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.

HEG Limited , a leading graphite electrode manufacturer, has received a significant reprieve as the tax authority has concluded its efforts to recover ₹2.82 billion from the company. This development, coupled with the company's recent board decisions, marks a positive turn for HEG's operations and future outlook.

Tax Recovery Effort Dropped

The Office of the Deputy Commissioner (SGST) Mandideep Circle, Bhopal Division-2 has dropped the show cause notice issued against HEG Limited for the tax period April 2018 to March 2019. The notice had initially proposed the recovery of allegedly erroneous IGST refunds along with penalties amounting to ₹282.34 crores. This decision effectively removes a substantial financial uncertainty that had been hanging over the company.

Capacity Expansion Approved

In a strategic move to strengthen its market position, HEG's Board of Directors has approved an expansion plan for graphite electrodes and related products. The key details of the expansion are as follows:

• Current Capacity: 100,000 TPA (Tonnes Per Annum)
• Proposed Capacity Addition: 15,000 TPA
• Implementation Period: 30 Months
• Estimated Investment: Approximately ₹650 Crores
• Financing: Through internal accruals and debt, if required

The company cited structural changes in the industry, boosting demand for electrodes, and expectations of healthy payback as the rationale behind this expansion.

Financial Performance

HEG reported the following consolidated financial results:

The company has shown a remarkable improvement in its profitability, with profit after tax increasing by over 350% compared to the same quarter in the previous year.

Management Commentary

Ravi Jhunjhunwala, Chairman, Managing Director & CEO of HEG Limited, stated, "The board's decision to expand our production capacity reflects our confidence in the growing demand for graphite electrodes. This investment will position HEG to capitalize on the structural changes we're observing in the industry."

He added, "The resolution of the tax matter is a positive development that removes a significant contingent liability from our books. We can now focus more intently on our core business and expansion plans."

The company's strategic decisions and improved financial performance indicate a positive outlook for HEG Limited, as it aims to strengthen its position in the graphite electrode market while resolving past regulatory challenges.

Investors and stakeholders will likely watch closely how these developments translate into long-term value creation for the company.