HBL Engineering shares experienced a significant decline of 14% on Friday, January 16, after the company announced its failure to secure a major Kavach tender for locomotive safety systems. The sharp drop in stock price reflects investor concerns over the missed business opportunity in the railway safety segment.

Tender Loss Impact

The company disclosed in a regulatory filing that it did not win any orders in the recently concluded Chittaranjan Locomotive Works (CLW) Kavach tender for 6,300 locomotive units. HBL Engineering attributed this outcome to rival bidders offering more competitive pricing, which positioned them unfavorably in the bidding process.

Revised Market Outlook

The loss of this significant order has substantially reduced the visible Kavach locomotive demand for the current year. HBL Engineering reported that the total Kavach locomotive demand, which previously stood at 18,429 units, has now decreased to 12,129 units following the CLW tender outcome.

The company clarified that its earlier communication to exchanges on December 18, 2025, specifically pertained to the Kavach locomotive business segment and excluded the Kavach station segment operations.

Future Revenue Projections

Despite the setback, HBL Engineering maintains optimistic revenue projections for its Kavach business across both locomotive and station segments:

Station Business Strength

The company's Kavach station business segment appears more stable, with existing orders in hand worth ₹900.00 crore expected to be invoiced during FY27. An additional ₹400.00 crore from station projects is likely to be billed in FY28, providing revenue visibility beyond the immediate fiscal year.

HBL Engineering anticipates more station-related Kavach tenders during FY27, with some projects potentially executed within the same financial year, offering additional growth opportunities.

Near-term Financial Outlook

For FY26, the company projects total Kavach sales of approximately ₹1,880.00 crore, demonstrating continued business momentum despite the recent tender loss. The overall Kavach-related sales estimate for FY27 remains robust at a minimum of ₹1,900.00 crore, indicating the company's confidence in securing alternative locomotive business and maintaining its station project pipeline.

HBL Engineering Limited has updated stakeholders on recent developments in its Kavach business, including the outcome of a significant tender and revised revenue projections for the upcoming fiscal year. The company communicated these updates to stock exchanges on January 15, 2026, providing clarity on its position in the railway safety equipment market.

Tender Outcome and Impact

The company disclosed that it did not secure the CLW locomotive Kavach tender for 6,300 units, which was decided during the week. The primary reason cited was competitive pricing, with other bidders offering lower rates than HBL Engineering's proposal.

This development has resulted in a reduction of the company's visible locomotive demand from 18,429 units to 12,129 units, as previously communicated in the company's December 18, 2025 intimation to exchanges.

Revenue Projections for FY2027

Despite the tender setback, HBL Engineering maintains robust revenue expectations for its Kavach business across two key segments. The company has provided detailed projections for both locomotive and station business components.

The locomotive business projection of ₹1,000.00 crores is based on the reduced demand of 12,129 units, with additional business expected to carry forward into FY2028. For the station segment, the company has existing orders worth ₹900.00 crores planned for invoicing during FY2027, with an additional ₹400.00 crores scheduled for FY2028.

Current Business Performance

The company provided context for its projections by sharing current year expectations. For FY2026, HBL Engineering anticipates total Kavach sales of ₹1,880.00 crores, establishing a baseline for comparison with the projected FY2027 figures.

Future Business Opportunities

HBL Engineering indicated that additional opportunities remain on the horizon. The company expects more tenders in the station business segment during FY2027, with potential for some value delivery within the same fiscal year. This suggests continued growth prospects beyond the current order book.

Clarification on Previous Communications

The company clarified that its December 18, 2025 intimation to exchanges specifically addressed locomotive Kavach business and did not include station business projections. This distinction helps stakeholders understand the comprehensive scope of the company's Kavach operations across both locomotive and station segments.

The update demonstrates HBL Engineering's transparency in communicating both challenges and opportunities in its core business segments, providing stakeholders with a clear picture of expected performance despite competitive market pressures.