HEG Charts Growth: Capacity, Green Tech, Market Recovery

Ashwin Thakker

— 2 min read

Key Facts on Outlook:

  • Graphite Electrode Capacity Expansion: 15,000 tons (from 100,000 to 115,000 tons) by January-March 2028.
  • Capital Expenditure (Capex) for Expansion: Approximately INR 650 crores.
  • Greentech Business Revenue Guidance (FY26): INR 500-600 crores.
  • Greentech Business EBITDA Guidance (FY26): INR 200-225 crores.
  • Outlook for Graphite Electrode Operational EBITDA (Q2 FY26): Expected to remain stable, similar to Q1 FY26 (23%).
  • Market Pricing: Anticipated to firm up in 2-3 quarters as industry utilization improves (from 60-65% towards 80-85%).

HEG Limited has reported a strong performance in Q1 FY26, with a significant jump in both revenue and profitability. Building on this momentum, the company unveiled ambitious plans and a positive outlook for future growth, focusing on capacity expansion, green technology, and market recovery. This forward-looking strategy positions HEG to capitalize on evolving industry dynamics.

HEG's Capacity Expansion and Cost Advantage

HEG is strategically expanding its core graphite electrode business. The company announced plans to increase capacity from 100,000 tons to 115,000 tons, with new production anticipated by January-March 2028. This expansion, requiring a capital expenditure of approximately INR 650 crores, aims to

"further reduce our costs and increase our market share."

Management noted the expansion leverages existing infrastructure, resulting in a

"lower capex per ton"

than prior phases. This move underscores HEG's position as

"one of the lowest cost producer globally,"

enhancing competitiveness and boosting profitability by adding volume with minimal fixed cost increases.

Green Initiatives and Anticipated Market Recovery

HEG is actively pursuing growth in green technologies. Its Greentech business, including hydro assets and the RePlus battery company, projects robust financial performance for FY26, targeting INR 500-600 crores in revenue and INR 200-225 crores in EBITDA. An anode plant supporting this segment is slated for operation by March 2027. The company maintains a positive medium-to-long term outlook for graphite electrodes, fueled by the global shift towards electric arc furnace (EAF) steelmaking, which is estimated to generate substantial incremental demand. Despite current prices being deemed

"unviable,"

HEG expects market stabilization and price firming within the next

"two quarters, three quarters,"

as industry utilization improves.

HEG's Q1 FY26 earnings call painted a clear picture of a company strategically poised for the future. With significant investments in capacity expansion for graphite electrodes and a robust roadmap for its Greentech businesses, HEG is aligning with global sustainability trends. The anticipated market stabilization and pricing recovery further underscore a positive outlook, suggesting a period of sustained growth and improved profitability for the company.

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