HEG Limited Stock Analysis [Fundamental+Technical]

• Industry: Graphite Electrodes (used in Electric Arc Furnaces for steel production)
  
• Parent Group: LNJ Bhilwara Group
  
• Location: Largest graphite plant at a single location near Bhopal, MP
  
• Global Reach: 67% export-based; presence in 35+ countries
  

• Products: UHP & HP Graphite Electrodes
  
• Customers: Top 25 global steel companies
  
• Capacity: Increased to 100,000 TPA in Nov 2023
  
• Utilization: 81% (despite global slowdown)
  
• Revenue from Operations: ₹2,394.90 Cr
  
• Net Profit: ₹231.54 Cr (down 49% YoY)
  
• EBITDA: ₹525.63 Cr (down 28% YoY)
  
• EPS: ₹59.99
  
• Net Cash Flow from Operations: ₹615 Cr (up from ₹114 Cr)
  
• ROCE: ~7.2%
  
• Return on Net Worth (RoNW): 5.63%
  

• Current Price: ₹474.60
  
• 50 EMA: ₹431.44 (support zone)
  
• 200 EMA: ₹429.40 (support zone)
  
• Price is trading above both EMAs, indicating a bullish trend reversal.
  
• Golden Cross formation (50 EMA crossing 200 EMA) recently occurred — a classic long-term bullish signal.
  
• The stock bounced from ₹400 zone and now forming higher highs.
  

• One of the lowest-cost graphite electrode producers globally
  
• Among top 5 global players (ex-China)
  
• Strong relationships with major steelmakers
  
• Backward integrated captive power: 76.5 MW
  
• State-of-the-art technology and high R&D focus
  

• Highly dependent on steel sector demand
  
• Pricing pressure due to global oversupply and China's export surplus
  
• Needle coke (key raw material) cost volatility
  
• Current underutilization of capacity
  

• Green Steel Push: EAF-based steel production expected to grow globally
  
• Anode Powder Plant: ₹1,800 Cr investment in 20,000 TPA facility for EV battery anode materials; revenue expected from FY27
  
• India’s EV & Steel Boom: Growing steel consumption (8.2% CAGR) and EV transition are long-term positives
  

• Strengths:

• Global presence, high export revenue, low-cost structure
  
• Technological leadership
  

• Weaknesses:

• Profitability linked closely to global steel demand
  
• Volatility in raw material prices
  

• Opportunities:

• EV market and EAF steel expansion
  

• Threats

• Competition from China, diversion of raw material to battery sector
  

• Near-term challenges due to soft steel demand
  
• Medium to long-term outlook is strong, driven by:
  

1. Increasing EAF penetration
   
2. Global decarbonization policies
   
3. Strategic expansion into EV-grade graphite anodes
   

• CMP:₹474.60
  
• Fair Price Range: ₹600 – ₹1200(Using a conservative P/E range of 10 to 20)
  
• Fair Value (DCF):₹1100+ (Based on 10% projected EPS growth over 5 years and a 12% discount rate.)
  
• Support Levels:₹430 (EMA), ₹400 (price action)
  
• Resistance Zones:₹490-500 (near-term), ₹600 (supply zone)
  

The information provided in this report is for educational and informational purposes only and should not be construed as financial or investment advice. While every effort has been made to ensure the accuracy of data and analysis, no guarantees are made regarding future performance. Stock market investments are subject to market risks, including potential loss of capital. Please consult your financial advisor or conduct your own due diligence before making any investment decisions.