Graphite India Q3FY26: PBT ₹124 cr, revenue ₹642 cr

Key takeaway from the quarter

Graphite India, an electrodes and refractories maker, reported its Q3FY26 financial results with a sequential slowdown in operating revenue but a sharp year-on-year improvement in profitability. Revenue from operations came in at ₹642 crore, down 12% quarter-on-quarter (QoQ) but up 23% year-on-year (YoY). Total income stood at ₹750 crore, lower by 8% QoQ but higher by 38% YoY. The quarter also sits alongside ongoing changes in the company’s overseas footprint, with its German graphite electrode production remaining closed amid a restructuring of other businesses.

Q3FY26 revenue and income numbers

For Q3FY26, Graphite India’s revenue from operations was ₹642 crore. The company also reported total income of ₹750 crore for the quarter. The gap between the two indicates the role of other income streams, which can be meaningful in quarters where operating conditions remain uneven across global markets. The company’s update flagged a sequential decline, while still showing a stronger comparison versus the year-ago period. These results arrived at a time when the broader graphite electrode market has been facing weak demand and pricing pressure in several regions.

Profit before exceptionals turns positive

Profit before tax (PBT) before exceptionals was ₹124 crore for Q3FY26. This compares with a loss of ₹14 crore in Q3FY25 on the same metric. The swing highlights improved operating performance versus the year-ago base, even as revenue from operations declined on a sequential basis. The company has also indicated that lower realisations have impacted performance, while lower costs and higher volume supported a somewhat better outcome. It also noted that global markets continue to be affected by economic uncertainty, intense competition, weak demand, and lower capacity utilisation.

How recent quarters compare: Q1FY25, Q4FY24 and FY24

Graphite India’s disclosures around recent periods show volatility in earnings and margins across the cycle.

In Q1FY25 (consolidated), the company reported net sales of ₹728 crore (down 2.5% YoY), EBITDA of ₹307 crore, and net profit of ₹236 crore versus a loss of ₹30 crore in Q1FY24. EPS was ₹12.11 per share. Gross debt stood at ₹257 crore, while cash (net of gross debt) was ₹3,729 crore.

For Q4FY24 (consolidated), net sales were ₹720 crore (down 11.7% YoY), EBITDA was ₹62 crore with a margin of 7.5%, and net profit was ₹16 crore. EPS was ₹0.80 per share.

For FY24 (consolidated), net sales were ₹2,950 crore (down 7.3% YoY), EBITDA was ₹160 crore with a margin of 5.4%, and net profit was ₹805 crore. EPS was ₹41.36 per share. Gross debt was ₹177 crore, and cash (net of gross debt) was ₹3,307 crore. A dividend of ₹11 per share was announced for FY24, with a dividend pay out ratio of 550% on the face value.

German electrode production shutdown and provision

A major operational development has been the shutdown of Graphite India’s German graphite electrode production. The company attributed reduced production to the closure of its German electrode plant and the downturn in the global economy. It cited a weak European economy, influenced by the Russia-Ukraine conflict, leading to a sharp rise in energy and gas costs that rendered German electrode operations unviable.

The company’s German facility has graphite electrode production capacity of around 18,000 tonnes, contributing about 18% to Graphite India’s aggregate graphite electrode capacity of 98,000 tonnes. Over the last few quarters, the German operations had been making EBITDA losses, and the company indicated that the closure could reduce negative contribution from the German subsidiary at a consolidated level over time.

The company has also disclosed that it has established a provision of ₹53 crore to cover restructuring and social security expenditures, as well as impairment of property, plant and equipment, linked to the German shutdown and liquidation process.

Overseas subsidiaries and restructuring status

As of March 31, 2025, Graphite India had seven subsidiaries: one in India, one in the Netherlands, four step-down subsidiaries in Germany, and one step-down subsidiary in the United States of America. The company has indicated that German graphite electrode production continues to remain closed, while restructured speciality and coating businesses are in operation.

It also disclosed that the liquidation process of a German step-down subsidiary, Bavaria Electrodes GmbH (in liquidation), is ongoing. Separately, it has described its fully-owned German subsidiary in Nuremberg as Graphite COVA GmbH.

Capacity expansion plan: 25,000 tonnes per annum

Alongside the overseas restructuring, the company has announced a capacity expansion plan of 25,000 tonnes per annum, to be executed in two phases. The first phase will add 13,000 tonnes within the next 12 months, and the second phase will add 12,000 tonnes over the following 36 months. Total investment for the expansion is estimated at ₹600 crore, including ₹100 crore for setting up captive power generation from renewable energy sources.

The company was set up in 1967 and has grown to operate six plants in India, in addition to its Germany presence.

Sector moves and stock reaction context

Shares of Graphite India and HEG Ltd rose as much as 15% in Monday’s trade amid a report that Japan’s Resonac Holdings was looking to shut its graphite electrode plants in China and Malaysia. As per Nikkei Asia, Resonac’s move is aimed at protecting margins amid competitive pressure. Resonac, with annual capacity of 2,10,000 tonnes, would liquidate its China and Malaysia arms and be left with four manufacturing sites: the US, Austria, Spain and Japan, according to the report.

Key data table: financial and operational disclosures

What the company has said on demand and production

Chairman KK Bangur has pointed to weak global indicators, particularly in West Asia, Southeast Asia, and Europe, and indicated a potential reduction in production if demand does not improve in the latter half of the year. He said the company had been slowing down production since Q3 (beginning September) of the last financial year, while also noting uncertainty over the extent of any cut.

Bangur also said it made little sense to maintain excess inventory and tie up capital. At the same time, he flagged that the domestic market remained relatively strong, citing expansions or acquisitions by firms like Essar, JSW, and Tata Steel. He also stated that the closure of the Bengaluru unit in Whitefield due to environmental issues would not impact overall operations, and that employees were compensated, with the company classifying this as an exceptional expense of ₹55 crore.

Conclusion

Graphite India’s Q3FY26 results showed revenue softness on a sequential basis but a clear YoY improvement in profitability, with PBT before exceptionals at ₹124 crore. The company’s operational story remains shaped by the continued closure of German graphite electrode production, an ongoing liquidation process for a German step-down subsidiary, and an announced 25,000 tpa capacity expansion in India with planned investment of ₹600 crore. Investors are likely to track execution milestones on the two-phase expansion plan, along with any further disclosures on overseas restructuring and demand conditions in key export markets.