HEG surges 9% on fixing October 18 as record date for 10:2 stock split

HEG share price surged 9 per cent to Rs 2,517 on the BSE in Wednesday's intraday trade, amid heavy volumes, after the company fixed October 18, 2024 as the record date for 10:2 stock split.

In the past two trading days, the stock of the graphite electrode manufacturer has rallied 12 per cent. Further, in the past two weeks, it has soared 26 per cent. The stock had hit a 52-week high of Rs 2,744.60 on May 22 and a record high of Rs 4,950 on October 16, 2018.

On September 23, HEG's board approved the sub-division of equity shares from existing 1 (one) equity share having face value of Rs 10 each, into 5 equity shares having face value of Re 2  each, fully paid-up.

 

The rationale behind the stock split, HEG 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.

HEG, on Tuesday, said the company has fixed Friday, October 18, 2024 as the 'Record Date' for determining entitlement of equity shareholders for the purpose of sub-division / split of existing equity shares of the company.

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

With the world's focus firmly on carbon neutrality, this innovative technology offers a sustainable and cost-effective solution that will undoubtedly transform the sector’s landscape. As a result, electric arc furnace 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 Electric Arc Furnaces (EAFs).

"The proportion of crude steel production (excluding China) from the EAF route has grown from around 44 per cent in 2015 to nearly 50 per cent in 2022. Industry experts predict that by 2030, with a focus on green steel production (excluding China), EAF production will account for approximately 60 per cent of the market and 80 per cent by 2050. This anticipated growth presents an excellent opportunity for our business, as we expect a substantial increase in demand for graphite electrodes," HEG said in its FY24 annual report.

HEG, being amongst the top 5 graphite electrodes producers globally, is poised to benefit from this transition. With structural tailwinds, analysts at ICICI Securities expect demand and pricing recovery in graphite electrode space from H2FY25 onwards and bake in capacity utilisation of ~75 per cent for FY25E and ~80 per cent for FY26E, on expanded base (1 lakh tonne).

Transition towards E-mobility space and rise in use of stationary applications will drive demand for Li-On batteries domestically to ~150- 160 GWh by 2030, resulting in a need for ~1.5 lakh tons graphite anode.

With the government's aim to localise battery components, HEG plans to seize the opportunity by setting up a 20,000 tons capacity of graphite anode at a capex of ~Rs 1,800 crore. This venture is anticipated to offer value addition benefits with targeted earnings before interest, tax, depreciation and amortisation (Ebitda) margins and RoCE pegged at over 20 per cent. The company is fine tuning plan of action in this space (location etc., amid falling battery prices globally) with likely commissioning in FY27E, the brokerage firm said.