HEG Q1 FY27 Results (NSE: HEG)
Signal: Margins at cyclical peak
The read
Q1FY27 marks a sharp V-shaped recovery from Q4FY26's standalone loss (driven by a fair value loss on GrafTech investment). Standalone EBITDA margin expanded 600bps YoY to 29% on higher revenue and cost control. Consolidated PAT grew 22.5% YoY, aided by a 86% surge in associate profit. Growth trajectory is positive but the company faces elevated input costs and relies on measured pricing actions. The long-term thesis hinges on Anode/BESS expansion and EAF steel adoption.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹680.79 Cr | 11.1% | 12.9% |
| EBIT | ₹0 Cr | ||
| Net profit | ₹122.22 Cr | 22.5% | |
| EPS | ₹6.33 | 16.6% |
P&L walk
Consolidated revenue ₹680.79 Cr (+11.1% YoY) grew on higher sales volumes; standalone EBITDA surged to ₹211 Cr (margin 29% vs 23% YoY) driven by revenue growth and lower employee, power & fuel costs as % of sales. Share of associate profit rose to ₹30.38 Cr (+85.9% YoY), boosting consolidated PAT to ₹122.22 Cr (+22.5% YoY). Cost of materials consumed as % of revenue was nearly flat (38.9% vs 38.7% YoY). Depreciation declined to ₹49.59 Cr (-6.5% YoY). Total expenses grew slower than revenue (+3.8% vs +11.1% YoY), indicating operating leverage.
Key positives
- Consolidated revenue ₹680.79 Cr (+11.1% YoY), driven by volume recovery.
- Standalone EBITDA margin expanded 600bps YoY to 29% — highest in six quarters, reflecting operating leverage.
- Standalone PAT ₹109.5 Cr (+52.5% YoY) — robust recovery from Q4FY26 loss of ₹163 Cr.
- Share of associate profit rose to ₹30.38 Cr (+85.9% YoY), contributing meaningfully to consolidated PAT.
- Employee and power & fuel costs as % of revenue declined YoY, aiding margin expansion.
- Global EAF steel production ex-China continues to grow (+2.1% YoY in H1 2026), supporting long-term electrode demand.
Key concerns
- Short-term borrowings remain elevated at ₹783 Cr (+33.6% YoY), indicating ongoing working capital needs.
- Cost of materials consumed as % of revenue was flat YoY (38.9% vs 38.7%) — input cost pressures are not abating, requiring disciplined pricing.
- Power & fuel cost absolute value rose 2.7% YoY despite margin improvement, showing variable cost sensitivity.
- Depreciation declined slightly YoY — may signal slower capex deployment in core electrode business.
- P/E of 35x is elevated relative to near-term earnings; markets pricing in the Greentech expansion thesis.
Research and educational content only. Not investment advice.