HEG (HEG) Q3 24/25 earnings summary

Executive summary

• Q3 FY25 revenue from operations was INR 477.07 crores, down from INR 562 crores year-over-year, with standalone net profit after tax rising to INR 98.32 crores from INR 37 crores and consolidated net profit at INR 83.40 crores, up from INR 44 crores.

• EBITDA rose to INR 194 crores, with margin improving to 33% in Q3 FY25 from 23% in Q2 FY25 and 10% in Q1 FY25.

• The expanded graphite electrode plant (100,000 tons) has been operational since November 2023, maintaining 80% capacity utilization, the highest among Western producers.

• Exported about two-thirds of production to over 30 countries, supplying top 20 global steel companies, with the U.S. as a major market.

• Board approved unaudited financial results, enhancement of investment limits, and a ₹100 crore unsecured loan to Bhilwara Energy Limited.

Financial highlights

• Standalone total income for Q3 FY25 was INR 590.30 crores; standalone EBITDA was INR 194 crores.

• Standalone EPS for Q3 FY25 was INR 5.09, and consolidated EPS was INR 4.32.

• Company remains long-term debt-free with a treasury of nearly INR 1,000 crores as of December 31, 2024; investments (including cash) stood at INR 1,013 crores.

• Other income included INR 60-70 crores in MTM gains, mainly from GrafTech shareholding.

• Short-term borrowings at INR 494 crores as of December 31, 2024.

Outlook and guidance

• Margins expected to remain under pressure in the near term, but demand recovery anticipated in the second half of the year as new EAF capacities come online globally.

• Price increases by Western peers (15-20%) may gradually improve market pricing, but acceptance depends on market dynamics.

• EBITDA margins for the next 1-2 quarters expected to remain in the 16-17% range.

• No specific revenue or EBITDA guidance for FY26 due to market uncertainties, but significant new EAF capacity is expected to drive demand.

• Composite Scheme of Arrangement involving demerger of graphite business and amalgamation with Bhilwara Energy Limited is in process, pending regulatory approvals.