HEG reports strong Q2 FY26 results with volume growth, updates on capex and demerger
HEG reported strong Q2 FY26 results driven by volume growth. The company provided updates on its ₹650 crore capacity expansion, demerger progress, and the long-term potential of its Greentech businesses.
The announcement details strong quarterly financial performance, significant capital expenditure for future growth in its core business, a clear timeline for the ongoing demerger, and substantial expansion plans for its new Greentech segments. These factors collectively indicate a strategic direction and potential for future value creation, warranting a high impact rating.
The company reported significantly improved financial results for Q2 FY26, including higher revenue, EBITDA, and PAT, primarily due to increased sales volumes. Management expressed confidence in long-term growth driven by EAF transition and outlined substantial expansion plans for both graphite electrodes and new Greentech ventures with encouraging profitability projections.
HEG Limited announced its financial results for Q2 FY26, reporting robust performance driven by higher sales volumes, despite challenging market conditions for graphite electrodes. The company's key highlights include: * Financial Performance (Q2 FY26): * Revenue from operations stood at ₹697 crores, up from ₹568 crores in Q2 FY25. * EBITDA was ₹226 crores, compared to ₹140 crores in the corresponding quarter of the previous year. * Standalone Net Profit After Tax (PAT) was ₹131 crores, significantly higher than ₹62 crores in Q2 FY25. * Consolidated Net Profit After Tax (PAT) was ₹105 crores, compared to ₹82 crores in Q2 FY25. * The revenue increase was entirely attributed to higher sales volumes, with electrode prices remaining flattish between Q1 and Q2 FY26. * The company is long-term debt-free and had a treasury size of approximately ₹1,167 crores as of September 30, 2025. * Global Steel and Graphite Electrode Market: * Global crude steel production declined 1.5% year-on-year in the first nine months of 2025 to 137.3 crore metric tons (1,373 million metric tons), with China's output down 2.6%. * India was a standout performer, with crude steel production increasing 10.5% year-on-year to 12.24 crore metric tons (122.4 million metric tons). * The graphite electrode market faces muted demand, intense competition from Chinese suppliers, and a 50% reciprocal duty in the U.S., which impacts competitiveness. * HEG maintained high utilization levels, exceeding 90% in the last two quarters, positioning it as a cost-efficient manufacturer with a diversified sales footprint across 35 countries. * Long-Term Outlook and Expansion: * The global shift towards Electric Arc Furnace (EAF) steelmaking is expected to drive an additional demand of approximately 2 lakh tons (200,000 tons) of graphite electrodes by 2030, excluding China. * HEG announced a 15,000-ton capacity expansion with a capital expenditure of ₹650 crores, slated for completion by the end of 2027, with production commencing in Q1 calendar year 2028. * Demerger Update: * The composite scheme of arrangement for demerger has been filed with stock exchanges and NCLT approval is expected by April 2026. * HEG Greentech Businesses (Post-Demerger): * Anode Material Manufacturing: Revenue expected from Q4 FY27, with EBITDA margins projected between 35-40%. * Hydro Power Assets: Will own 100% of Malana and Allain Duhangan (278 MW combined capacity) after acquiring the remaining 49% from Statkraft. * BESS EPC Business: Current installed capacity of 1 GWh, planning to expand to 6 GWh by Q1 FY27. * IPP (BESS + Solar) Vertical: First 200 MWh project expected to be operational by Q2 FY27, with an additional 1000 MW/2000 MWh tender targeted for commissioning by Q2 FY28. * Management expects industry-wide utilization levels above 80-85% for prices to start firming up, and does not foresee needle coke availability as a significant long-term issue.
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HEG Limited filed this with the NSE as a statutory disclosure, categorised under quarterly results. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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