homeearnings NewsHEG’s Manish Gulati optimistic about volume recovery in FY24, expects improvement by year end
HEG’s Manish Gulati optimistic about volume recovery in FY24, expects improvement by year-end
Comparing the third quarter (Q3) to the fourth quarter (Q4), HEG observed a decline of 3 percent in prices. Additionally, they expect further softening by 7-10 percent in the first quarter (Q1). The declining prices have implications for the company's margin, which could come under pressure.
HEG, one of India's leading graphite electrode manufacturers, reported a weak set of fourth quarter earnings. Margin has been the lowest since 2021, capacity expansion plans for the company have also been delayed further. While Q4 performance experienced some headwinds, Manish Gulati expressed optimism regarding volume recovery in the upcoming fiscal year.
During Q4, HEG reported a capacity utilisation rate exceeding 75 percent. Speaking to CNBC-TV18, Manish Gulati, Executive Director of the company said, “For Q4, it was in in excess of 75 percent capacity utilisation and the pricing was a little bit down, let us say about 3 percent so that is what probably we are noticing in our results. If we take the full year of 22-23, we were at 75 percent capacity utilisation.”
However Gulati expressed optimism regarding volume recovery in the upcoming fiscal year. “About the volumes, which we expect in 23-24 I am hoping that these difficulties will get over towards the end of the year. And we are talking about, let us say a 70 percent capacity utilisation, or let us say between 65 to 70 capacity utilisation.”
HEG foresees a volume growth rate of 10 percent over the previous year.
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Comparing the third quarter (Q3) to the fourth quarter (Q4), HEG observed a decline of 3 percent in prices. Additionally, they expect further softening by 7-10 percent in the first quarter (Q1). The declining prices have implications for the company's margin, which could come under pressure.
Gulati added, “Due to the slowdown in demand, you will see these margins even go down further. The prices are softening while our costs are there. We are we are getting a little bit of respite in needle coke prices, but margins will be in pressure throughout this year, at least up to the third quarter is now clearly visible.”
The drop in electrode prices is much more than the drop in needle coke price which is putting pressure on the margins this year.
Needle coke is a crucial raw material used in the production of graphite electrodes. The decline in its prices might provide some relief in terms of production costs.
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First Published: May 23, 2023 11:48 AM IST
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