Shares of this smallcap company fell around 9 percent in Thursday’s trading session after announcing the spin-off of its graphite business along with the quarterly results. The shares have delivered a multibagger return of 109 percent to its shareholders in one year.
With a market capitalization of Rs. 9,531 crores, the shares of HEG Ltd started Thursday’s trading session on a lower note at Rs. 2,599 compared to its previous close of Rs. 2,687. During the trading session, the shares hit a low of Rs. 2,427.40, losing around 9 percent and are currently trading at Rs. 2,438 apiece.
Such a negative movement in the share price was observed after the company in an exchange filing announced that the board of directors had approved the demerger of its graphite business into a new company, and the merger of Bhilwara Energy with itself. In FY24, the company received 94.41 percent of the total turnover from the Graphite business.
Furthermore, the company mentioned that the existing company will be turned into a platform for green energy businesses, hydro and wind energy, advanced carbon business and other opportunities in the new age businesses.
The demerger will result in a share exchange ratio of 1:1. For the merger, HEG stated that shareholders will receive 8 fully paid-up equity shares of Rs. 10 each in the transferee company for every 35 equity shares of Rs.10 each held in the transferor company.
Additionally, HEG stated that segregating businesses with varying risk and return profiles offers shareholders greater flexibility to align their investments with their strategies and risk preferences, effectively de-risking the graphite business.
Coming onto the company’s quarterly and financial year-end 31st March 2024 results. Quarterly, the revenue decreased by around 3 percent from Rs. 562.4 crores during the December quarter to Rs. 546.9 crores in the March quarter. On the other hand, the net profits declined by 25 percent from Rs. 43.67 crores to Rs. 32.91 crores during the same period.
Comparing the same metrics on a YoY basis, the revenue fell by 11 percent from Rs. 616.88 crores during Q4FY23 to Rs. 546.9 crores in Q4FY24. In addition, the net profits slumped by 63 percent from Rs. 88.89 crores to Rs. 32.91 crores during the same period.
Moreover, the Board of Directors of the company have recommended a Final Dividend on Equity Shares at the rate of Rs. 22.50 per equity Share of the face value of Rs. 10 each, for the financial year 2023-24 subject to the approval of the Shareholders at the ensuing Annual General Meeting (AGM) of the company.
Headquartered in Noida, HEG Ltd was incorporated in 1972. The company has one of the largest integrated Graphite Electrode plants in the world and exports over 70 percent of its production to more than 30 countries of the world.
Written By Vaibhav Patil
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