Shares of graphite electrode manufacturers HEG Ltd and Graphite India witnessed substantial gains in the final trading session, as investors positioned themselves ahead of significant regulatory changes in the global steel industry.

Market Performance

The two companies demonstrated strong market performance during the trading session:

EU Carbon Border Adjustment Mechanism Impact

The rally was primarily driven by expectations surrounding the European Union's Carbon Border Adjustment Mechanism (CBAM), scheduled for implementation from 2026. Under this framework, steel and aluminium imports into the European Union will face taxation based on the volume of carbon emissions embedded in their production processes.

The mechanism is expected to raise landed costs for carbon-intensive steel exports, particularly those relying on traditional blast furnace routes. However, CBAM simultaneously creates incentives for cleaner production technologies, improving the competitive positioning of low-carbon steelmakers globally.

Strategic Positioning for Clean Steel Transition

Both HEG and Graphite India are strategically positioned to benefit from this transition as manufacturers of graphite electrodes, a critical input for electric arc furnace (EAF) steelmaking. EAFs represent a significantly less carbon-intensive alternative to traditional blast furnace methods and are central to the global shift towards greener steel production.

Industry Growth Projections

According to Emkay Global Financial Services analysis from December 2025, Indian graphite electrode producers are entering a fresh capital expenditure cycle to capture structural demand growth linked to EAF-based steel production.

Key Market Drivers

Emkay highlighted three primary global triggers supporting the outlook for graphite electrode manufacturers:

• China's Policy Shift: Measures to curb excessive competition in the steel sector
• CBAM Implementation: Europe's carbon border framework creating demand for cleaner production
• Global Policy Coordination: Coordinated efforts to lift the steel industry from prolonged downturn

These factors have collectively renewed investor interest in graphite electrode makers, positioning them as potential beneficiaries of the global transition towards cleaner and more efficient steel production technologies.

HEG Limited has disclosed that its associate company Bhilwara Energy Limited has announced a significant acquisition in the renewable energy sector. The company entered into a Share Purchase Agreement to acquire 100% equity shares of Mandakini Jal Urja Private Limited from Statkraft IH Holding AS, subject to customary conditions precedent.

Acquisition Details

The acquisition encompasses the 76MW Phata Byung Hydroelectric Project, strategically located in Rudraprayag district, Uttarakhand. This run-of-the-river hydroelectric project is currently under construction and represents Bhilwara Energy's first venture into Uttarakhand's hydropower sector.

Strategic Impact on Portfolio

Upon completion of the transaction, Bhilwara Energy Limited will become the sole owner of the project, marking a significant milestone in strengthening its hydropower portfolio in India. The acquisition will increase the company's total hydro capacity to 375MW, reinforcing its position in India's renewable energy landscape.

Management Commentary

Riju Jhunjhunwala, Managing Director of Bhilwara Energy, emphasized the acquisition's alignment with LNJ Bhilwara Group's commitment to building high-quality renewable energy assets. He stated that the project strengthens their hydropower portfolio and reinforces their long-term approach of investing in dependable, environmentally responsible power infrastructure.

Fernando de Lapuerta, Executive Vice President International at Statkraft, noted that the divestment aligns with their global strategy to streamline the international portfolio and focus on select core markets. He expressed confidence in Bhilwara Energy's capability and long-term vision to advance the project.

Transaction Advisory

The transaction involved multiple advisory firms to ensure smooth execution:

Company Background

LNJ Bhilwara Group, established in 1961, operates as one of India's leading business conglomerates with strong presence across textiles, graphite electrodes, power generation, and IT-enabled services. Through its energy arm, Bhilwara Energy Limited, the Group has developed and operated several hydro and renewable power projects across the country, contributing significantly to India's clean energy transition.