HEG surges 6% after buying 8.23% stake in GrafTech Int'l for Rs 250 crore

Graftech has a competitive portfolio of low cost, ultra-high power graphite electrode manufacturing facilities, with some of the highest capacity facilities in the world.

Shares of HEG rallied 6 per cent to Rs 2,335 on the BSE in Tuesday’s intraday trade after the company informed the exchanges that it has acquired a 8.23 per cent stake in GrafTech International, for a total consideration of Rs 248.6 crore. 

HEG said it acquired the stake in Graftech through secondary market transactions/overseas portfolio investment (OPI) scheme of Foreign Exchange Management (Overseas Investment) Rules, 2022. The company added that if it acquires any more shares, it shall be subject to approval from the company's board and it will be intimated accordingly.

Graftech International, which is listed on the New York Stock Exchanges, is a leading manufacturer of high quality graphite electrode products essential to the production of electric arc furnace (EAFs) steel and other ferrous and non-ferrous metals. It has a competitive portfolio of low cost, ultra-high power graphite electrode manufacturing facilities, with some of the highest capacity facilities in the world. GrafTech International has a global presence.

 

HEG is one of the leading graphite electrode manufacturers in India and a key exporter, with roughly 65 to 70 per cent of the company's production being exported to global markets. The company has a graphite electrode production capacity of 100,000 tonnes in Madhya Pradesh.

Apart from that, HEG has fixed October 18, 2024 as the record date for 10:2 stock split. On September 23, HEG's board approved the sub-division of equity shares from existing 1 equity share having a face value of Rs 10 each, into 5 equity shares having a face value of Re 2  each, fully paid-up.

The rationale behind the stock split, HEG had said, is to enhance the liquidity of the company's equity shares and to encourage participation of retail investors by making equity shares of the company more affordable.

With the world's focus firmly on carbon neutrality, GrafTech's innovative technology offers a sustainable and cost-effective solution. As a result, electric arc furnace (EAF) steelmaking is expected to continue to grow and become the primary method for steel production, leading the way towards a greener and more sustainable future. Graphite electrodes are an essential component for producing steel in EAFs.

"While the short-term prospects for graphite electrodes appear challenging, owing primarily to geopolitical instability that has impacted industrial activity in developed nations, the mid- and long-term demand for graphite electrodes looks promising, considering a global thrust on adopting the EAF route for manufacturing steel," HEG had said in its FY24 annual report.

In line with its decarbonisation efforts, more than 100 mmt (million metric tonne) of new Greenfield/Replacement EAF’s capacities have already been announced to date, with the US and EU leading the way, according to HEG.

Out of this, about 9–10 mmt is already in operation, and another, approximately 30 mmt capacity is expected to be in operation between now and the end of 2025.  

HEG expects graphite electrode demand to increase gradually by around 150,000 to 200,000 mt (metric tonne) by 2030, a significant increase over the current demand for graphite electrodes, excluding China. The company remains one of the most cost competitive and quality producers of graphite electrodes globally, and is fully ready to capture any available opportunities, HEG said.