HEG hits record high ahead of June quarter results

Shares of graphite electrode manufacturer HEG have hit a record high of Rs 4,250 per share, up 3.3% on the BSE in intra-day trade on Tuesday, ahead of June quarter (Q1FY19) results on Wednesday, August 1, 2018.

Since May 8, 2018, after the March quarter (Q4FY18) results, the stock has outperformed the market by surging 45% as compared to 6.5% rise in the S&P BSE Sensex.

For FY18, the company reported a stellar performance by reporting net profit of Rs 10.81 billion against net loss of Rs 501 million in FY17. The topline increased around 220% year on year (YoY) to Rs 27.50 billion. The EBITDA (earnings before interest, taxes, depreciation and amortization) margin for the fiscal was at 62.6% against 9.4% in FY17. HEG has also repaid its entire debt (long term, short term as well as working capital) and is now debt free, providing further strength to balance-sheet.

ICICI Securities expect HEG to continue to report a healthy performance on the back of increasing realisations. HEG’s topline is likely to increase around 649% YoY, around 19% QoQ. The brokerage firm expects HEG to report strong EBITDA margins of 66.7%.

“We expect HEG to continue to report robust profitability for Q1FY19E supported by consistently increasing realisations. We expect the company to report a healthy capacity utilisation level of around 85%. The topline is likely to increase 648.8% YoY and 19.0% QoQ to Rs 15.38 billion while EBITDA is likely to come in at Rs 10.25 billion, implying an EBITDA margin of 66.7% (vs. Q4FY18: 73.6% and Q1FY18:11.4%). We expect the company to report a profit after tax of Rs 6.70 billion,” ICICI Securities said in Q1FY19 result preview.

At 11:55 am; HEG was trading 1.7% higher at Rs 4,183 on the BSE, as compared to 0.38% rise in the S&P BSE Sensex. A combined 150,252 equity shares changed hands on the counter on the BSE and NSE so far.


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