HPL Electric

The meter behind your wall

Look at the electricity meter mounted outside your home, the little switchboard in the bedroom, the wires threaded through the ceiling you never think about. Someone manufactures all of it, and a good deal of it in India carries the HPL name. This is a forty-year-old maker of the plumbing of electricity — meters, switches, switchgear, LED lights, wires and cables. Dull as dishwater to talk about at a dinner party, and precisely the sort of business that keeps earning while nobody notices. That is the setup here. What makes this note worth writing is not the product; it is the price.

Why we are looking now

A year ago this share traded near ₹607. Today it sits at ₹338, roughly a 43% fall in twelve months. When a stock halves, one of two things has happened: either the business broke, or the crowd changed its mind faster than the facts did. Here the numbers argue for the second.

Sales have not broken. Read the annual line and you see a company that stumbled through the COVID years — revenue actually shrank from ₹1,158 crore in 2019 to ₹875 crore in 2021 — and then found its stride. From that trough, turnover climbed to ₹1,014 crore, ₹1,262 crore, ₹1,461 crore, ₹1,700 crore, and the latest year points to ₹1,811 crore. The five-year sales growth sits at 16% compounded, a genuine acceleration over the sleepy 5% it managed across the full decade. Profit followed the same arc, more violently — net profit went from a miserable ₹8 crore in 2022 to ₹94 crore in 2025, which is how you end up with a headline five-year profit growth figure of 57%. That number flatters, because it is measured from a near-death trough. Be honest with yourself about that. The recovery is real; the 57% is arithmetic theatre.

What you are paying

Here is the part that earns this stock its place in a short-horizon list. HPL trades at a P/E of about 22.9. Its own five-year median multiple is 43.6, and its ten-year median is 28.3. So you are being offered the company at roughly a 47% discount to how the market has priced it over five years, and around a 19% discount to its ten-year habit. The market fell out of love, and the multiple compressed even as earnings rose — a combination that is exactly what a value buyer waits for. When falling price meets rising profit, the P/E does the work of two.

On dilution, I can hand you clean news. The equity capital was ₹19 crore in 2015, expanded to ₹46 crore and then ₹64 crore around the 2016 IPO period — and has sat dead flat at ₹64 crore every single year since 2017. No creeping share issuance, no quiet punishment of the loyal shareholder. Promoters have held their 72.66% unmoved, and a whiff of FII interest (0% to 0.75%) has just begun to appear. That is the ownership posture of people who are not looking to escape.

The blemishes, stated plainly

Now the cautions, because this is not a flawless thing. Return on equity is 9.92%, and averaged under 9% over three years — for all the profit-growth fireworks, this company still earns a pedestrian return on the capital its owners have parked in it. Munger would call that a business that grows but does not compound richly. ROCE of 13.5% is respectable, not thrilling.

The uglier detail is buried in the working capital: debtors of 154 days. That means customers — many of them government utilities and agencies — take roughly five months to pay. A meter company that sells to sarkari buyers is forever financing their slow chequebooks. That is why cash and reported profit can drift apart, and why the balance sheet must be watched, not admired. The TTM profit growth of just 1% is your early hint that the parabola has flattened.

The verdict for a short holding

Strip it down. You have a real, forty-year brand selling essential electrical hardware, revenue at a record and still climbing, no share dilution for eight years, promoters sitting tight — offered at less than half its five-year median multiple after a 43% price wash-out. For a one-to-six-month horizon, that is a coiled spring: a beaten-down cyclical where sentiment overshot the deterioration. The reversion in multiple alone, back toward even the ten-year median, is the thesis.

But hold it with your eyes open. This is not a buy-and-forget compounder — the middling ROE and the five-month debtor cycle forbid that. It is a mispriced recovery you are renting, not a fortress you are marrying. Size it modestly, respect the ₹256 low as the market's recent floor, and treat any return toward its old multiple as your cue to book and move on rather than fall in love.