Comments
Target: ₹2,462
CMP:₹1830.05
HEG has a significant exposure to US steel mills, as 25-30 per cent of its topline comes from the same. Now US steel mills are witnessing a very strong order book, with their total new orders standing at ₹ 1,479 crore, which, for context purpose, is even higher than the peak level of the 2008 Global Financial Crisis (₹1,460.5 crore).
HEG will set up a 20,000-tonne graphite anode manufacturing capacity, which is likely to be operational by FY26. Power remains the key input cost for manufacturing graphite anode, as it accounts for 50-60 per cent of the cost. Moreover, the PLI from the Centre for battery storage mandates battery manufacturers to do 60 per cent of their value addition in India. With global players wanting to de-risk the supply chain away from China, it also presents an export opportunity for HEG.
- Also read: Broker’s Call: Federal Bank (BUY)
We believe electric arc furnace or EAF route is the way to go forward in steel manufacturing. Graphite electrode manufacturing is a high entry-barrier business, with only five players globally with the technological know-how. As no player has announced capacity expansion in this space, coupled with the new EAF capacity coming up in Europe and the US, and the EU’s ETS scheme to be launched in the US, we believe EAF-based steel will increase its market share in the coming years.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.