HEG Ltd Q1 FY26 – Graphite Electrode Baba With 355% Profit Jump, ₹650 Cr Capex, and Graphene Chappals Incoming
1. At a Glance
HEG Ltd, India’s graphite electrode don, just reported Q1 FY26 results with a Bollywood-style comeback—quarterly profit up 355% YoY to ₹105 Cr, thanks to “Other Income” bailing them out like a rich uncle. Revenue grew 8%, margins improved, GST ghosts worth ₹282 Cr were exorcised, and the board approved yet another ₹650 Cr capex. The company is also splitting, merging, investing in graphene textiles, and basically auditioning for “Bigg Boss Corporate Edition.”
2. Introduction
Once upon a time in 1976, HEG walked into the graphite electrode business like the new kid in school who brought biryani for tiffin. Fast forward to today, it is running the world’s largest single-location graphite electrode plant in Madhya Pradesh with a 100,000 TPA capacity. That’s not a factory—it’s basically a graphite Disneyland.
But don’t let the size fool you. This is a company where numbers swing harder than Virender Sehwag in powerplay overs. In FY19, it made ₹3,000 Cr profit. In FY21, it was staring at red ink. In FY26, it’s again trying to pull off a comeback.
The trick? Graphite electrodes—those big black rods used in Electric Arc Furnaces (EAFs). Steelmakers can’t do without them. But here’s the catch: electrode prices fluctuate like onions in India before Diwali. HEG’s fortunes are tied to global steel demand, Chinese dumping, and raw material (needle coke) prices.
Now they’ve decided to reinvent themselves. Building a graphite anode plant for EV batteries, setting up graphene collabs, investing in power assets, restructuring business units—basically they’re trying to be the Ambani of carbon.
But while they dream of graphene-enhanced sarees, the harsh reality is: sales growth over 5 years is 0.12%. ROE is 2.59%. P/E is 50.8. Imagine paying ₹500 for pani puri where only one puri actually has aloo.
So, should investors look at HEG as a graphite giant reborn, or just another mid-cap soap opera? Let’s tear into the numbers.
3. Business Model – WTF Do They Even Do?
At its core, HEG makes graphite electrodes. These are the unsung heroes of steelmaking. Electric Arc Furnaces (EAFs) use them to melt scrap steel by passing electricity through electrodes hotter than your ex’s temper.
Product Range:
UHP (Ultra-High Power): Premium segment, used by world’s top steelmakers.
HP (High Power): The middle-class electrode, neither too cheap nor too fancy.
SHP (Super-High Power): Rare and elite, like finding space on Indian Railways without waitlist.
Geographical Split:
Domestic: 33% of sales
Exports: 67% of sales (35+ countries, including top 20 steelmakers)
Capacity:
100,000 TPA electrodes (expanded from 80,000 TPA in FY24 with ₹1,200 Cr capex)
Captive power: 80 MW (2 thermal + 1 hydro plant)
New graphite anode plant: 20,000 TPA, expected FY26
Subsidiaries & Diversification:
TACC Ltd: Advanced materials, synthetic graphite & graphene. Partnered with Birla Cellulose for graphene sarees (yes, tech meets desi fashion).
Bhilwara Energy: Hydropower assets, merged into HEG.
GrafTech stake: 9.98%, because apparently electrodes weren’t enough.
In short: HEG is electrodes + energy + graphene + textiles + EV batteries. It’s like a thali where chef keeps adding dishes till you’re too confused to eat.
4. Financials Overview
Metric
Latest Qtr (Jun’25)
YoY Qtr (Jun’24)
Prev Qtr (Mar’25)
YoY %
QoQ %
Revenue
₹617 Cr
₹571 Cr
₹542 Cr
8.1%
13.8%
EBITDA
₹105 Cr
₹39 Cr
-₹66 Cr
169%
NA
PAT
₹105 Cr
₹23 Cr
-₹74 Cr
355%
NA
EPS (₹)
5.43
1.19
-3.82
356%
NA
Commentary: Last quarter they were bleeding. This quarter they’re flexing. But don’t get fooled—₹83 Cr of “Other Income” (investments, forex gains, etc.) did the heavy lifting. Without it, operating profit looks more like a struggling startup.
5. Valuation Discussion – Fair Value Range Only
P/E Method: Annualised EPS ₹21.7 × Industry PE (30–42) → ₹650 – ₹910/share
EV/EBITDA Method: EV ₹10,450 Cr / EBITDA TTM ₹510 Cr ≈ 20.5×. Fair EV multiple 10–15× → Equity Value = ₹510 – ₹770/share
