HEG's net profit nearly doubled in the April-June quarter, boosted by an almost 75 percent surge in net sales, pushing the graphite electrode makers' stock price sharply higher in trade on Thursday. A six percent reduction in the steel production in Europe this year — due to rising electricity costs owing to Western sanctions and disruptions in energy imports from Russia after the war with Ukraine — is pinching HEG's order book from the region.

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HEG's Executive Director Manish Gulati told CNBC-TV18 that the company sees a pushback of orders from Europe. Europe contributed to around 10 percent in HEG's overall exports last year.

"Europe is badly hit as far as steel production is concerned. That is what is reflected in our order book."

HEG's overall sales volume could come in lower going ahead on account of geopolitical issues, said Gulati.

"The volumes might be less for the quarter, which we are in — July to September — and mainly because of these geopolitical reasons and slowdown of steel production. Because if we compare the first half of 2021 to 2022, there's almost a 6 percent drop in steel production."

HEG's consolidated net profit nearly doubled, rising 180 percent to Rs 159 crore, buoyed by an almost 75 percent surge in net sales to Rs 721.95 crore in the April-June quarter. HEG's net profit in the June quarter last year had come at Rs 74.5 crore, while net sales came at Rs 413.69 crore.

Part of the LNJ Bhilwara Group, HEG's primary business is graphite which accounts for 80 percent of the revenue, as per information available on the company website. Located at Mandideep near Madhya Pradesh capital Bhopal, HEG has the largest integrated graphite plant in the world with an annual capacity of making 80,000 MT of ultra-high power (UHP) grade electrodes. HEG exports over 70 percent of its production to more than 30 countries around the world.

HEG share price surged nearly 6.5 percent in intra-day trade on Thursday, after the graphite electrode manufacturer posted strong results. HEG stock price was trading at Rs 1,283.30 on BSE at 11.52 am, up 3.71 percent, after opening with a gain of 5.2 percent at Rs 1,301.70. The stock trades higher than 5-day, 20-day, 50-day and 100-day moving averages but lower than its 200-day moving averages.

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First Published:Aug 11, 2022 1:42 PM IST