HEG Limited , a leading graphite electrode manufacturer, has released its financial results for the first quarter, showcasing resilience in the face of global steel market challenges.

Financial Highlights

HEG reported a revenue from operations of Rs 613.00 crores for the quarter. The company's profit after tax stood at Rs 72.00 crores, representing an 11% profit margin. EBITDA for the quarter was Rs 154.00 crores, with a robust EBITDA margin of 23%.

Market Conditions and Industry Outlook

The global steel industry faced headwinds during the first half of the year. According to the World Steel Association, global crude steel production declined by 1.9% year-on-year to 934.3 million tonnes. This downturn has led to weak demand for graphite electrodes, with sustained pressure on spot market prices.

China's steel output fell by 2.4%, but elevated export volumes continued to flood global markets, disrupting trade flows and exerting downward pressure on both steel and electrode prices. Steel production outside China declined by 1.2% in the first half, with several regions experiencing sluggish recovery due to weak demand and shifting trade dynamics.

Despite the overall global decline, India reported a robust 9.2% year-on-year increase in steel production for the first half, supported by steady infrastructure spending and strong momentum in the automotive sector.

Expansion Plans

HEG announced an expansion plan to increase its production capacity from 100,000 tons to 115,000 tons. This expansion requires a total capital expenditure of Rs 650.00 crores and is expected to be commissioned by the end of January 2028. The company cites anticipated demand from new electric arc furnaces globally, driven by decarbonization initiatives, as the rationale behind this expansion. It is estimated that these initiatives could contribute approximately 200,000 tonnes of additional graphite electrode demand by 2030.

Company Position and Outlook

Following its capacity expansion to 100,000 tons in November 2023, HEG has maintained its position as the third largest graphite electrode producer in the western world. The company continues to export approximately 65-70% of its production to about 35 countries worldwide, supplying a large portion of its production to the top 20 steel companies globally.

While short-term market conditions remain challenging, HEG's management views the long-term outlook for graphite electrodes as positive, supported by the structural transition to lower-emission steel production worldwide.

Conclusion

HEG Limited's Q1 results demonstrate the company's ability to navigate through a challenging global steel market. With its strategic expansion plans and strong market position, HEG appears well-positioned to capitalize on the anticipated growth in demand for graphite electrodes driven by global decarbonization efforts in the steel industry.

HEG Limited , a leading graphite electrode manufacturer, saw its shares soar by 12% following the announcement of its robust first-quarter results for the fiscal year 2025-26 and plans for capacity expansion. The company's performance showed significant improvement across key financial metrics, coupled with a strategic decision to increase production capacity.

Strong Financial Performance

For the quarter ended June 30, 2025, HEG reported:

• Revenue from operations grew by 8% to ₹616.93 crore, up from ₹571.50 crore in the same period last year.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) saw a remarkable increase of 172% to ₹105.00 crore, compared to ₹39.00 crore in the previous year.
• EBITDA margin expanded significantly to 17.10% from 6.80% year-on-year.
• Net profit jumped by an impressive 355% to ₹104.80 crore, up from ₹23.04 crore in the corresponding quarter last year.

The company's performance was further bolstered by a reduction in other expenses, which declined by 14% to ₹128.40 crore. This improvement was partly attributed to mark-to-market gains on HEG's holdings in Graftech International, contrasting with losses experienced in the prior year.

Capacity Expansion Plans

In a strategic move to capitalize on growing market demand, HEG's Board of Directors approved an expansion plan for graphite electrodes and related products. Key details of the expansion include:

• A capacity addition of 15,000 TPA (Tonnes Per Annum), increasing the total capacity to 115,000 TPA from the current 100,000 TPA.
• The expansion project is estimated to cost approximately ₹650.00 crore.
• The new capacity is expected to be operational within 30 months.
• Funding for the expansion will be through internal accruals and debt, if required.

HEG's decision to expand comes at a time when the company is experiencing high capacity utilization rates of 85-90%, indicating strong demand for its products.

Market Response

The market responded positively to HEG's announcements:

• The stock price surged by 11.91% to ₹597.90 following the results and expansion news.
• Over the past month, HEG's stock has gained 17.11%, reflecting growing investor confidence.

Company's Outlook

Ravi Jhunjhunwala, Chairman, Managing Director & CEO of HEG Limited, commented on the expansion, stating, "The decision to increase our capacity is driven by structural changes in the industry, which are boosting demand for electrodes. We anticipate a healthy payback from this investment."

The company's strong quarterly performance, coupled with its expansion plans, positions HEG to capitalize on the growing demand in the graphite electrode market. As the steel industry, a primary consumer of graphite electrodes, continues to grow, HEG appears well-positioned to meet the increasing demand and potentially enhance its market share.

Investors and analysts will be keenly watching HEG's progress on its capacity expansion project and its impact on the company's future financial performance. The company has scheduled an earnings conference call for August 4, 2025, where management is expected to provide further insights into the quarterly results and expansion plans.