HEG shares surge 12% after strong Q1 results — Key factors aiding the upmove

HEG Ltd. shares gained 12% on Thursday, July 31, after the company reported its first quarter earnings, with margins rising as guided by the management earlier.

Its revenues from operations increased 8% to ₹616.93 crore in the June quarter from ₹571.5 crore in the previous year.

The company's earnings before interest, taxes, depreciation and amortisation (EBTIDA) increased 172% to ₹105 crore from ₹39 crore in the June quarter last year.

HEG's margins are improving directionally, as the company had guided earlier. Its margins expanded to 17.1% from 6.8% in the year-ago period.

Other expenses declined 14% in the first quarter to ₹128.4 crore from ₹148.77 crore in the previous year. These include market-to-market (MTM) on investments, holding in Graftech Ltd, US.

In the first quarter last year, it reported an MTM loss of ₹27.7 crore in comparison to the gain this year.

Excluding the MTM loss, margins are at 17.1% compared to 11.6% last year.

HEG reported a net profit of ₹104.8 crore up 355% from ₹23.04 crore it reported in the year-ago period.

Finance costs declined 3% to ₹8.18 crore from ₹8.47 crore in the previous year. Other income increased 227% to ₹66.9 crore from ₹20.44 crore. Other income too includes MTM gain on investments, holding in Graftech .

HEG announced 15 kt expansion with capital expenditure of ₹650 crore. The existing capacity base is of 100 kt, utilisation was a t85% to 90%. The mode financing will be internal accruals and debt, if required.

HEG shares were trading 11.91% higher at ₹597.9 apiece around 12 pm on Thursday. The stock has gained 17.11% in the past month.