HEG Limited Stock Analysis [Fundamental+Technical]Company Overview:
Industry: Graphite Electrodes (used in Electric Arc Furnaces for steel production)
Parent Group: LNJ Bhilwara Group
Location: Largest graphite plant at a single location near Bhopal, MP
Global Reach: 67% export-based; presence in 35+ countries
Business Highlights
Products: UHP & HP Graphite Electrodes
Customers: Top 25 global steel companies
Capacity: Increased to 100,000 TPA in Nov 2023
Utilization: 81% (despite global slowdown)
Revenue from Operations: ₹2,394.90 Cr
Net Profit: ₹231.54 Cr (down 49% YoY)
EBITDA: ₹525.63 Cr (down 28% YoY)
EPS: ₹59.99
Net Cash Flow from Operations: ₹615 Cr (up from ₹114 Cr)
ROCE: ~7.2%
Return on Net Worth (RoNW): 5.63%
📈 Technical Insights:
Current Price: ₹474.60
50 EMA: ₹431.44 (support zone)
200 EMA: ₹429.40 (support zone)
Price is trading above both EMAs, indicating a bullish trend reversal.
Golden Cross formation (50 EMA crossing 200 EMA) recently occurred — a classic long-term bullish signal.
The stock bounced from ₹400 zone and now forming higher highs.
Key Strengths
One of the lowest-cost graphite electrode producers globally
Among top 5 global players (ex-China)
Strong relationships with major steelmakers
Backward integrated captive power: 76.5 MW
State-of-the-art technology and high R&D focus
Key Risks
Highly dependent on steel sector demand
Pricing pressure due to global oversupply and China's export surplus
Needle coke (key raw material) cost volatility
Current underutilization of capacity
Growth Triggers
Green Steel Push: EAF-based steel production expected to grow globally
Anode Powder Plant: ₹1,800 Cr investment in 20,000 TPA facility for EV battery anode materials; revenue expected from FY27
India’s EV & Steel Boom: Growing steel consumption (8.2% CAGR) and EV transition are long-term positives
SWOT Summary
Strengths:
Global presence, high export revenue, low-cost structure
Technological leadership
Weaknesses:
Profitability linked closely to global steel demand
Volatility in raw material prices
Opportunities:
EV market and EAF steel expansion
Threats
Competition from China, diversion of raw material to battery sector
Future Outlook
Near-term challenges due to soft steel demand
Medium to long-term outlook is strong, driven by:
Increasing EAF penetration
Global decarbonization policies
Strategic expansion into EV-grade graphite anodes
Analysis Based on Valuation + Chart
CMP:₹474.60
Fair Price Range: ₹600 – ₹1200(Using a conservative P/E range of 10 to 20)
Fair Value (DCF):₹1100+ (Based on 10% projected EPS growth over 5 years and a 12% discount rate.)
Support Levels:₹430 (EMA), ₹400 (price action)
Resistance Zones:₹490-500 (near-term), ₹600 (supply zone)
Disclaimer
The information provided in this report is for educational and informational purposes only and should not be construed as financial or investment advice. While every effort has been made to ensure the accuracy of data and analysis, no guarantees are made regarding future performance. Stock market investments are subject to market risks, including potential loss of capital. Please consult your financial advisor or conduct your own due diligence before making any investment decisions.
