HEG Limited reported strong operational performance in Q3 FY26, clocking 89% utilization across the last three quarters. Management emphasized that the global transition toward low-emission Electric Arc Furnace (EAF) steelmaking is driving substantial long-term demand for graphite electrodes, projected at 200,000 tons by 2030 (excluding China). Financially, consolidated PAT stood at Rs.455 crores against Rs.189 crores the previous year, supported by cost efficiency and scale.
HEG Q3 FY26 Conference Call Summary
The HEG Limited Q3 FY26 Earnings Conference Call, held on February 11, 2026, focused heavily on the underlying trends supporting the graphite electrode industry, driven primarily by the global shift in steel production methods.
Global Steel Market Context
Chairman Mr. Ravi Jhunjhunwala set the context by noting that global steel production declined by about 2% in CY2025. However, India remained a bright spot, with crude steel production increasing by 10.4% YoY. In contrast, China’s production fell by 4.4%, though its exports rose sharply by 78% over five years, intensifying competition.
EAF Transition and Electrode Demand
A key theme was the acceleration towards low-emission EAF steelmaking. The transition is expected to generate incremental graphite electrode demand of approximately 200,000 tons by 2030 (excluding China). This demand is fueled by replacing older blast furnace routes, which emit 4-5x more carbon. New Greenfield EAF capacities expected by 2030 total 110 million tons.
Mr. Jhunjhunwala stressed that new capacity addition does not equate to overall steel capacity growth, but rather a shift in technology, meaning electrode demand is guaranteed to rise.
Operational Highlights and Capacity
HEG continues to lead the industry in efficiency:
- Capacity utilization was maintained at 89% across the last three quarters, the highest in the graphite industry globally.
- The company operates the world’s largest single-location facility in Mandideep with a capacity of 100,000 tons (reiterated that current numbers reflect this expanded capacity).
- The ongoing expansion of 15,000 tons is progressing on schedule, targeted for completion by early 2028.
Financial Performance (Consolidated)
CFO Mr. Ravi Kant Tripathi presented the financial results for the period ended December 31, 2025:
- Revenue from Operations (9M FY26): Rs.1,965 crores, up from Rs.1,616 crores in the previous year.
- Revenue from Operations (Q3 FY26): Rs.656 crores versus Rs.477 crores in Q3 FY25.
- EBITDA (9M FY26): Rs.623 crores, up significantly from Rs.393 crores.
- Profit After Tax (Consolidated, 9M FY26): Rs.455 crores, compared to Rs.189 crores the previous year.
The balance sheet remains strong, with the company remaining long-term debt-free and maintaining a treasury balance of approximately Rs.1,155 crores as of December 31, 2025.
Q&A Insights
Product Mix and Pricing
Regarding the product mix, the electrode output is dominated by the high-end segment, with 70%-75% being Ultra High Power (UHP).
On pricing arrangements, Mr. Jhunjhunwala noted that 50%-60% of the next year’s volume is already settled, with pricing expected to remain more or less similar to recent quarters.
US Tariffs Impact
Addressing the reduction of the US tariff from 50% to 18%, management stated that while this will impact profit, it is manageable. Since the company already has cost advantages due to size and location, the hit is expected to be not significant, and they are committed to retaining market share.
GrafTech Investment
Regarding the investment in GrafTech, management confirmed they are staying put, viewing the investment as a long-haul proposition, despite recent share volatility. They dismissed fears of competitor shutdowns given the overall industry demand forecast.
Anode Business Cost Structure
For the Graphite Anode business, Riju Jhunjhunwala confirmed that the state government of MP has provided a significant power subsidy, locking in prices at lower than Rs.5 for at least five years starting from the commencement of operations, granting a clear cost advantage.
Capacity Utilization Peak
When asked about the practical peak utilization beyond the current 90% level on the 100,000-ton capacity, Mr. Manish Gulati suggested that 94%-95% might be achievable under real working conditions, subject to securing the ideal product mix.
Source: BSE
