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HEG Limited announced the transcript of its Earnings Conference Call for Q4 FY25 and full year FY25, held on 26 May 2025. The call featured key management including Mr. Ravi Jhunjhunwala (Chairman, MD & CEO) and Mr. Riju Jhunjhunwala (Vice Chairman).
Global crude steel production in Q1 2025 slightly declined by 0.3% to 468 million tons. Ex-China production decreased by 1.5% to 209 million tons, while Chinese production rose by 0.8% to 259 million tons, impacting global pricing. India was an exception, with a 6.8% year-on-year increase in steel output to 40 million tons.
HEG's EBITDA saw sequential improvement, reaching 27% in Q4 FY25, with a full-year average of 21%. Operationally, Q4 FY25 was the best quarter, excluding a mark-to-market (MTM) loss on investments.
The global graphite electrode industry has seen significant capacity reductions in the last 12 months, totaling 120,000 tons (equivalent to about 16% of global capacity excluding China and Russia). This includes 4 full plant closures and downsizing of 4 other plants. Notably:
These closures have reduced the total graphite electrode industry capacity from 752,000 tons two years ago to about 633,000 tons today, an 18% reduction.
Despite these reductions, HEG has increased its capacity from 80,000 tons to 100,000 tons and continues to operate at a high capacity utilization of 80%-85%, making it among the lowest-cost producers globally.
HEG invested ₹282 crore to acquire 2.57 crore shares (9.98% stake) in GrafTech International at an average price of $1.32 per share. Due to fair value accounting, an MTM loss of ₹160 crore was recorded in Q4 FY25 and ₹80 crore for the full year FY25, impacting reported PBT.
The company remains optimistic about the mid- to long-term outlook, driven by global decarbonization and new electric arc furnace (EAF) projects. Approximately 11 million tons of new EAF capacity have been commissioned in the last 18 months, with another 25-30 million tons expected in the next 18 months.
The demerger scheme has been filed with stock exchanges and relevant authorities, with approvals expected by the end of calendar year 2025.
Financial Performance for FY25:
HEG is long-term debt-free with a treasury size of approximately ₹875 crore as on 31 March 2025.
The Board recommended a final dividend of 90% (₹1.80 per equity share) for FY25.
During the Q&A session, management provided updates on the Graphite Anode Plant:
Regarding US tariffs, a 10% import duty on graphite electrodes is expected from 9 July 2025, with uncertain long-term impact. The management anticipates price increases for graphite electrodes in the coming quarters, likely in the second half of FY26, as the significant capacity closures take full effect and steel production recovers. Needle coke prices have remained stable over the last three quarters.