Event Participants
Executives
6 Manish Gulati, Puneet Anand, Ravi Jhunjhunwala, Ravi Tripathi, Reha Neha Rajvanshi, Ankur Thaitan
Analysts
8 Amit Lahoti (Aditya Birla), Akhilesh Kumar (MK Global), Chirag (SKP Securities), Deepak Poddar (Sapphire Capital), Kaushal Sharma (Equinox Capital), Keerthan Mehta (Baroda BNP Paribas), Rohan (Aarahan Capital), Ronak Agarwal (I Thought PMS)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Standalone) | ₹681 crores | +11% YoY vs ₹613 crores; +13% QoQ vs Q4 FY26, driven by better realization and product/geography mix |
| Revenue (Consolidated) | ₹681 crores | +11% YoY vs ₹613 crores |
| EBITDA (Standalone) | ₹211 crores | +38% YoY vs ₹154 crores; margin 29% vs 23% YoY; recovered from ₹126 crore loss in Q4 FY26 |
| EBITDA (Consolidated) | ₹194 crores | +17% YoY vs ₹166 crores; margin 27% vs 25% YoY; recovered from ₹108 crore loss in Q4 FY26 |
| PAT (Standalone) | ₹110 crores | +53% YoY vs ₹72 crores; recovered from ₹163 crore loss in Q4 FY26 |
| PAT (Consolidated) | ₹122 crores | +23% YoY vs ₹100 crores; recovered from ₹119 crore loss in Q4 FY26 |
| Installed Capacity | 100,000 TPA | World's largest single-location graphite electrode plant; expansion to 115,000 TPA on track for early 2028 |
| Capacity Utilization | 90%+ | Marginally lower YoY; expected to sustain above 90%, closing FY27 in 92-95% band |
| Treasury / Cash | ₹858 crores | As of 30 June 2026; company remains debt-free with no long-term borrowings |
| Other Income | ₹43 crores | Includes interest income of ~₹78 crores in segmental numbers and fair valuation gain on investments; prior quarter loss driven by MTM on foreign equity investments |
Geographic & Segment Commentary
Graphite Electrodes (core business): Operated at 90%+ capacity utilization during Q1, with EBITDA margins expanding to 29% (standalone) despite marginally lower volumes. Improved realization driven by product mix and cost discipline offset lower volume; management confirmed the company is reasonably well-diversified across ~30 countries, with exports at 70-75% of sales, and US exposure at less than 10%. Profitability recovery was sharp QoQ — EBITDA swung from a ₹126 crore loss in Q4 FY26 to ₹211 crore profit in Q1 FY27.
HEG Advanced Materials / Greentech (de-merged entity): The composite scheme of arrangement is progressing — NCLT has received its order and the company awaits pronouncement. The demerged entity will house TACC Ltd (anode project, 20,000 TPA) and Bilwara Energy (two debt-free hydro IPPs totaling ~300 MW generating ₹320-350 crores free cash flow annually, plus one 75 MW hydro project acquired from Statkraft and a 300 MW DC solar project due within 18 months). Management guided Greentech to achieve four-digit EBITDA by 2030.
TACC Ltd (anode project): Construction on track; ~40% of ₹2,200-2,300 crore capex spent, with 90-95% of payments to be completed by end FY27. Commercial production expected Q1 FY28, with ~70% of 20,000 TPA capacity already committed under 3-5 year long-term contracts with top-tier global players (contracts to close within next 1-1.5 months). Revenue guidance: ₹600-700 crores in year 1 (40-50% utilization), ₹1,200+ crores year 2, ₹1,500-1,600 crores year 3, at ~35% EBITDA margin.
Company-Specific & Strategic Commentary
Capacity Expansion: HEG's 100,000 TPA plant remains the world's largest single-location facility, far ahead of the next two largest plants (~70,000 TPA each). Expansion to 115,000 TPA is on track for commissioning by early 2028, further widening the scale gap.
Global EAF Transition Tailwinds: OECD outlook cites ~71 million tons of new EAF steelmaking capacity planned globally by end 2028, supporting long-term demand for graphite electrodes. Management noted 25-30 million tons of EAF capacity has already been commissioned in the last 3-4 quarters, with 8-10 million tons in H1 CY26, and ~60 million tons expected during 2026-2028. Decarbonization policies (EU CBAM etc.) are accelerating the shift from blast furnace to EAF steelmaking.
Pricing and Cost Pass-Through: HEG is booked through September 2026; negotiated price hikes (following peers' announcements of $600-1,200/ton and $930/ton increases) will start reflecting from October onwards. Needle coke prices have risen $200-300/ton, representing ~10-15% of electrode cost of production; impact will flow through by end of fiscal year, with management confident of maintaining current EBITDA margins.
Demerger and Consolidation: Post-demerger share base will be ~32.9 crore shares (including 13 crore shares issued to Singularity and promoter/RSL Limited), with no further issuances. Greentech will carry ~₹1,500 crores gross debt on its books by 31 March 2027 (₹1,240 crores secured from SBI), while HEG remains debt-free.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Capacity Utilization | 90-95% for FY27 | Management committed to operating "come what may" within this band, near practical peak (~94-95%) |
| Price Realizations | Higher from October 2026 onwards | HEG booked through September; new contracts at higher prices, with price hikes translating in later quarters |
| EBITDA Margin | Maintain ~28-29% | Management asserted HEG will sustain current margin levels and maintain a higher margin than any competitor |
| TACC (Anode) Commercial Production | Q1 FY28 | First-year revenue ₹600-700 crores at 40-50% utilization; ramp to ₹1,200+ crores year 2 and ₹1,500-1,600 crores year 3; ~35% EBITDA margin |
| TACC Capacity Expansion | Decision post-20K commissioning | Land supports 30,000 TPA; additional 10,000 TPA expansion at ~₹800 crore capex, facility by 2029 |
| Greentech EBITDA | ₹1,000+ crores by 2030 | Aggregate across anode, hydro, and solar businesses |
| 115,000 TPA Capacity | Commissioning by early 2028 | Expansion on track; will increase gap with next largest plants |
Risks & Constraints
| Risk | Context |
|---|---|
| US Trade Actions (CVD/ADD) | Preliminary CVD results expected by July and anti-dumping by September 2026. US accounts for <10% of revenue. Management contends HEG has not dumped, but if duties are "totally unreasonable," volumes can be redirected to diverse alternate markets. |
| Middle East Geopolitical / Energy Costs | Ongoing war has inflated energy prices, freight costs, and transit times, affecting input costs across needle coke and supply chain. Impact is gradually flowing into cost base but mitigated by 3-4 month inventory coverage and long production cycles. |
| Needle Coke Cost Inflation | Price increases of $200-300/ton (~10-15% of electrode cost of production) will hit P&L toward end of FY27 (November-January impact window). Management expects to offset via price hikes effective October onwards. |
| China Steel Export Pressure | Chinese steel exports remain at historically elevated levels (55 million tons in H1 2026, -5.6% from 2025 peak), sustaining global oversupply and triggering defensive trade measures across US, EU, and India. |
| Demerger Execution | NCLT order pronounced but not yet received; timeline for record date and scheme effectiveness pending. Greentech to carry ~₹1,500 crores gross debt post-demerger (₹1,240 crores from SBI), with further debt for ₹3,100 crore expansion expected in FY29 assuming 70:30 project financing. |
Q&A Highlights
Revenue Mix and Middle East Impact
- Question: What was Middle East revenue share in Q1, and which regions absorbed diverted volumes? (Amit Lahoti, Aditya Birla)
- Answer: Middle East is ~20% of revenue historically; no volumes were lost in Q1 — capacity utilization exceeded 91%. The company operates across 30 countries and temporary shipping delays were easily absorbed elsewhere. Management declined to disclose country-level detail, citing competitive sensitivity. (Manish Gulati, Ravi Jhunjhunwala)
Price Hikes and Cost Pass-Through
- Question: How much price increase can be expected in coming quarters, and will it outpace cost increases? (Amit Lahoti; Akhilesh Kumar, MK Global)
- Answer: HEG is fully booked through September, so announced price hikes by peers ($600-1,200/ton by one, $930/ton by another) will start flowing in October onwards for HEG. Needle coke costs have risen ~$200-300/ton; the combined impact will surface toward year-end. Management expects to maintain margins and be "higher margin than anybody else," without committing to a specific quantum. (Manish Gulati, Ravi Jhunjhunwala)
US Trade Actions (CVD/ADD)
- Question: What is the company's exposure to US anti-dumping/countervailing duties, and how will it de-risk? (Akhilesh Kumar, MK Global; Ronak Agarwal, I Thought PMS)
- Answer: US is less than 10% of revenue. Preliminary CVD results are due in July, anti-dumping by September. Management is confident HEG has not engaged in dumping, and if duties are unreasonable, volumes can be redirected ("we will cross the bridge when we come to it"). HEG intends to retain the US market given higher prices there. (Manish Gulati, Ravi Jhunjhunwala)
EAF Capacity Additions
- Question: How much of the forecasted 30 million tons of EAF capacity has been commissioned? (Akhilesh Kumar, MK Global)
- Answer: 25-30 million tons has been commissioned in the last 3-4 quarters, with 8-10 million tons during H1 CY26. Between 2026-2028, ~60 million tons is expected to come online. Management tracks each facility and confirmed all major greenfield projects are on track, allowing for ±10-20% variance in timing. (Ravi Jhunjhunwala, Manish Gulati)
TACC Contracts and Capacity Commitment
- Question: How much of the 20,000-ton anode capacity is contracted ahead of April 2026 start? (Akhilesh Kumar, MK Global)
- Answer: ~70% of capacity will be locked under 3-5 year long-term contracts with top-tier global players within the next 1-1.5 months. (Ankur Thaitan)
Needle Coke Cost Flow-Through
- Question: Which quarter will higher needle coke costs hit P&L, and what spread pattern is expected? (Keerthan Mehta, Baroda BNP Paribas)
- Answer: The $200-300/ton needle coke increase represents roughly 10-15% of electrode cost of production. Given long process cycles (1.5 months manufacturing plus inventory coverage), the cost impact will surface toward end of FY27, by which time HEG will be unbooked and can raise prices to cover. (Manish Gulati, Ravi Jhunjhunwala)
Market Oversupply and Pricing Sustainability
- Question: Global UHP electrode market is ~600 KT with one-third supplied by China; Western capacity is at 60-65% utilization. What drives confidence in pricing improvement? (Keerthan Mehta, Baroda BNP Paribas)
- Answer: Management disputes the China supply share (~half of stated 200 KT), and notes no new blast furnaces are being built in Europe/US — all new capacity is EAF. Steel production growth in ex-China regions (+2.1% in H1 CY26, India +7.1%, US +6.3%, Germany +8%, Vietnam +27%) will drive electrode demand irrespective of China. (Manish Gulati, Ravi Jhunjhunwala)
Greentech Funding and Structure
- Question: How was the Statkraft stake purchase in Malana Power funded, and what is the post-consolidation share count? (Akhilesh Kumar, MK Global; Deepak Poddar, Sapphire Capital)
- Answer: 50% borrowed from commercial banks and 50% from family office/BEL; ~₹600 crore debt remains on BEL books but will be retired by the time of demerger. Post-consolidation shares will be ~32.9 crores (including 13 crore shares issued for Singularity and promoter/RSL Limited), with no further issuance. (Puneet Anand)
TACC Capex Phasing
- Question: What is the phasing of the ₹2,200-2,300 crore anode capex? (Chirag, SKP Securities)
- Answer: 40% already spent; 90-95% of payments will be completed during FY27, with the balance 10% in Q1 FY28. (Puneet Anand)
Greentech Revenue and EBITDA Potential
- Question: What is the revenue/EBITDA potential of TACC and Bilwara Energy? (Deepak Poddar, Sapphire Capital)
- Answer: Anode project: ₹600-700 crores revenue in year 1 (40-50% utilization), ₹1,200+ crores year 2, ₹1,500-1,600 crores year 3 at ~35% EBITDA. Hydro: ~300 MW operating plants generate ₹320-350 crores free cash flow annually; new 75 MW hydro (2.5 years) plus 300 MW DC solar (18 months) add ~₹200 crores EBITDA. Combined Greentech guidance: four-digit EBITDA by 2030. (Unidentified executive)
Key Takeaway
HEG delivered a sharp sequential recovery in Q1 FY27 — standalone EBITDA swung from a ₹126 crore loss in Q4 FY26 to ₹211 crore profit (+38% YoY) on ₹681 crore revenue (+11% YoY), with margins at 29%. The recovery was driven by improving realization and product mix despite slight volume decline, while the 100,000 TPA plant ran above 90% utilization and the balance sheet remains debt-free with ₹858 crore treasury. Management affirmed 92-95% utilization for FY27 and a commitment to maintain current margin levels, with price hikes starting to flow from October as forward bookings (through September) reset at higher levels. Strategic pillars include the 115,000 TPA capacity expansion (early 2028), the HEG Advanced Materials/Greentech demerger (NCLT order awaited), and TACC's anode project entering commercial production in Q1 FY28 with ~70% capacity pre-contracted at 3-5 year tenors. Risks center on needle coke inflation ($200-300/ton), Middle East energy/freight disruptions, and US CVD/ADD outcomes (preliminary July, final September); however, US exposure is under 10% and management maintains the global EAF transition — with 71 million tons of planned capacity through 2028 — underpins a structurally favorable demand outlook.