HEG (HEG) Q3 24/25 earnings summary

Executive summary

• Q3 FY25 revenue was INR 477.07 crores, down from INR 562 crores year-over-year, but standalone net profit after tax rose to INR 98.32 crores from INR 37 crores, and EBITDA increased to INR 194 crores from INR 110 crores.

• EBITDA margin improved 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, with capacity utilization at 80%, the highest among Western producers.

• Export markets account for about two-thirds of production, with the U.S. as a major destination and supply to top 20 global steel companies.

• The company remains debt-free with a treasury of nearly INR 1,000 crores as of December 2024.

Financial highlights

• Standalone net profit after tax for Q3 FY25 was INR 98.32 crores, up from INR 37.08 crores year-over-year; consolidated net profit was INR 83.40 crores.

• Standalone EBITDA for Q3 FY25 was INR 194 crores, up from INR 140 crores in Q2 FY25.

• Standalone total income for Q3 FY25 was INR 590.30 crores; nine-month total income was INR 1,792.75 crores.

• Other income increased significantly, mainly due to mark-to-market gains on GrafTech shares, estimated at INR 60-70 crores.

• Investments (including cash) stood at INR 1,013 crores as of December 31, 2024; short-term borrowings at INR 494 crores.

Outlook and guidance

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

• Price increases by Western peers (15%-20%) may lead to gradual price improvement if market conditions allow.

• Decarbonization in steelmaking is projected to drive long-term demand for graphite electrodes, with an additional 200,000 tons expected by 2030 (excluding China).

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

• Optimism remains for long-term growth despite short-term headwinds.