homeearnings NewsThis graphite electrode manufacturer expects margin pressure to persist for 2 3 quarters
This graphite electrode manufacturer expects margin pressure to persist for 2-3 quarters
Manish Gulati, Executive Director of HEG said volume growth will be at 75,000 tonne in FY25 and for this year it will be around 70,000 tonne.
Noida-based graphite electrode manufacturer HEG expects margin pressure to continue for at least the next 2-3 quarters. In an interview with CNBC-TV18, Manish Gulati, Executive Director of the company expressed concerns over declining electrode and needle coke prices.
The company's margins for the third quarter of the current financial year (Q3FY24), at 15.6%, were the lowest since March 2021.
“When we talk about margins, we are more worried about the electrode price and the needlecoke price. Both of them have come down and although we always have this lag effect that electrode price fall sooner and the needlecoke consumption prices follow later, the margins are indeed low. And as I have been always saying on your channel it will still be at least two to three quarters more that we will see lower margins or margins under pressure,” he said.
In the third quarter (Q3FY24), the company reported a revenue from operations of ₹562 crore, with an operating profit of ₹88 crore compared to ₹132 crore in Q3FY23. Other income for the quarter was ₹23.22 crore, down from ₹37 crore in Q3FY23.
Gulati previously emphasised the industry's tough outlook for the upcoming quarters, citing subdued pricing trends. He attributed the pricing decline to ongoing geopolitical uncertainties.
He expects the company to end FY24 with volume of around 70,000 tonne. For FY25, volumes could be at 75,000 tonne. “Last financial year, we were running at 75% capacity utilisation. This financial year, the first three quarters, we are at 85%. And next year, we have planned to be 75% of the new capacity of 100,000,” he said adding that the company managed to sell its entire production for FY23-24.
Regarding revenue prospects from Li-Ion cell manufacturing capacity, Gulati mentioned ongoing construction plans with the plant expected to commence operations in mid-2025. Revenue accretion from this plant is anticipated to begin in Q2FY26.
The company, which has a market capitalisation of ₹7,507 crore, has seen its shares gain 67% over the last year.
(Edited by : Shweta Mungre)
First Published: Feb 13, 2024 12:18 PM IST
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