We Discuss Why HFCL Limited's (NSE:HFCL) CEO Compensation May Be Closely Reviewed

Key Insights

• HFCL to hold its Annual General Meeting on 15th of September
• CEO Mahendra Nahata's total compensation includes salary of ₹55.0m
• The total compensation is 775% higher than the average for the industry
• HFCL's three-year loss to shareholders was 8.2% while its EPS was down 52% over the past three years

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HFCL Limited (NSE:HFCL) has not performed well recently and CEO Mahendra Nahata will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 15th of September. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for HFCL

Comparing HFCL Limited's CEO Compensation With The Industry

According to our data, HFCL Limited has a market capitalization of ₹102b, and paid its CEO total annual compensation worth ₹78m over the year to March 2025. Notably, that's a decrease of 22% over the year before. In particular, the salary of ₹55.0m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the India Telecom industry with market capitalizations ranging between ₹35b and ₹141b had a median total CEO compensation of ₹8.9m. Hence, we can conclude that Mahendra Nahata is remunerated higher than the industry median. Moreover, Mahendra Nahata also holds ₹282m worth of HFCL stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. There isn't a significant difference between HFCL and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

HFCL Limited's Growth

Over the last three years, HFCL Limited has shrunk its earnings per share by 52% per year. It saw its revenue drop 18% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has HFCL Limited Been A Good Investment?

With a three year total loss of 8.2% for the shareholders, HFCL Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for HFCL that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.