HEG shares jump 10% on capacity expansion, strong Q1 results; Graphite India gain 5.8%

HEG Ltd, a leading exporter of graphite electrodes witnessed sharp rise in its share price today despite subdued sentiments in the broader markets after the United States announced a 25% tariff and penalty on Indian goods exports.

HEG Ltd stock surge 11.8% intraday on NSE to day high of ₹597.80 per share reacting to upbeat quarterly earnings. The company reported multifold rise in standalone net profit to ₹71.8 crore compared to ₹2.6 crore in the same quarter last year. Meanwhile, its revenue from operations rose 7.3% YoY to ₹613 crore.

On a consolidated basis, revenue rose 8.05% YoY to ₹617 crore, while net profit jumped 356% YoY to ₹105 crore.

The company also informed the stock exchanges that its board has approved a plan to add 15,000 tonnes per annum (TPA) of graphite electrode production capacity. This expansion will cost about ₹650 crore and is expected to be completed in 30 months. As per management, this expansion will be funded internally and through debt if needed.

Experts believe new capacity addition comes amid demand revival in the global market and recent closure of electrodes production by Japanese company, Resonac in China and Malaysia. Resonac, is key producer of graphite electrodes with annual capacity totalling 2,10,000 tonnes. However, the shutdown of subsidiaries in China and Malaysia likely to impact up to one-third of its capacity.

Moreover, lower supply in global markets will eventually increase prices of graphite electrodes, which is positive for Indian companies like HEG Ltd, Graphite India which exports major portion of their production.

Following upbeat result announcement by HEG Ltd, shares of another electrodes maker, Graphite India also rose 5.8% intraday on NSE with day high of ₹587 per share.