HEG Ltd

The stock price has been hitting new highs consistently for the past couple of days and volumes have also been robust. And it seems to have been all a build-up for its Q4 and FY14 performance, which were disappointing to the say the least. Q4 numbers are better off on a YoY, with net sales coming in at Rs.499 crore, up 13% while net profit at Rs.46 crore rose 31%. But sequentially, net sales rose 18%  and net profit by 4%. But the FY14 performance was a real dampner. Consolidated net sales for the fiscal came in at Rs.1459 crore, down 10% and net profit was down 19% at Rs.81 crore. Its debt continues to remain high, at over Rs.630 crore and interest outgo for the year was at Rs.72 crore, up 12%.

The company’s Graphite Electrode capacity currently stands at 80,000 MT, making it one of the largest single-site integrated graphite electrode facility in the world.  It also operates three power generation facilities with a total rated capacity of about 77 MW. The hydroelectric power plant at Tawa near Itarsi, District Hoshangabad (Madhya Pradesh) has a rated capacity of 13.5 MW, while two captive thermal power plants located at Mandideep (Madhya Pradesh) have rated capacities of 30 MW and 33 MW respectively. Looking ahead in the immediate short term, the downward bias in prices of graphite electrodes is expected to continue but lower price of needle coke, its main raw material is also expected to remain low and if supported with better volumes, margins will get better. But its hydro power unit will be seasonally shut down in Q1 and that, like every first quarter is sure to affect the bottomline. Typically, for this company, Q2 and Q3 are the best.