HEG hits new high on stellar Q2 performance; stock zooms 1127% in 2017

The stock locked in upper circuit of 5% at Rs 1,841, also its new high on the BSE, after the company reported net profit of Rs 114 crore in Q2 against loss of Rs 14 crore in year ago quarter

HEG was locked in upper circuit of 5% at Rs 1,841, also its new high on the BSE, after the company reported stellar performance in September 2017 (Q2FY18) with net profit Rs 114 crore. The company, a leading graphite electrode manufacturer in India, had recorded a net loss of Rs 14 crore in a year ago quarter. It had posted loss of Rs 50 crore in the entire previous financial year 2016-17.

Operational revenue during the quarter under review more than doubled at Rs 410 crore against Rs 194 crore (net of excise duty) in the corresponding quarter of previous fiscal.

Thus far in the calendar year 2017 (CY17), HEG has zoomed 1,127% from Rs 150, as compared to 26% rise in the S&P BSE Sensex.

Graphite India, the peer group company, too locked in upper circuit of 5% at Rs 575, also its record high on the BSE. The stock rallied 688% from Rs 73, thus far in CY17.

“The recent few years have been challenging for the graphite electrode industry due to lower demand and realization globally, coupled with oversupply from China. However, the momentum has shifted in FY2018. China shutting down selected steel and electrode capacities on account of environmental considerations has led to an increase in the steel output in other EAF steel producing countries. These developments supported the recovery of volume and price of graphite electrodes,” K K Bangur, Chairman of Graphite India said while announcing September quarter (Q2FY18) results.

In Q2FY18, Graphite India delivered a sales growth of 36% y-o-y which was driven by an increase in volume coupled with improved realizations. Earnings before interest, tax, depreciation and amortization (EBITDA) margin expanded from 11% in Q2 FY2017 to 32% in Q2FY18. Capacity utilization increased from 75% to 89% y-o-y.

Graphite India surpassed its entire previous fiscal net profit of Rs 112 crore during first half of current fiscal. It recorded profit of Rs 119 crore in first half (April – September 2017) against Rs 26.93 crore during the same period last fiscal.