The shares of this smallcap company surged around 9 percent in Wednesday’s trading session after the board set a record date for a 1:5 stock split. In one year, the stock has delivered more than a 40 percent return to its shareholders.
Price Movement:
With a market capitalization of Rs. 9,695 crores, the shares of HEG Ltd started Wednesday’s trading session on a higher note at Rs. 2,330 compared to its previous close of Rs. 2,309.35.
During the trading session, the shares hit a high of Rs. 2,543, gaining around 9 percent and are currently trading at Rs. 2,458 apiece.
What Happened:
Such a bullish movement in the share price was observed after the company in an exchange filing announced October 18, 2024, will be the record date for determining the entitlement of equity shareholders for the sub-division or split of existing equity shares in a 1:5 ratio.
Specifically, each equity share with a face value of Rs. 10 will be split into 5 equity shares with a face value of Rs. 2 each, fully paid up. The company approved this split on September 24.
Financials:
Looking at the company’s financial performance, the revenue increased by 4 percent from Rs. 547 crores during the March quarter to Rs. 571 crores in the June quarter. On the other hand, the net profits declined by around 30 percent from Rs. 33 crores to Rs. 23 crores during the same timeframe.
Future Outlook:
The growth of Electric Arc Furnace (EAF) production in crude steel manufacturing, particularly excluding China, has been notable.
According to HEG’s FY24 annual report, the proportion of crude steel produced via the EAF route has increased from approximately 44 percent in 2015 to nearly 50 percent in 2022. Industry experts predict that this trend will continue, estimating that by 2030.
Further, HEG anticipates a significant rise in demand for graphite electrodes, which are essential for the EAF process, as the industry moves towards greener production methods.
HEG Ltd is making significant strides in the battery component sector by planning to establish a 20,000-ton capacity for graphite anodes, crucial for lithium-ion batteries.
This venture is part of a broader strategy to capitalize on the Indian government’s initiative to localize battery component production, particularly amid a global shift towards electric vehicles (EVs) and renewable energy solutions.
Important Financial Ratios:
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 7.04 percent and a return on capital employed (RoCE) of 7.70 percent for the period spanning FY23-24. Further, the net profit margin during FY23-24 was 9.60 percent.
Company Profile:
HEG Ltd is a leading manufacturer and exporter of graphite electrodes, primarily producing Ultra High Power (UHP) and High Power (HP) grades, which are essential for electric arc furnaces in steel production.
Written By Vaibhav Patil
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