HEG (HEG) Q2 24/25 earnings summary

Executive summary

• Global crude steel production declined by 2% in the first nine months of 2024, with India up 5.5% and China down 4.8%.

• The graphite electrode plant expansion to 100,000 tons is fully operational, making it the largest single-location facility in the Western world and providing cost advantages.

• Export sales represent 65–70% of production to 25–35 countries, serving top global steel companies.

• Capacity utilization reached 80% in Q2 FY25, the highest globally among peers, and is expected to continue at this level.

• Captive power generation capacity of 80 MW supports operational efficiency.

Financial highlights

• Q2 FY25 standalone revenue from operations was ₹567.60 crore; consolidated revenue was ₹571.46 crore.

• Standalone net profit after tax was ₹62.76 crore; consolidated net profit was ₹82.28 crore.

• EBITDA for Q2 FY25 was ₹140 crore; standalone EBITDA margin was 23%.

• Mark-to-market gains from treasury equity investments contributed to higher profit before tax this quarter.

• The company remains long-term debt-free with a treasury size of ₹923 crore as of September 30, 2024.

Outlook and guidance

• EBITDA margin is expected to remain around 17% for the coming quarters.

• Margins are likely to remain under pressure in the near term, with demand recovery anticipated from the second half of 2025 as new electric arc furnace capacities come online.

• Over 100 million tons of new electric arc furnace capacity announced globally, with 20–25 million tons expected operational by late FY26.

• Medium- to long-term graphite electrode demand expected to rise due to steel industry decarbonization and EAF adoption.

• Global steel demand forecasted to decline 0.9% in 2024, with recovery expected in 2025.