HEG hits new high; stock zooms 1245% in one year

The stock hit a new high of Rs 3,148, up 4%, extending its past four days 18% rally on the BSE in otherwise weak market on Friday.

HEG hit a new high of Rs 3,148, up 4%, extending its past four days 18% rally on the BSE in otherwise weak market on Friday. The company engaged in graphite electrodes business has outperformed the market by surging 23%, as compared to 0.61% rise in the Sensex thus far in the current week.

In past one year, the market value of HEG zoomed 1,245% from Rs 234, against 13% rise in the benchmark index.

The company had reported a robust performance during the first nine months (April-December) of current financial year 2017-18 (FY18), posted net profit of Rs 4,473 million. It had reported a net loss of Rs 466 million during the same period of FY17 and loss of Rs 500 million in entire FY17.

“Closures of around 200,000 mt of electrodes capacities outside China, closures of another approximately  300,000 mt capacities in China, sharp reduction in finished steel exports from China along with a sharp reduction in billet exports from China , large closures of steel capacities in China – all these factors resulted into supply and demand imbalance of electrodes and a spurt in the demand of electrodes in all parts of the world, incl India and have led to a sharp increase in prices of electrodes,” HEG said while announcing December quarter results.

HEG’s debt has dropped to Rs 2 billion, which is likely to be NIL in Q4FY18 itself. The company has been evaluating capacity expansion by 20ktpa depending on Needle Coke availability.

Analysts at Emkay Global Financial Services said that earnings improvement will continue, March being the first month of new and higher prices. Even though Needle Coke prices rise, the spread will still be much favorable.

At 09:52 am; HEG was trading 3.4% higher at Rs 3,122 on the BSE against 0.54% decline in the S&P BSE Sensex. A combined 567,294 shares changed hands on the counter on the BSE and NSE so far.