HEG targets FY27 EBITDA ₹600-650 cr, capacity up

What HEG told CNBC-TV18

HEG executive director Manish Gulati said the company is trying to divert West Asia volumes to other markets as exports through the Strait of Hormuz slowed in March and April. He said the Middle East and North Africa (MENA) region contributes around 20% of HEG’s sales, but the current situation has led to orders being placed on hold rather than cancelled. Gulati also reiterated HEG’s guidance for graphite electrodes, stating that EBITDA is expected to be ₹600-650 crore in FY27. Separately, he said the group expects two listed entities to be on the bourses by September 2026.

Strait of Hormuz disruption and order postponements

Gulati described the Middle East as an important market for HEG, and linked the recent export slowdown to the Strait of Hormuz disruption. According to him, exports have been down for the months of March and April, with Middle East orders currently on hold. He said, however, that HEG supplies to many countries and has been able to make up volumes by selling into different regions. The company exports 65-70% of its production to around 35 countries, giving it flexibility when one trade lane weakens. In his comments, the impact was characterised as a timing issue, with postponed MENA orders and other orders being brought forward.

Why HEG says Q4 was not hit

Despite the delayed MENA orders, the company said it did not see a direct impact on results. Gulati said the situation was not a “loss for the quarter” because HEG had business from several other markets as well. He pointed to strong operating metrics, saying capacity utilisation in Q4 was as high as 95% and was more than 90% for the full year. In operational terms, the company said it brought forward orders that were otherwise expected from Europe, the US, and Southeast Asia.

Wider trade and logistics context for Indian exporters

Separately, industry executives in Pune said the closure of the Strait of Hormuz would hurt India’s garment and textile exporters. They said vessels bound for the US and Europe could be forced onto a longer route around the Cape of Good Hope. The diversion is expected to increase transit time by 20-25 days and raise freight costs, which could be challenging for fashion businesses operating on tight seasonal calendars. Exporters also warned longer shipping durations could disrupt timely deliveries of season-specific merchandise, given that shipping routes through the area are critical for consignments to Europe and the US.

Global steel trends management highlighted

HEG also discussed steel production trends across key markets. Management highlighted that China steel production declined about 2.4%, which it linked to weaker construction activity and government-imposed production curbs. At the same time, finished steel exports rose 9.2% year-on-year to 58 million tonnes, which it said increased global competition and pressured international steel prices. Production outside China fell about 1.2% to 419 million tonnes amid macro headwinds and muted industrial recovery in most countries. In contrast, India was highlighted as a stronger market, with steel production up 9.2% year-on-year to about 81 million tonnes in the first six months, supported by infrastructure spending and automotive growth.

Tariffs and demand drivers for graphite electrodes

HEG said the recent imposition of a 25% duty in the US is being studied, describing the US as an important market and the leading consumer of graphite electrodes. Management said it hopes the duty is eventually settled to a more reasonable level, adding that discussions between the two countries are ongoing. It also said HEG’s diversified sales footprint across major markets should help it work to keep the impact minimal. On demand, the company pointed to the global shift toward low-emission electric arc furnace (EAF) steelmaking, supported by regulatory actions and decarbonisation targets.

Capacity expansion plan: 100,000 to 115,000 tonnes

HEG said it has announced an expansion plan to increase capacity from 100,000 tonnes to 115,000 tonnes. The company said the project will require capex of about ₹650 crore, with completion in 2.5 years and expected production in January-March 2028. In a separate market update linked to Q1FY26 results, HEG also said the board approved a ₹650 crore expansion to add 15,000 tonnes per annum (TPA) of graphite electrode capacity, with completion expected in 30 months. Management indicated the expansion would be funded internally and through debt if needed.

Financial and market snapshots mentioned in the updates

Data points cited in the provided information show mixed performance across time periods. For calendar 2024, HEG’s revenue was stated as ₹2,160 crore (21.60 billion), down 9.82% from ₹2,395 crore (23.95 billion) in the previous year. Earnings were stated as ₹115 crore (1.15 billion), down 63.09%. In Q1FY26, HEG reported consolidated revenue of ₹617 crore, up 8.05% year-on-year, and consolidated net profit of ₹105 crore, up 356% year-on-year.

HEG’s share price moves cited across reports included a 7% rise on reports related to China’s graphite export restrictions, and an 11.8% rise after Q1FY26 results. Another update said Graphite India rose 5.8% intraday on NSE to a day high of ₹587 per share following HEG’s results.

Trade actions and supply changes outside India

One report cited that Japan imposed a 95.2% anti-dumping duty on graphite electrode imports from China, effective 29 March 2025 for a provisional period of four months. On 25 March 2025, HEG was reported to have surged up to 14% to ₹510, while Graphite India jumped 18% to ₹525, as investors assessed potential opportunities from the duty.

Another update cited supply-side developments involving Resonac, described as a key producer of graphite electrodes with annual capacity totalling 210,000 tonnes. It said the shutdown of subsidiaries in China and Malaysia could impact up to one-third of that capacity.

Key figures at a glance

What investors may track next

For HEG, near-term monitoring will likely focus on how quickly MENA orders normalise and whether shipping disruptions persist through key export lanes. Investors may also track updates on the US duty discussions referenced by management and the pace of global EAF adoption that underpins long-term graphite electrode demand. On the corporate side, Gulati’s comment about two listed entities by September 2026 sets a clear timeline for the next structural milestone the market could watch.

Conclusion

HEG said Strait of Hormuz disruption has delayed Middle East orders, but diversified exports and high utilisation helped keep operations steady, while management reiterated FY27 EBITDA guidance of ₹600-650 crore. The company has also outlined a ₹650 crore expansion from 100,000 to 115,000 tonnes, with expected production in January-March 2028. Investors will watch for execution updates on capacity addition and clarity on the expected two-listing timeline by September 2026, alongside developments in global trade routes and tariffs.