HEG Advanced Materials Ltd Q3 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
N/A
Order
N/A
Capex
Yes
1 of 3 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- HEG expects volume growth of about 10-12% by fiscal year-end 2024 compared to the previous year (Page 7).
- Electric Arc Furnace (EAF) steel is expected to grow at a CAGR of 3-3.5% over the next decade, driving substantial increase in electrode demand (Page 5 and 8).
- Announced global new Greenfield EAF capacities exceeding 90 million tons, with 9-10 million tons already operational, 30 million tons expected by 2025, and the rest post-2025 (Page 4 and 11).
- Graphite electrode demand projected to increase by 150,000 to 200,000 tons by 2029-30 from current ~500,000 to 600,000 tons ex-China (Page 5).
- HEG’s expanded capacity to 100,000 tons is operational, targeting to leverage economies of scale and market growth (Page 5).
- New graphite anode facility for EV sector aims for commercial production in second half 2025, enhancing future revenue streams (Page 15).
See what HEG Advanced Materials Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
- The transcript does not mention any current or planned fundraising through debt or equity.
- The company is long-term debt free as of 31st December 2023.
- It has a strong treasury size of nearly Rs. 950 crores as of 31st December 2023.
- There is no indication or discussion about raising funds via new debt or equity in the near future.
- Investments mentioned, such as the ₹2,000 crore investment in the graphite anode business, appear to be internally financed or not linked to new fundraising at this stage.
See what HEG Advanced Materials Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- HEG is investing around ₹2,000 crores in a new graphite anode powder plant, targeting an output-to-investment ratio of about 1:1 to 1:1.3.
- The graphite anode facility construction has started on already acquired land, expected to be completed by mid-2025 with commercial production beginning around March-April 2025.
- HEG is expanding its existing graphite electrode capacity from 80,000 tons to 100,000 tons, with the expanded capacity now operational.
- The new anode plant aims to cater to the growing EV sector demand.
- The selection of Madhya Pradesh for the anode facility benefits from government subsidies, including power cost reductions.
- HEG plans to collaborate with solar and wind power producers to source dedicated green electricity for the new facility, aiming to reduce weighted average power cost to around ₹5 per unit.
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