HEG (HEG) Q2 24/25 earnings summary

Executive summary

• Global crude steel production declined in 2024, with India growing 5.5% and China declining 4.8%.

• The graphite electrode plant expansion to 100,000 tons is fully operational, making it the largest in the Western world and supporting export growth to 35 countries.

• Capacity utilization reached 80% in Q2 FY25, the highest globally among peers.

• Approved unaudited standalone and consolidated financial results for Q2 and H1 FY25, with no material misstatements.

• Appointed new CFO and directors, and approved acquisition of Bhilwara Infotechnology Limited as a wholly owned subsidiary.

Financial highlights

• Q2 FY25 standalone revenue from operations was ₹567.60 crore; consolidated net profit was ₹82.28 crore.

• Standalone EBITDA for Q2 FY25 was ₹140 crore, with a margin of 23%.

• Standalone PAT for Q2 FY25 was ₹62.76 crore; EPS: ₹3.22.

• Mark-to-market gains on investments contributed ₹20.37 crore to profit before tax.

• Standalone investments (including cash) were ₹1,013 crore as of September 30, 2024.

Outlook and guidance

• Margins are expected to remain under pressure in the near term due to weak demand and narrow spreads between electrode and needle coke prices.

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

• Demand recovery is anticipated from the second half of 2025, supported by new EAF capacities and decarbonization trends.

• Composite Scheme of Arrangement for demerger and amalgamation is approved, pending regulatory approvals.

• India’s steel production and demand remain strong, driven by infrastructure and automotive sectors.