Can Copper, Vande Metro, & Propulsion Drive Mukul Agrawal Stock's 30% Growth?

As India’s railway sector evolves towards advanced, integrated systems, Hirect Limited is positioning itself at the forefront of this transformation. The company, which once focused primarily on supplying individual railway components, has spent recent years building technological capabilities across power electronics, traction systems, and railway engineering. Management now believes these investments are starting to open up larger opportunities in locomotive and trainset markets, both in India and abroad.

Hirect, with a market capitalization of Rs 4,400 crore, has maintained an ambitious target of 30 percent revenue growth by fiscal year 2027. This comes even as the company saw a relatively modest start to its order intake this year. Its shares, which have surged over 1200 percent in the past five years, are currently trading at Rs 1,243 and command a price-to-earnings ratio of 75, notably higher than the industry average of 33.

A core part of Hirect’s new approach involves moving from a focus on components to supplying integrated railway system solutions. According to Hirect’s management, this enables deeper participation in the supply chain and higher revenue per train platform. Early success stories include the company’s first development contract for a Mainline Electric Multiple Unit (MEMU) trainset from Modern Coach Factory, valued at about Rs 60 crore, and a contract for the Vande Metro program involving the design, development, and commissioning of comprehensive propulsion and systems packages.

Management estimates underscore the financial impact of this shift. While the company’s addressable opportunity per locomotive is around Rs 5.5 crore, this figure jumps to Rs 15 crore for each MEMU trainset and Rs 60 crore for the more advanced Vande Metro models. This represents a potential increase in revenue content by three to twelve times for every platform where Hirect moves beyond the component level.

Another avenue for growth stems from Hirect’s in-house manufacturing of copper conductors, which provides the company with increased process control and access to new third-party customers. The company’s current monthly copper production installation stands at 350 metric tonnes, with plans to target both internal consumption and sales to the power sector in the coming years. Management estimates this vertical integration has boosted gross margins by about two percentage points.

International expansion is also picking up pace. Hirect recently received its first traction motor assembly order from the United States, alongside an order for IGBT converters for mining applications, both marking its entry into American industrial sectors. Management views these initial prototype projects as footholds for future volume-based orders, aiming to leverage railway expertise into adjacent fields like mining, defense, marine, power management, and technology solutions.

Financially, Hirect reported a 20.3 percent year-on-year increase in consolidated revenues in the first quarter of FY27, reaching Rs 258.4 crore. Gross profits rose 30.2 percent to Rs 73.2 crore, though EBITDA declined 45.4 percent to Rs 13.2 crore due to increased employee and operational costs related to the integration of Elventive France. Management anticipates this European acquisition will take another three to five quarters to break even.

Whether all these initiatives - spanning integrated trainset systems, copper conductor manufacturing, and international orders - can collectively support Hirect’s 30 percent growth target remains to be seen. Management is optimistic, especially if ongoing trials for propulsion systems and pilot international orders convert into recurring business. However, many initiatives are still in developmental or prototype stages, underscoring the importance of execution in the coming quarters as the company navigates this new growth path.