HBL Engineering Soars on ₹1,522 Crore Train Safety Order

Shares of HBL Engineering surged to an all-time high of ₹738.65 per share on the BSE during Monday’s intraday trading, marking a 6.22% increase. This rally came in response to the company's announcement of securing a major order worth ₹1,522 crore. The order, awarded by Chittaranjan Locomotive Works, involves the supply, installation, and commissioning of the Train Collision Avoidance System (TCAS), known as KAVACH, in locomotives. The project is set to be completed within 12 months from the issuance of the purchase order, providing a significant boost to the company's railway electronics segment.

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The award of this substantial contract underscores HBL Engineering’s expanding role in the railway and defense sectors, particularly in the high-demand area of safety and automation technology. The KAVACH system is designed to prevent train collisions and enhance safety, a priority for India's railway infrastructure. This deal reinforces HBL's position as a critical player in India's evolving railway modernization efforts. Investors reacted positively to the news, pushing the stock to record levels, although subsequent profit booking saw shares trading lower at ₹708 per share by 10:10 AM, a decline of 1.82%. Meanwhile, the BSE Sensex was also down by 0.18%, reflecting broader market sentiment.

The company’s financial performance highlights a steady growth trajectory. In the second quarter of FY25 (Q2FY25), HBL Engineering posted a revenue of ₹533.38 crore, up 1.48% from ₹525.59 crore in Q1FY25. EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) rose by 4.37% to ₹120.97 crore in September 2024 from ₹115.9 crore in June 2024. Net profit saw a modest increase of 0.21%, reaching ₹76.01 crore compared to ₹75.85 crore in the previous quarter. Despite these gains, the company’s stock has underperformed compared to broader market indices, rising 48% year-to-date and 51% over the past year, while the BSE Sensex gained 6% and 14% respectively during the same periods.

HBL Engineering operates through three main business verticals: batteries, electronics, and defense. The electronics segment, which includes railway electronics and electric mobility, has been a key driver of growth. The company’s ability to secure large-scale orders like the KAVACH TCAS system reflects its strategic focus on high-growth, government-backed initiatives such as “Make in India” and infrastructure modernization.

With a market capitalization of ₹19,682.23 crore, HBL Engineering's shares currently trade at a P/E ratio of 62.26 times and an EPS of ₹10.88. The new order is expected to enhance the company’s revenue streams and reinforce its leadership in railway safety solutions. Looking ahead, continued execution of such projects and sustained financial performance will be critical for maintaining investor confidence and driving further growth in the company’s share price.

Conclusion

HBL Engineering’s recent success in securing a substantial order highlights its competitive strength in the defense and railway electronics markets. While the stock has seen strong gains, its valuation reflects high expectations. As the company moves forward with executing the TCAS project and expanding its market presence, it remains well-positioned to benefit from India’s infrastructure and defense modernization initiatives.