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HBL Engineering
Our verdict on HBL Engineering isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →How durable is the business?
Export revenue grew significantly by 55.6%, increasing its share of total revenue to 23.15% as the company successfully expanded its footprint in the Middle East and other global markets. (2 expanding)
“Batteries Exports: 21,086.72. Unallocated Exports: 1,655.16.”
HBL is aggressively expanding its technological moat by entering new consumer markets (Automotive, UPS, Inverters) and Solar Photovoltaic systems. The company reclassified substantial R&D development costs as Intangible Assets, signaling a shift from exploratory R&D to commercialized proprietary tech. (1 expanding)
“The company, during the year 2011-12 undertook substantial development activities and improvements by changing the product design, materials, manufacturing processes and developed prototypes... reclassify the expenditure and to recognise the costs incurred in the development phase as ‘ Intangible Assets’”
See the full cited Business Model analysis of HBL Engineering
What could break the thesis?
The risk is intensifying as the total amount involved in disputed demands (not deposited) has increased to Rs. 4,000.48 lakhs, primarily driven by a large Central Excise Act dispute of Rs. 2,169.92 lakhs. (5 intensifying, 3 high-severity)
“Inspite of an increase in finance cost... PBT for the year was Rs.2169.90 lacs compared to Rs.511.27 lacs in the previous year.”
The risk remains stable but significant. While the value of imports decreased slightly from Rs. 164 crores to Rs. 144 crores, the company notes that for new segments like Lithium-ion, it remains dependent on imported cells with marginal domestic value addition. (2 stable)
“Imported Raw Material: 23,682.86 (39.67%)”
See the full cited Risk analysis of HBL Engineering
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