HEG, Graphite India hit new high on expectations of robust Q1 results

Shares of graphite electrode players -- Graphite India (up 4% at Rs 1,027 per share) and HEG (up 3% at Rs 3885 per share) hit their respective new highs on the BSE in intra-day trade on expectations of continuous healthy performance by these companies on the back of increasing realisations.

“We expect companies to report a robust EBITDA (earnings before interest, tax, depreciation and amortization). HEG and Graphite India are likely to report strong EBITDA margins of 66.7% and 63.5%, respectively during April-June quarter (Q1FY19),” ICICI Securities said in result preview.

The brokerage firm expects HEG to continue to report robust profitability for Q1FY19 supported by consistently increasing realisations.

“We expect the company to report a healthy capacity utilisation level of around 85%. The topline is likely to increase 648.8% YoY and 19.0% QoQ to Rs 15.38 billion while EBITDA is likely to come in at Rs 10.25 billion, implying an EBITDA margin of 66.7% (vs. Q4FY18: 73.6% and Q1FY18:11.4%). We expect the company to report a profit after tax (PAT) of Rs 6.70 billion against net loss of Rs 84 million in year ago quarter,” ICICI Securities said.

The brokerage firm expects the Graphite India’s capacity utilisation levels to remain elevated at around 90% for Q1FY19.

“The consistent increase in realisations are likely to boost the topline to Rs 15.68 billion, up 346.7% YoY and 29.3% QoQ. We expect the EBITDA to come in at Rs 9.95 billion, implying an EBITDA margin of 63.5% (vs. 55.2% in Q4FY18 and 10.1% in Q1FY18). We expect the company to report a healthy profit after tax of Rs 6.63 billion against Rs 4.53 billion in previous quarter and Rs 295 million in year ago quarter,” it added.

Thus far in the calendar year 2018, HEG (up 67%) and Graphite India (45%) has outperformed the market by surging more than 40% as compared to 6% rise in the S&P BSE Sensex.