HEG Limited Q1 FY27 Earnings Conference Call Transcript Summary

Call Date: July 24, 2026

Financial Performance Highlights

Standalone Performance (Q1 FY27 vs Q1 FY26):

  • Revenue from operations: INR681 crores (up 11% from INR613 crores)
  • Total income: INR731 crores (up 11% from INR660 crores)
  • EBITDA: INR211 crores (up 38% from INR154 crores)
  • EBITDA margin: 29% (vs 23% in Q1 FY26)
  • Profit after tax: INR110 crores (up 53% from INR72 crores)

Consolidated Performance (Q1 FY27 vs Q1 FY26):

  • Revenue from operations: INR681 crores (up 11%)
  • Total income: INR724 crores (up 8% from INR673 crores)
  • EBITDA: INR194 crores (up 17% from INR166 crores)
  • EBITDA margin: 27% (vs 25%)
  • Profit after tax: INR122 crores (up 23% from INR100 crores)

Sequential Performance (Q1 FY27 vs Q4 FY26):

  • Standalone revenue increased by 13% over previous quarter
  • Standalone EBITDA improved from loss of INR126 crores to positive INR211 crores
  • Standalone PAT improved from loss of INR163 crores to profit of INR110 crores
  • Consolidated EBITDA improved from loss of INR108 crores to INR194 crores
  • Consolidated PAT improved from loss of INR119 crores to profit of INR122 crores

Operational Metrics

  • Capacity utilization: Over 90% during the quarter
  • Plant capacity: 100,000 tons per annum (world's largest single location plant)
  • Expansion plans: Capacity increasing to 115,000 tons, expected commissioning by early 2028
  • Export percentage: 70-75% of total sales

Balance Sheet Position

  • Debt-free company with no long-term loan borrowings
  • Treasury position: Approximately INR858 crores as of June 30, 2026
  • Strong liquidity position providing financial flexibility

Business Environment Context

Global Steel Industry Overview:

  • Global steel production declined 0.7% YoY to 931 million tons in H1 2026
  • Steel production outside China expanded 2.1% YoY to 431 million tons
  • Chinese steel exports: 55 million tons in H1 2026 (5.6% decline from 2025 peak)
  • Indian crude steel output: Increased 7.1% YoY to 87 million tons in H1 2026
  • US steel production: Grew 6.3% YoY to 43 million tons
  • Germany output: Rose nearly 9% to 18.6 million tons
  • Vietnam output: Surged 27% YoY to over 15 million tons

Challenges Mentioned:

  • Middle East conflict impacting energy prices globally
  • Increased shipping costs and transit times
  • Rising raw material costs (needle coke and other inputs)
  • Trade policy changes and geopolitical tensions creating uncertainty

Long-term Industry Trends:

  • Decarbonization policies accelerating shift to electric arc furnaces
  • OECD steel outlook: 71 million tons of new EAF capacity planned globally through 2028
  • EU's carbon border adjustment mechanism (CBAM) supporting EAF transition

Price Increase Announcements

  • Competitors have announced price increases of $600-$1,200 per ton depending on size and quality
  • One competitor announced specific increase of $930 per ton
  • Price hikes expected to flow through from October 2026 onward
  • Needle coke prices have increased by approximately $200-$300 per ton
  • Overall cost of production expected to increase by 10-15%

Demerger Update (HEG Advanced Materials)

  • Composite scheme of arrangement progressing well
  • NCLT has reserved its order
  • Company awaiting pronouncement of order
  • Investor call planned to explain HEG Advanced Materials business once order is received
  • Time line and record date to be provided shortly

Greentech Business (TACC Limited) Update

Anode Project:

  • Capacity: 20,000 tons
  • Project cost: INR2,200 crores
  • Spending: 40% already spent, 90% to be spent by FY27, balance 10% in Q1 FY28
  • Commercial production: Expected Q1 FY28
  • Capacity utilization: 40-50% in first year, ramping up thereafter
  • Contract status: 70% of capacity to be contracted within 1-1.5 months with Tier 1 players
  • Revenue projection: INR600-700 crores in first year, INR1,200+ crores in year 2, INR1,500-1,600 crores in year 3
  • EBITDA margin target: 35%
  • Additional expansion: Potential 10,000 tons expansion at capex of INR800 crores by 2029

Bhilwara Energy:

  • Capacity: 300 MW hydro plants (debt-free)
  • Free cash flow: INR320-350 crores per year
  • New projects: 75 MW hydro project (30% work completed, expected 2030 commissioning), 300 MW solar project (expected in 18 months)
  • Additional EBITDA: INR200 crores from new projects
  • Tariff assumption: Weighted average INR5.5+ per unit
  • Overall Greentech EBITDA target: 4-digit (INR1,000+ crores) by 2030

Regional Market Exposure

  • Middle East exposure: Approximately 20% of sales
  • US exposure: Less than 10% of sales
  • US regulatory actions: CVD preliminary results expected July 2026, dumping final results expected September 2026
  • Company confident in diverting volumes to other markets if needed

Other Income Details

  • Other income: INR43 crores in Q1 FY27
  • Components: INR7-8 crores interest income, balance from fair valuation gain on investments

Management Guidance

  • Capacity utilization: Expected to maintain 90-95% levels
  • Margin maintenance: Target to maintain current margin levels (28-29%)
  • Price increases: Following competitor announcements, implementation from October 2026
  • Volume flexibility: Capable of absorbing market disruptions through geographic diversification

Participants in Conference Call

Management Team:

  • Ravi Jhunjhunwala (Chairman, Managing Director and CEO)
  • Riju Jhunjhunwala (Vice Chairman)
  • Manish Gulati (Executive Director)
  • Om Prakash Ajmera (Group CFO)
  • Ravi Tripathi (CFO, HEG Limited)
  • Puneet Anand (Group Chief Strategy Officer)
  • Ankur Khaitan (MD and CEO, TACC Limited)
  • Neha Rajvanshi (CFO, HEG Advanced Materials)
  • Salil Bawa (Group Head, Investor Relations)

Moderator: Rajesh Majumdar (360 ONE Capital)

Analysts Participating: Representatives from Aditya Birla, Unifi Capital, Emkay Global, Arihant Capital, SKP Securities, Sapphire Capital, Baroda BNP, iThought PMS, and Equinox Capital.