HEG rallies 11% in weak market; what's driving graphite electrode stocks?

Business Standard

a day ago

Share price of HEG, Graphite India today
Shares of graphite electrodes companies HEG and Graphite India have rallied by up to 11 per cent on the BSE in Thursday's intra-day trade after HEG reported sequential improvement in topline in June 2025 quarter (Q1FY26). The company also announced capex plan amidst a demand recovery in the global market.
Among the individual stocks, HEG has surged 11 per cent to ₹593.25 in intra-day trade amid heavy volumes. The stock is quoting close to its 52-week high level of ₹619.25 touched on December 5, 2024. Till 10:08 AM; a combined 11.28 million equity shares changing hands on the NSE and BSE.
Shares of Graphite India has soared 6 per cent to ₹586 in intra-day trade. In comparison, the BSE Sensex was down 0.70 per cent at 80,912.
What's driving Graphite India, HEG stock price?
HEG's revenue from operations witnessed a sequential improvement, largely driven by a 6 per cent quarter-on-quarter (QoQ) increase in graphite electrode realization (with an assumption of 85 per cent capacity utilisation) during Q1FY26. However, gross margins saw a marginal decline, reporting at 58.5 per cent vs 61.2 per cent in Q4FY25, impacted by higher raw material cost. Additionally, higher power and fuel expenses led to a 220 bps QoQ decline in overall earnings before interest, taxes, depreciation, and amortization (EBITDA) margins.
Additionally, it has informed the exchanges that the board has approved a 15,000 TPA capacity addition, which will be implemented over a period of 30 months period at a capex cost of ~₹650 crore.
The structural change in the industry, boosting demand of electrodes and healthy pay back, HEG said on rationale behind capex plan.
Nonetheless, the company's recent capex program is encouraging and comes amidst a demand recovery in the global market and recent plant closures by industry players (~1.2 lakh tons which accounts for ~16 per cent of global graphite electrodes capacity ex China & Russia). On that basis, ICICI Securities in a note said that they remain positive on HEG, supported by the global transition towards electric arc furnace-based steelmaking and entry into the emerging graphite anode market.
Graphite electrodes are used in electric arc furnace (EAF) based steel mills and is a consumable item for the steel industry. The graphite electrode industry is highly consolidated with the top five major global manufacturers accounting for almost 75 per cent of the high end UHP electrode capacity. The majority of this capacity however, is currently located in high cost regions like US, Europe and Japan.
The demand for graphite electrodes is expected to grow steadily as the steel industry increasingly embraces the electric arc furnace (EAF) method for production. With countries and regions intensifying their efforts toward decarbonisation, projections indicate that around 170–180 million tons of EAF capacity (excluding China) will be introduced by 2030.
This shift is anticipated to generate an additional requirement of approximately 200,000 tons of graphite electrodes to support the expanding infrastructure. This transition underscores the crucial role graphite electrodes will play in the steel industry's evolution toward sustainability, HEG said in its FY25 annual report.
Currently, anode powder – a critical material for lithium-ion battery production is entirely imported from China. Credible research indicates that India's domestic demand for anode powder is projected to reach 100,000 to 140,000 tons annually by 2030, driven by the scaling up of local cell manufacturing. With commercial operations in place, HEG said the company will be well-positioned to capture a share of this growing market and contribute to the development of a localised, resilient battery supply chain.