HEG announces share repurchase and expansion plans

HEG announced its decision to repurchase shares and expand its graphite electrode production capacity.

HEG declared a buyback of 13,63,636 equity shares constituting 3.41 per cent of the total paid up equity share capital of the company, for an amount not surpassing Rs. 750 crore. The company proposes to buy these at a price of Rs. 5,500 per share from the existing shareholders of the company on a proportionate basis via the tender offer route.

In addition to this, HEG also stated its expansion plans for enhancing the production capacity for graphite electrode from the current 80,000 TPA to 100,000 TPA. The incorporation of an additional 20,000 TPA will require a capital outlay of Rs. 1,200 crore and will most probably be financed by means of internal accrual and debt, if necessary. The new capacity is expected to come on stream within 30-36 months. Presently, the company is operating at a capacity of 85-90 per cent.

Worldwide demand for graphite electrodes is healthy owing to the developments taking place in the steel industry such as the shift towards the more resourceful Electric Arc Furnace (EAF) route. On the domestic front, the steel industry is consolidating and developing newer capacities opting for the EAF route. This is likely to boost domestic demand for HEG’s products.

HEG houses India’s largest single-site manufacturing facility of Graphite electrodes. The company exports over 70 per cent of its production to more than 30 countries across the world.

On Tuesday, the shares of HEG opened at Rs. 4,374.00 per share and hit a high and low of Rs. 4,403.00 per share and Rs. 4,337.50 per share, respectively. At 11:45 am, the stock was trading at Rs. 4,386.00 per share, up 0.50 per cent.