Synopsis: The company stock that has given a compounded return of 41 percent in the last three years has now announced its Q3FY26 result with a 150 percent YoY profit growth while the revenue grew by 37 percent.
An electrical equipment company, which is India’s leading manufacturer and exporter of graphite electrodes, saw its stock in the spotlight after reporting a 150 percent YoY profit growth in Q3FY26. The company in context operates the world’s largest single-site graphite electrode plant.
With a market cap of more than Rs 10,200 Cr, HEG Ltd saw its stock hit an intraday low of Rs 527 which is 6 percent lower than the previous close of Rs 561. But the same stock has given a compounded return of 41 percent in the last three years.
Q3FY26 Result
In the latest quarterly result the company has seen its revenue from operations increase by 37 percent YoY, from Rs 478 Cr in Q3FY25 to Rs 656 Cr in Q3FY26, while the QoQ decreased by 6 percent from Rs 699 Cr. The net profits grew by 150 percent going from Rs 83 Cr in Q3FY25 to Rs 207 Cr in Q3FY26, while the QoQ increased by 44 percent from Q2FY26’s Rs 143 Cr.
In 9M numbers of the fiscal year, the company saw its revenue from operations increase by 22 percent YoY, from Rs 1617 Cr in 9MFY25 to Rs 1972 Cr in 9MFY26. The net profits for the same period grew by 140 percent going from Rs 189 Cr to Rs 455 Cr.
The company has a 3 year sales CAGR of negative 1 percent, while the TTM is at 16 percent. The company’s 3 year profit CAGR is at negative 36 percent, while the TTM number is at 72 percent. The company also has a ROCE of 4 percent and a ROE of 3 percent.
HEG Demerger
HEG Ltd has proposed a demerger to unlock value by separating its graphite electrode business into a new entity, HEG Graphite Ltd, while the residual company will be renamed HEG Greentech Ltd. Existing shareholders will receive one share of HEG Graphite for every HEG share held, ensuring mirror shareholding and focused business operations.
Post demerger, Bhilwara Energy Ltd will be merged into HEG Greentech, leading to an increase in outstanding shares and minority dilution. The restructuring aims to create two distinct, specialized companies one focused on graphite electrodes and the other on green energy, battery materials, and renewable power enhancing strategic clarity and long-term growth potential.
Why did the stock move negative?
Though HEG Ltd reported a 150 percent YoY profit growth, its QoQ profit growth was only 44 percent. Additionally, while YoY revenue grew 37 percent, QoQ revenue declined by 6 percent. Given that HEG Ltd is a manufacturer and exporter of graphite electrodes, evaluating the company based on its QoQ performance is crucial. Therefore, this could be a potential reason why the stock fell by 6 percent post the results.
HEG Ltd, incorporated in 1975 and headquartered in Bengaluru, is a leading manufacturer of graphite electrodes for electric arc furnaces. It operates the world’s largest single-site plant with 80,000 tons capacity, expanded to 100,000 tons in Nov 2023, becoming the third-largest producer in the western world.
The company exports 65- 70 percent to 35 countries, serves top 20 global steel companies, has 80 MW captive power, and plans further expansion to 115,000 tons by 2027.
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