HBL Engineering Tumbles 14% After Losing Major Kavach Tender

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AuthorIshaan Verma|Published at:
HBL Engineering Tumbles 14% After Losing Major Kavach Tender
Overview

HBL Engineering Ltd. shares plunged as much as 14% on Friday, January 16, after the company failed to secure a crucial tender for locomotive safety systems from Chittaranjan Locomotive Works. The loss, attributed to more competitive bids from rivals, significantly impacted investor sentiment and led to a reassessment of future revenue projections.

Tender Loss Hits HBL Engineering Stock

HBL Engineering Ltd.'s stock price plummeted nearly 14% on Friday, January 16, following the company's announcement that it lost a significant tender for locomotive safety systems.
The loss of orders for the Chittaranjan Locomotive Works (CLW) Kavach tender has directly impacted investor confidence.

Competitive Landscape

The company disclosed in a regulatory filing that it did not secure any orders for the CLW Kavach tender, which covered 6,300 locomotive units. Rival bidders reportedly offered more competitive pricing, outmaneuvering HBL Engineering in this specific bid.

Revised Revenue Outlook

Following the tender outcome, HBL Engineering has revised its demand forecasts. The visible demand for locomotive-related Kavach business for the current year has been reduced from 18,429 units to 12,129 units. Despite this setback, the company anticipates securing at least ₹1,000 crore in locomotive Kavach business during fiscal year 2027, with potential spillover into fiscal year 2028.

For the Kavach station segment, HBL Engineering holds existing orders totaling ₹900 crore expected to be invoiced in FY27, with an additional ₹400 crore anticipated for FY28. The company expects more station-related tenders to emerge in FY27. Overall, HBL estimates its Kavach-related sales for FY27 to be a minimum of ₹1,900 crore, comprising ₹1,000 crore from locomotive units and ₹900 crore from station projects. For FY26, the company projects Kavach sales around ₹1,880 crore.

Competitor Secures Major Order

In contrast, Kernex Microsystems announced that CLW awarded it an order worth ₹2,465.71 crore. This contract involves the supply, installation, testing, and commissioning of 3,024 sets of on-board KAVACH locomotive equipment, to be executed over 12 months.

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