 2 in Himachal) and 2 R&D centres. In meters segment, company has an annual capacity of 11 million units which they plan to expand in the coming 2-3 years    

Healthy revenue visibility on current order book: HPL has a strong order book of ₹ 3500+ crore (~94% of OB for smart meters and would be executed in 2-2.5 years). The order backlog implies 3.6x of TTM metering revenues, providing a strong medium-term growth visibility in the segment. Company’s execution remains healthy in smart metering segment, which grew by 32% YoY in H1FY25 and we believe this segment will remain the key growth driver for HPL in the coming period

Comprehensive product portfolio: The company is strongly positioned to get significant number of orders in coming future as the tendering activities remains healthy. Out of the 22.24 crore meters sanctioned by the govt, large part is yet to be awarded to meter manufacturers like HPL. Company’s other segments like cables and switchgears are also witnessing strong growth led by healthy demand. With strong capabilities across design, development & manufacturing capabilities led by backward integrated manufacturing facilities & R&D centres, company has been able to diversify its product portfolio which now covers a wide range of low-voltage electric products.

HPL is strongly positioned to witness healthy growth led by robust opportunity arising in smart meters segment. Moreover, consumer & industrial segment too is poised to grow considerably in the coming period. We estimate revenue CAGR of ~22% over FY24-27E while EBITDA & PAT to grow at ~28% & ~48% CAGR respectively over the same period. We recommend BUY on HPL Electric with a target price of ₹ 660 per share (based on 30x P/E to FY27E EPS)