1. At a Glance – The Electrode That Sparks Steel (and Occasionally Investors)
HEG Ltd is currently priced at ₹531 with a market cap of ₹10,248 crore. In the last 3 months, the stock has returned 3.12%, and in one year, a spicy 55.2%.
Q3 FY26 numbers? Sales at ₹656 crore (up 37.2% YoY), PAT at ₹207 crore (up 148% YoY), and EPS at ₹10.73.
But hold your champagne.
TTM EPS stands at ₹19.77, giving a P/E of ~26.9 (531 ÷ 19.77). ROCE is just 3.96%. ROE? 2.59%. OPM is 11.9%.
Translation: Profit spike is visible. Efficiency? Still waking up from a power nap.
Debt-to-equity is 0.14 — manageable. Enterprise value ₹10,766 crore. EV/EBITDA at 15.
The biggest question:
Is this a structural recovery in graphite electrodes… or is “Other Income” doing cardio again?
Let’s plug in.
2. Introduction – The Steel Industry’s Secret Sauce
Graphite electrodes are not glamorous.
They don’t sell to you.
They don’t advertise.
They don’t have influencers.
But without them, Electric Arc Furnaces (EAF) can’t melt scrap steel.
And without EAF, a big chunk of global steel production stops.
HEG operates the largest single-site integrated graphite electrode plant in the world at 100,000 TPA capacity. In FY24, it operated at 81% utilization.
The company is part of the LNJ Bhilwara Group — which also has presence in textiles, power generation, and IT-enabled services.
Now here’s the thing.
Graphite electrodes are a cyclical business. When steel demand booms, electrode prices explode. When steel slows down, electrode prices collapse like a WhatsApp crypto tip.
Look at history:
- FY19: Net profit ₹3,026 crore. EPS ₹156.80.
- FY25: Net profit ₹115 crore.
- TTM: ₹381 crore.
From hero to zero to maybe-hero-again.
Are we at the start of another cycle… or just mid-cycle noise?
Let’s break it down.
3. Business Model – WTF Do They Even Do?
HEG manufactures graphite electrodes used in Electric Arc Furnaces (EAF) for steel production.
They sell UHP, HP and SHP grades in various diameters and lengths.
Think of graphite electrodes as giant pencils that melt scrap metal using electric current. Except these pencils cost crores.
Entry barriers? High.
Last global entrant? HEG itself — in 1976.
They export 65–70% of production to 35+ countries.
FY24 split:
- Domestic: 33%
- Exports: 67%
Customer base includes top 20 steel companies worldwide.
Manufacturing capacity:
- 100,000 TPA electrodes
- 80 MW captive power generation (2 thermal + 1 hydro)
Recent expansion:
Capacity expanded from 80,000 to 100,000 TPA in Nov 2023 for ₹1,200 crore.
Now comes the interesting twist.
Graphite Anode Plant:
20,000 tons capacity under construction, expected by FY26 end.
Translation?
They want to enter battery materials space.
Steel today. Batteries tomorrow.
Question is — will this become a second growth engine or another capital-intensive hobby?
4. Financials Overview – The Q3 Spark
Q1 EPS = 5.43
Q2 EPS = 7.43
Q3 EPS = 10.73
Average = (5.43 + 7.43 + 10.73) / 3 = 7.86
Annualised EPS = 7.86 × 4 = 31.44
Forward P/E (annualised basis) ≈ 531 ÷
