HEG (HEG) Q4 24/25 earnings summary

Executive summary

• Global crude steel production declined 0.3% year-over-year in Q1 2025, with most regions except China and India seeing lower output due to weak demand and pricing challenges.

• Chinese steel production and exports rose, intensifying global competition and pressuring prices, while India's steel output grew 6.8% year-over-year.

• The company expanded graphite electrode capacity to 100,000 tons in Nov 2023, becoming the third largest producer in the western world, and maintains 80-85% utilization.

• Exports constitute about two-thirds of sales, with a diversified footprint across 25-35 countries, serving top global steelmakers.

• The company remains among the lowest-cost producers globally and is optimistic about mid-to-long-term demand due to new EAF projects and decarbonization trends.

Financial highlights

• FY2025 standalone revenue was ₹2,152.71 crore, down from ₹2,394.90 crore in FY2024; consolidated revenue was ₹2,159.69 crore, down from ₹2,394.90 crore.

• Standalone net profit for FY2025 was ₹101.31 crore (vs. ₹231.54 crore in FY2024); consolidated net profit was ₹115.06 crore (vs. ₹311.67 crore in FY2024).

• EBITDA margin was 17% in FY2025, down from 21% in FY2024; PAT margin declined to 4% from 9%.

• EPS for FY2025 was ₹5.25, down from ₹12.00 in FY2024; consolidated EPS was ₹5.96, down from ₹16.15.

• Mark-to-market losses on GrafTech investment significantly impacted profits.

Outlook and guidance

• Capacity utilization expected to remain at or above 80% in FY2026.

• Industry closures and new EAF capacity (35-40 million tons in next 18 months) are expected to stabilize demand-supply and support price recovery.

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

• Management remains optimistic about long-term growth despite short-term headwinds.

• Awaiting regulatory and shareholder approvals for a composite scheme of arrangement involving demerger and amalgamation.