HEG - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.6

📊 Core Financials Breakdown

Profitability

ROE: 3.40% and ROCE: 5.19% — weak return metrics, indicating underutilized capital.

EPS: ₹8.84 — modest earnings base, though a sharp turnaround from a loss of ₹61.7 Cr to a profit of ₹71.8 Cr this quarter signals recovery.

Dividend Yield: 0.35% — minimal, not a key draw for income-focused investors.

Balance Sheet & Leverage

Debt-to-Equity: 0.14 — low leverage, a positive for financial stability.

Book Value: ₹216 — implies a P/B ratio of ~2.4, reasonable given asset-heavy operations.

💰 Valuation Metrics

Metric Value Comment

P/E Ratio 58.7 Significantly above industry average (43.0) — overvalued

PEG Ratio -2.03 Negative PEG suggests unreliable or distorted growth

Intrinsic Value ~₹480–₹500 CMP slightly above fair value zone

Valuation is stretched, especially given weak return metrics and volatile earnings.

⚙️ Business Model & Competitive Edge

Sector: Industrial Materials — graphite electrodes used in electric arc furnaces for steel production.

Strengths

One of India’s largest graphite electrode manufacturers with global exports.

Recent partnerships in graphene innovation and sustainable concrete applications

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FII holding slightly up (+0.11%) — cautious optimism from foreign investors.

Challenges

DII holding slightly down (−0.05%) — muted domestic sentiment.

Received a ₹282 Cr GST show cause notice, which may impact investor confidence

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Operating margins remain thin (TTM OPM ~0.9%)

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, and ROE/ROCE are below peers like Graphite India.

📉 Technicals & Entry Zone

Current Price: ₹519

DMA 50: ₹505 | DMA 200: ₹478 — bullish crossover intact

RSI: 58.5 — neutral zone

MACD: Positive — momentum building

📌 Suggested Entry Zone: ₹480–₹500

A dip near the 200 DMA or intrinsic value would offer a better margin of safety.

🧭 Long-Term Holding Guidance

Hold with caution: If already invested, monitor regulatory developments and margin recovery.

Avoid fresh entry at CMP: Wait for valuation to cool or for earnings to stabilize.

HEG’s future hinges on demand recovery in steel and successful execution of its graphene initiatives. You can explore HEG’s full financials and peer comparison or review its quarterly performance and analyst sentiment for deeper insights. Let me know if you'd like a comparison with Graphite India or De Nora.

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stockanalysis.com

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www.valueresearchonline.com

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