HEG
Large CapHEG Limited
Industrials
HEG Limited is a leading Indian manufacturer of graphite electrodes, operating the world's largest single-site electrode plant. The company focuses on operational efficiency, cost discipline, and customer diversification, serving the global steel industry's shift towards electric arc furnace (EAF) steelmaking. HEG also has an investment in GrafTech and is expanding into green technologies.
One read, four checks
75+ is strong, 60-74 is usable, 45-59 is mixed, and below 45 needs caution. These are research lenses, not buy/sell instructions.
Mixed fundamentals, management trust is acceptable, price trend is neutral, and recent execution is mixed.
Fundamental lens: valuation, quality, growth, balance sheet, and cash flow.
low confidence · 0/0 claims checked
Timing lens: price trend and sector relative strength.
Rolling lens: recent quarterly delivery, not the latest single-result score.
Quarter ended 31 Mar 2026
Bad · 12/100margin compression · Rev +12% YoY
| Metric | This quarter | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹603 Cr | +12.3% | -8.1% |
| EBITDA | ₹-148 Cr | -142.6% | -203.5% |
| Operating margin | -25.0% | -1400 bps | -4700 bps |
| PAT | ₹-114 Cr | NDF | -155.1% |
| PAT margin | -18.9% | -513 bps | -5046 bps |
NDF means not disclosed in the current structured filing feed. It is intentionally not treated as zero.
Where growth can come from, and what can break the case
Q4 FY26 reported a net loss of INR 189 crores due to unrealized fair value and FX losses, masking stable operating margins. Full-year FY26 saw strong growth with sales volume up 20%, revenue up 19.3%, EBITDA up 28.1%, and net profit up 79.2% YoY.
Management reaffirms conviction in the long-term thesis for graphite electrodes, driven by the structural shift to EAF steelmaking and decarbonization. Despite Q4's reported loss from unrealized items, operating performance remained stable with high utilization. Capacity expansion plans are on track to capitalize on future demand.
Structural Shift to EAF Steelmaking
The structural shift toward electric arc furnace steelmaking, supported by decarbonization policies and trade realignments, continues to strengthen the long-term demand outlook for electrodes.
Global EAF Capacity Additions
About 20 million tons of new Greenfield electric arc furnaces have already been commissioned in the last 12-18 months; an additional 60 million tons are expected by 2028, and 30 million tons by 2030 (ex-China).
Incremental Electrode Demand
This kind of growth in EAF steel industry is expected to translate into incremental electrode demand of around 200,000 tons by 2030, excluding China.
Cost Leadership and Scale
Our plant near Bhopal remains the largest single site location of electrode plants anywhere in the world, with a capacity of 100,000 tons, making us one of the most competitive cost companies.
Current Capacity Expansion
We are very well placed to meet some of this new demand with our recent expansion from 80,000 to 100,000 tons.
Next Electrode Capacity Expansion
Our next expansion to 115,000 tons is likely to be operational by early 2028. Construction is progressing as planned.
TACC Greentech Plant Commissioning
The plant commissioning date for TACC Greentech is April. We hope that in the first year itself, we will be able to have a decent 40% to 60% kind of capacity utilization.
Decarbonization Policies (CBAM)
Carbon Border Adjustment Mechanism (CBAM) in Europe incentivizes lower emission steel production, which is only possible through electric arc furnace.
EU Tariff Rate Quota Regime
The EU’s upcoming tariff rate quota regime, coming as early as 1st July 2026, is expected to further restrict steel imports into the EU, thus increasing its own EAF steel production.
Strong Indian Steel Demand
India continues to be a standout performer, recording around 5% quarter-on-quarter growth in Q1 2026, supported by strong infrastructure and construction activities.
Global Crude Steel Production Decline
Global crude steel production in Q1 2026 stood at around 459 million tons, marking a decline of roughly 2% year-on-year. Excluding China, global steel production declined about 1.3% over Q4 2025.
Chinese Steel Export Pressure
China continues to face domestic demand pressure, resulting in elevated export levels of over 100 million tons annually, impacting global pricing and driving increased trade protection.
Geopolitical Tensions
Current geopolitical tensions amidst conflicts in the Middle East are contributing to volatility in energy markets and supply chains, causing disruption in Middle East sales.
Needle Coke Price Volatility
Needle coke prices are eventually impacted by crude oil prices. While covered until September, future price increases are uncertain and subject to negotiation.
Rising Trade Protectionism
Acceleration in regionalization of steel trade, driven by rising protectionist measures globally (e.g., Section 232 in US, anti-dumping), could impact export volumes.
Unrealized Losses on Investments
Q4 reported a loss of INR 189 crores mainly attributable to fair values and impact on foreign investment, and rapid depreciation of rupees. These are entirely unrealized losses.
Competition from Chinese Players
Chinese players export UHP electrodes, with one-third of existing 650 KT demand in the UHP market met by them, potentially impacting overall industry capacity utilization.
What management said, and what results must prove
Issuer guidance and extracted claims are tracked against later reported outcomes. Treat these as management statements, not IndiaPulse forecasts.
Full-year results are best compared YoY to assess overall growth and profitability trends. Quarterly results (Q4 FY26) are compared QoQ to understand sequential momentum, particularly for operating margins and sales volumes, which experienced temporary impacts.
Sales Volume (FY26)
Our sales volume increased by 20% compared to last year.
Revenue (FY26)
Our revenue grew from INR 2,153 crores to INR 2,569 crores.
EBITDA (FY26)
Our EBITDA increased from INR 388 crores to INR 497 crores, with margins increasing from 17% to 19%.
Net Profit (FY26)
Net profit also increased from INR 101 crores to INR 181 crores.
Necessity of Price Increases
For unbooked orders, we are definitely looking at price increase. The price increase is very necessary not only to protect our margins, but to help improve further.
Commitment to GrafTech Investment
Our conviction continues to be anchored in the structural foundations, fundamentals of this business, rather than near term market movements. We remain fully committed to this investment.
Scheme of Arrangement Progress
The composite scheme of arrangement is progressing well. We anticipate that the scheme could be approved by the NCLT sometime in the second quarter of this financial year.
TACC Greentech Ramp-up Outlook
We hope that in the first year itself, we will be able to have a decent 40% to 60% kind of capacity utilization, because of the customer acquisitions that are going on right now.
Numbers and claims to verify in the next filings
| Checkpoint | Current evidence | What to verify next |
|---|---|---|
| Electrode Pricing | Management is offering increased prices for uncommitted volumes, aiming for H2 improvement. | Market acceptance of price hikes and the quantum of realization improvement in H2 FY27. |
| Needle Coke Prices | Needle coke purchases are covered until end of June, protecting costs until September. | Negotiation outcomes for next quarter's contracts (mid-June) and impact of crude oil price behavior. |
| TACC Greentech Utilization | Plant commissioning in April, targeting 40-60% utilization in the first year. | Actual ramp-up progress and successful customer qualification for battery-grade materials. |
| Middle East Sales Normalization | Orders postponed due to Middle East disruptions, some diverted to other customers. | Resolution of geopolitical tensions and resumption of normal shipments to the Middle East region. |
Verification checkpoints are IndiaPulse research interpretation, not investment advice.
Trend score and candlestick chart
54NeutralSMA20 +6.7% / mo
Technical chart
HEGweekly · 3Y+21.4%Technical trend read
Mixed signalsSignals are conflicting — long-term trend unclear. RSI 42. Wait for confirmation.
- SMA20 rising (~6.2% over last month) — short-term momentum positive.
- RSI(14) at 42 — falling, no extreme reading.
- MACD below signal, histogram expanding negatively — bearish momentum building.
- 24% off 52W high · 15% above 52W low.
Mechanical read from the price + indicator series above. Not a recommendation — technical setups can reverse without warning, especially around earnings and macro events.
Valuation, score drivers, trust methodology, financials, and peers
Use these sections after reviewing the decision summary, latest result, thesis, management accountability, and technical timing above.
Fundamental score breakdown
FAIR VALUEWhy this score?
Top U-Score contributors and drags from the latest stored fundamentals.
Positive drivers
- Piotroski is strong at 8/9.
- Fair-value margin of safety is positive at 33.7%.
- Growth contributes 19/25 to the score.
Main drags
- Quality is weaker at 0/20; verify the latest quarterly trend.
- Valuation is weaker at 10/30; verify the latest quarterly trend.
- Cash flow is weaker at 4/10; verify the latest quarterly trend.
Blended valuation: PE, EV/EBITDA, FCF yield, and balance-sheet checks
For this sector, IndiaPulse uses a blended lens rather than relying on a single valuation ratio.
Stored run vs live recompute
This shows the stored score trend when snapshots exist, and also compares the latest stored nightly score with a live recompute from current fundamentals and price.
Score history
12 stored score snapshots. Latest stored move: +0 points.
Factor attribution
Trust asks: does management behaviour match later outcomes? Higher is better, but confidence and evidence depth matter as much as the number.
Healthy Trust: Claim history is still being built. It ranks around the 73rd percentile of the scored universe and 70th percentile within Industrials. Main check: financial discipline is weak at 52/100.
Healthy Trust Lite: Promoter holding is 56.3%. Key concern: ROE is low at 7.3%.
Generally investable credibility. Look for weak sub-scores before increasing position size.
overall median 67 · Industrials: 70th pctile, median 68 · Large: 50th pctile, median 74
197 documents indexed, but claim history is not strong enough yet.
0 claims extracted · No contradicted claim yet
How to read this Trust Score
Healthy Trust · low confidenceRead Trust alongside U-Score, result consistency, and technical trend. A cheap stock with weak Trust needs a larger margin of safety; a high Trust score does not make an expensive stock attractive by itself.
Forensic breakdown
Read low sub-scores as due-diligence warnings, not automatic sell signals.
Trust positives
- ▸Promoter holding is 56.3%.
- ▸Promoter pledge is zero.
- ▸10 years of positive FCF.
- ▸4/4 latest quarters had positive YoY revenue growth.
Trust risks
- ▸ROE is low at 7.3%.
- ▸1 of the latest 4 quarters had PAT decline worse than 25% YoY.
- ▸OPM spread across recent quarters is 47%.
Trust Lite uses financial behaviour only. Prefer claim-tested Trust when enough concall claims have later outcomes.
Intrinsic value
Fundamentals
Valuation
- P/E
- 30.10
- P/B
- 2.13
- EV/EBITDA
- 17.93
- Market Cap
- 10161.00Cr
Profitability
- ROE
- 7.34%
- ROCE
- 8.34%
- ROA
- 5.53%
- Dividend Y
- 0.34%
Growth (CAGR)
- Revenue 5Y
- 15.00%
- EPS 5Y
- 46.00%
- Revenue 3Y
- 1.00%
- EPS 3Y
- -14.00%
Balance Sheet
- Debt/Equity
- 0.17
- Interest Coverage
- 10.76×
- Altman Z
- 6.31
- Book Value
- 247.00
Cash Flow
- FCF Yield
- —
- FCF Positive Y
- 10/5
- OCF
- 213.00 Cr
- EPS TTM
- 17.69
Shareholding
- Promoter Hold
- 56.27%
- Promoter Pledge
- 0.00%
- Momentum 52W
- 29%
Financial History
Updated 9/6/2026
Revenue
₹ CrNet Profit
₹ CrReturn on Equity
%Peers
Business-comparable peers in Industrials — ranked by industry, sub-sector, theme-tag overlap, market cap, and U-Score similarity. Green cells mark the best available peer metric in this table.