Synopsis: HEG came under focus after the US Department of Commerce imposed a preliminary 6.99% countervailing duty on its graphite electrode exports from India. The final decision, along with the anti-dumping investigation, is scheduled for December 8, 2026.
The move comes as the US intensifies trade scrutiny of graphite electrode imports, even as global electric arc furnace steelmaking capacity continues expanding. For export-oriented producers such as HEG, the final US duty decision could influence competitiveness in one of the world’s major steel markets.
Shares of HEG traded at Rs 656.70 on the NSE, up 0.64% from the previous close of Rs 652.50, against a market capitalization of approximately Rs 12,659.33 crore and a 52-week range of Rs 459.80 to Rs 690.
What’s the News?
HEG Limited submitted its investor presentation on unaudited standalone and consolidated financial results for the quarter ended June 30, 2026, to the BSE and NSE on July 23, 2026, followed five days later by a separate disclosure on July 28, 2026, concerning a US trade action affecting its exports.
On the trade front, the company disclosed that the US Department of Commerce issued a preliminary affirmative determination on July 27, 2026, in its Countervailing Duty investigation concerning imports of large diameter graphite electrodes from India, setting a preliminary countervailing duty rate of 6.99% specifically for HEG.
The company stated that cash deposits at this rate may now be required on the subject merchandise entering the United States, and confirmed the determination remains subject to verification and a final ruling, with the final Countervailing Duty determination scheduled to be announced alongside the final Anti-Dumping Duty determination on December 8, 2026, unless postponed.
HEG confirmed it is cooperating with the ongoing investigation and stated that the financial impact of the preliminary determination is not yet ascertainable, as the company continues to evaluate the effect on its business and financial performance.
Financial Impact Analysis
The preliminary 6.99% countervailing duty adds a direct cost to HEG’s shipments into the United States for the duration it remains in effect, and because this is layered on top of a separate, still-pending Anti-Dumping Duty investigation, the combined tariff burden facing the company’s US-bound exports could rise further depending on the final AD determination due in December 2026.
Since HEG has historically exported roughly 65-70% of its production across some 35 countries, any US-specific duty affects only a portion of the company’s overall export book, but the preliminary nature of the finding, subject to verification, means the ultimate financial exposure remains genuinely uncertain until the final determination, a point the company itself has acknowledged by declining to quantify impact at this stage.
For Q1 FY27, revenue from operations stood at Rs 603.21 crore, down 1.6% year-on-year and 11.4% sequentially, reflecting softer realisations despite relatively stable production and export volumes. The company reported a loss before tax of Rs 189.01 crore, compared with a profit of Rs 92.42 crore a year earlier, primarily due to a mark-to-market loss on its investment in GrafTech International.
Net loss for the quarter widened to Rs 163.19 crore, versus a profit of Rs 71.80 crore in Q1 FY26, translating into a loss per share of Rs 8.46. However, the loss largely reflected investment valuation adjustments rather than weakness in HEG’s core graphite electrode operations, with consolidated results partially cushioned by Rs 26.77 crore of profit from associates.
Despite the quarterly loss, HEG’s underlying operating performance has improved over the past year. FY26 EBITDA increased to Rs 497 crore from Rs 388 crore in FY25, while EBITDA margin expanded to 19% from 17%, indicating stronger operating profitability even though reported earnings continue to be influenced by GrafTech-related valuation movements.
The company also retains a comfortable liquidity position to navigate potential trade headwinds. Short-term borrowings stood at Rs 783 crore as of June 30, 2026, while investments and cash equivalents, excluding stakes in associates and subsidiaries, totalled Rs 858 crore, providing financial flexibility despite the recent earnings volatility.
Industry & Strategic Analysis
HEG operates the largest graphite electrode plant in the Western world with 100,000 tonnes of annual capacity, and management highlighted that the company remains the only producer in the Western world to have announced additional capacity, with an ongoing brownfield expansion of 15,000 tonnes set to lift total capacity to 115,000 tonnes.
The company pointed to structural demand tailwinds from the global shift toward electric arc furnace steelmaking, which the World Steel Association estimates rose to 51% of ex-China steel production in 2024, alongside an OECD outlook projecting around 71 million tonnes of new EAF capacity globally between 2026 and 2028, both of which support long-term graphite electrode demand independent of the near-term US trade dispute.
The preliminary countervailing duty determination adds to a broader pattern of trade policy and geopolitical friction that management flagged as an industry-wide risk, alongside tariffs, anti-dumping measures and Middle East tensions that continue to raise freight, energy and raw material costs across the graphite electrode and steel value chain.
India’s own crude steel production grew 7.1% year-on-year to 87 million tonnes in the first half of 2026, reinforcing domestic demand as a partial offset to any export-side pressure from US trade actions, even as HEG’s core export dependency means developments in the American market will remain a swing factor for sentiment until the December 2026 final determination.
Company Overview
HEG Limited, part of the LNJ Bhilwara Group, is among the top three graphite electrode producers globally outside China, operating from Mandideep near Bhopal with over 50 years of manufacturing expertise and captive power generation capacity of around 80 megawatts. The company reported FY26 standalone revenue of Rs 2,568.50 crore and net profit of Rs 180.72 crore, and holds an equity stake in US-listed GrafTech International.
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