Hind Rectifiers Logs Stellar Q3 With Record 64% Revenue Surge, 1:1 Bonus issue; Stock Eyed for Strong Opening
Mumbai: When Hind Rectifiers Ltd (NSE: HIRECT) reported its highest-ever quarterly revenue of ₹277.4 crore on Wednesday—a staggering 64.2% year-on-year growth—institutional whisper rooms expected fireworks. The board cleared a 1:1 bonus issue, the first in nearly a decade. Order book crossed ₹1,013 crore. European acquisition is paying off. The backward integration plant is live.
So why is the stock trading 33% off its 52-week high of ₹2,101? And why did MarketsMojo downgrade it to “HOLD” just 30 days ago?
We dug through 15 financial datasets, three strategic announcements, and one crucial technical downgrade to answer the only question that matters: Should we buy, hold, or fold?
PART I: THE NUMBERS DON’T LIE—BUT THEY DON’T TELL THE FULL STORY
The Q3FY26 Blowout: By The Numbers
| Metric (Consolidated) | Q3FY26 | Q3FY25 | YoY Change | 9MFY26 | 9MFY25 | YoY Change |
|---|---|---|---|---|---|---|
| Revenue from Operations | ₹277.4 Cr | ₹168.9 Cr | ▲ +64.2% | ₹719.3 Cr | ₹470.3 Cr | ▲ +52.9% |
| EBITDA | ₹25.5 Cr | ₹17.6 Cr | ▲ +44.9% | ₹75.7 Cr | ₹50.4 Cr | ▲ +50.1% |
| EBITDA Margin | 9.2% | 10.4% | ▼ -120 bps | 10.5% | 10.7% | ▼ -20 bps |
| PAT (ex-Minority) | ₹13.0 Cr | ₹10.0 Cr | ▲ +30.1% | ₹40.5 Cr | ₹27.1 Cr | ▲ +49.3% |
| EPS (Diluted) | ₹7.56 | ₹5.83 | ▲ +29.7% | ₹23.53 | ₹15.79 | ▲ +49.0% |
Source: Company reports, S&P Capital IQ
Headline Verdict: Spectacular. Unambiguous. Record-breaking.
But here’s the catch: Revenue grew 64%. PAT grew 30%. The delta? Margin compression of 120 basis points. Management attributes this to “expansion-led investments in the copper conductor plant at Sinnar” and “supply chain disruptions”. The market, however, is asking a different question: If raw material headwinds compress margins in a blockbuster quarter, what happens in a slowdown?
PART II: STRATEGIC DEEP DIVE—THREE PILLARS THAT CHANGE THE NARRATIVE
This isn’t just a quarterly story. Between September 2025 and February 2026, Hind Rectifiers executed three structural transformations that alter its five-year trajectory.
PILLAR 1: BACKWARD INTEGRATION—THE ₹56 CRORE GAMBLE THAT’S PAYING OFF
What happened: In November 2025, Hirect commenced commercial production of Continuously Transposed Conductors (CTC), Enamelled Paper Insulated Copper Conductors (EPICC), and Paper Insulated Copper Conductors (PICC) at Sinnar .
Why it matters:
- Self-reliance: These are critical raw materials for traction transformers. Hirect was previously 100% dependent on external suppliers—often single-sourced.
- Penalty avoidance: The company has historically incurred liquidated damages from Indian Railways due to supply chain delays. This plant eliminates that.
- New revenue stream: Management explicitly stated they will sell to the “wider transformer industry” starting Q1FY27. This turns a cost centre into a profit centre.
ET Insight: The ₹56 crore capex represents ~2.7% of FY26 estimated revenue. If this vertical achieves even 15% EBITDA margins, it adds ₹8-10 crore annualized profit by FY27—without incremental railway order flow.
PILLAR 2: EUROPEAN INVASION—THE BeLink ACQUISITION UNBOXED
What happened: September 2025. Hirect acquires 66% stake in France-based BeLink Solutions for €1 million, with total capital infusion of €2 million.
What BeLink brings:
- Six automated production lines and advanced testing facilities
- IP, technology, and ongoing customer contracts
- Projected FY25 revenue: €13 million (approx ₹117 crore)
- Order book for 2026: €10 million (approx ₹90 crore)
Why the market hasn’t priced this: The acquisition was announced during the September quarter earnings, but integration timelines were unclear. Q3FY26 commentary confirms: “Integration efforts with BeLink Solutions is progressing as planned” with active focus on printed electronics in Railway and defence sectors across European markets.
BrightStake Insight: This isn’t a revenue story yet. It’s a capability story. BeLink gives Hirect robotics and EMS (Electronics Manufacturing Services) expertise—adjacencies that command higher multiples in European markets. If Hirect successfully cross-sells Indian Railways’ requirements to European rail OEMs, the TAM expansion is substantial.
PILLAR 3: BONUS ISSUE—SIGNAL OR NOISE?
The announcement: 1:1 bonus share issuance .
What it signals:
- Accumulated reserves: You cannot issue 1:1 without substantial free reserves. This confirms balance sheet strength.
- Retail sentiment: Bonus issues historically attract retail participation. With the stock down 33% from peak, this is tactical timing.
- Liquidity improvement: Management explicitly cited “improving the liquidity of the Company’s equity shares” . Current public float is modest. Bonus issuance doubles floating stock without dilution.
BrightStake Insight: Bonus alone is not a buy signal. But a bonus during a price correction, accompanied by record earnings, with a European subsidiary gaining traction? That’s a signal cluster.
PART III: THE ELEPHANT IN THE BOARDROOM—WHY “HOLD”?
On January 9, 2026, MarketsMojo downgraded Hind Rectifiers from BUY to HOLD. Four specific concerns were flagged :
1. VALUATION: EXPENSIVE BY ANY MEASURE
| Metric | HIRECT | Industry Median | Verdict |
|---|---|---|---|
| P/E (TTM) | 43.9x | ~28-32x | Premium |
| P/BV | 10.5x | 4.5-5.5x | Expensive |
| EV/Capital Employed | 6.7x | 3.2-4.0x | Rich |
| ROCE | 19.87% | 15-16% | Superior |
| PEG Ratio | 0.9 | 1.2-1.5 | Undervalued on growth |
Source: MarketsMojo, Equitymaster
The conflict: At 44x earnings, Hirect is undeniably expensive in absolute terms. But PEG of 0.9 suggests the stock is cheaper than peers when adjusted for 55%+ earnings growth. This is the classic “growth at reasonable price” (GARP) debate.
2. TECHNICALS: BULLISH TO SIDEWAYS
The technical trend shifted from mildly bullish to sideways in January 2026. Key deteriorations :
- Weekly & monthly MACD: Mildly bearish
- Weekly Bollinger Bands: Bearish
- KST indicator: Bearish (weekly), Mildly bearish (monthly)
- Dow Theory: Mildly bearish across timeframes
One bright spot: On-Balance Volume (OBV) remains mildly bullish weekly—indicating institutional accumulation despite price decline.
3. INSTITUTIONAL OWNERSHIP: THE DOG THAT DIDN’T BARK
Domestic mutual funds hold negligible stake . For a company with ₹2,100 crore market cap, 44% earnings growth, and 64% revenue growth—this is conspicuous absence.
Two interpretations:
- Bear case: Institutions have access to deeper diligence. Their absence signals concern about sustainability.
- Bull case: No institutional overhang means no panic selling. When earnings sustain, FII/MF buying will drive re-rating.
PART IV: ORDER BOOK—THE ₹1,013 CRORE LIFELINE
As of December 31, 2025: ₹1,013 crore.
Context:
- FY25 revenue: ~₹650 crore
- FY26 revenue (run-rate): ~₹950-1,000 crore
Book-to-bill ratio: ~1.1x. Healthy, but not euphoric.
Composition: “Primarily driven by railway sector expansion”. This is both sa trength and a vulnerability. Indian Railways capital expenditure is politically supported but fiscally constrained. Diversification into defence and industrial segments is ongoing, but railway remains 70%+ of revenue.
PART V: GLOBAL BENCHMARKING—HOW DOES HIRECT STACK?
| Company | Geography | P/E (TTM) | Revenue Growth (FY26) | ROCE | Key Business |
|---|---|---|---|---|---|
| Hind Rectifiers | India | 44x | 52.9% | 19.9% | Railway traction, power electronics |
| ABB India | India | 68x | 21% | 18.5% | Electrification, automation |
| Siemens India | India | 62x | 14% | 17.2% | Industrial manufacturing |
| CG Power | India | 52x | 19% | 22.1% | Industrial motors, railways |
| Stadler Rail | Switzerland | 18x | 8% | 6.5% | Rolling stock |
| Alstom | France | 22x | 5% | 4.8% | Rolling stock, signalling |
ET Insight: Compared to Indian industrial peers, Hirect is cheaper than ABB, Siemens, and CG Power on P/E—despite faster growth. Compared to global rolling stock peers, Hirect commands a 100% valuation premium, justified by India’s 15% railway electrification CAGR vs Europe’s 2-3%.
PART VI: THE EARNINGS TRAJECTORY—WHAT CHARTS SAY
5-year EPS compounded growth: 30.53%
10-year stock return: 1,523% vs Sensex 71%
ROCE trajectory: 11% (FY23) → 19.87% (H1FY26)
The hockey stick is real.
Since Q3FY24, Hirect has delivered seven consecutive quarters of double-digit revenue growth and positive profit growth for 12 straight quarters. This isn’t a COVID bounce or a policy sugar-high. This is execution.
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RISKS THAT COULD DERAIL THE STORY
- Raw material inflation: Copper constitutes 40-50% of transformer cost. LME copper at $9,500/tonne is 15% above FY25 average. If copper touches $10,500+, margins face structural compression.
- Railway order book velocity: Indian Railways’ capex grew 17% in FY26 budget. Any moderation to <10% will impact FY27/FY28 revenue visibility.
- BeLink integration failure: Cross-border M&A in mid-caps carries execution risk. One delayed contract or key employee exit in France could spook sentiment.
- Liquidity constraints: Debt/Equity at 1.05 is manageable but not pristine. The Sinnar capex and BeLink acquisition were funded through term loans. Rising interest rates impact finance costs.
FINAL THOUGHT: THE ₹2,100 QUESTION
Can Hind Rectifiers reclaim ₹2,100 in FY27?
Yes—if two conditions are met:
- Q4FY26 and Q1FY27 show EBITDA margin expansion to 11.5%+ , proving Sinnar integration is delivering operating leverage.
- BeLink secures at least one multi-year European rail contract announced separately, validating the “global expansion” thesis.
Until then, Hind Rectifiers is a fundamentally outstanding company in a technically uncertain phase. The HOLD rating isn’t skepticism of the business—it’s respect for the price you pay.
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