HEG shares rose 13% to ₹675.90 after reporting a Q1 profit of ₹110 crore. The company announced a strategic demerger to separate its graphite electrode business from its new green energy platform. Investors are tracking how this restructuring will impact future capital allocation and growth in the battery components sector.
Detailed Coverage
Shares of HEG, a leading manufacturer of graphite electrodes, saw a sharp rise of 13% to reach ₹675.90 on the BSE today. The market reaction follows the company’s financial performance for the April-June quarter of the 2027 fiscal year, which showed a recovery in profitability and margins.
Financial Turnaround in Q1 FY27
HEG reported a profit after tax of ₹110 crore for the first quarter of FY27. This is a notable improvement compared to the ₹72 crore profit in the same quarter last year and marks a reversal from the ₹163 crore loss reported in the preceding quarter (Q4 FY26). Quarterly revenue also grew by 13% sequentially, reaching ₹681 crore. The company’s operating performance improved significantly, with EBITDA margins rising to 23.7% from 8.4% in the previous quarter. This margin expansion was aided by a 560 basis point increase in gross margins, driven by lower raw material costs and higher realization rates for graphite electrodes.
Strategic Demerger and Future Growth
Beyond the quarterly financials, the company’s board has approved a plan to demerge its business into two separate listed entities. The first entity will focus on the core graphite electrode business, which continues to supply the steel industry as it shifts toward electric arc furnace (EAF) technology. The second entity, HEG Greentech, will concentrate on high-growth segments including battery components, energy storage systems, and renewable power generation. This move is designed to provide investors with a clearer view of the distinct business models and growth drivers within the group.
Sector Context and Investor Monitorables
The graphite electrode sector is undergoing a shift as global steelmakers move away from traditional blast furnaces to EAFs to lower their carbon footprint. In India, policy initiatives related to green steel production and environmental compliance, such as the Carbon Border Adjustment Mechanism (CBAM), are expected to support long-term demand for electrodes. However, while the company is entering the graphite anode market for electric vehicles, investors should monitor the execution risk associated with the new Greentech platform. The success of this expansion will depend on the company’s ability to scale manufacturing-led battery solutions and manage the capital required for such new ventures. Future updates on the demerger timeline, the specific asset allocation between the two entities, and the debt position of the new Greentech platform will be key areas for investors to track in the coming quarters.