HEG Limited, one of India’s leading graphite electrode manufacturers, saw its share price surge by 9% on Wednesday, reaching ₹2,517 on the BSE during intraday trade. The significant rise in HEG’s stock came after the company announced October 18, 2024, as the record date for a highly anticipated 10:2 stock split.
Recent performance of HEG shares
The past two trading days have been particularly lucrative for investors in HEG, with the stock rallying by 12%. Over the past two weeks, the company’s shares have skyrocketed by 26%. Earlier this year, on May 22, HEG’s stock hit a 52-week high of ₹2,744.60, and in 2018, it reached an all-time high of ₹4,950.
Details of the stock split
On September 23, 2024, the board of HEG approved the subdivision of its equity shares. This will split one existing equity share, with a face value of ₹10 each, into five equity shares with a face value of ₹2 each. The purpose behind this move is to increase the liquidity of HEG’s shares and make them more accessible to retail investors. By lowering the price per share, the stock becomes more affordable, encouraging greater participation from individual investors who are looking to invest in stocks at a more affordable price point.
Record date and its significance
HEG has fixed Friday, October 18, 2024, as the record date for determining shareholder eligibility for the stock split. This date is crucial for investors as only shareholders who own HEG shares on this date will benefit from the subdivision. For those looking to invest in stocks, this stock split offers an enticing opportunity to participate in the company’s growth while holding a larger number of shares at a reduced price.
HEG’s position in the graphite industry
HEG is not only a dominant player in India but also a significant exporter, with 65%–70% of its production shipped to global markets. With a production capacity of 100,000 tonnes at its facility in Madhya Pradesh, HEG is well-positioned to capitalise on the increasing demand for graphite electrodes, which are essential for producing steel in Electric Arc Furnaces (EAFs). As the world shifts towards carbon-neutral steel production, EAFs are expected to dominate the market, leading to a rise in the demand for graphite electrodes.
Future growth opportunities for HEG
With global efforts towards sustainable practices, the proportion of crude steel produced via the EAF route (excluding China) has grown from 44% in 2015 to nearly 50% in 2022. Analysts expect this number to reach 60% by 2030 and 80% by 2050. This anticipated growth represents a substantial opportunity for HEG, as demand for graphite electrodes is set to rise significantly. For those seeking to invest in stocks, HEG’s potential for growth within the green steel sector makes it an attractive investment opportunity.
Expansion plans and investment in the Li-On battery market
In addition to its strong position in the graphite electrode market, HEG is also exploring opportunities in the electric mobility and stationary application spaces. With domestic demand for Li-On batteries expected to rise to 150-160 GWh by 2030, there will be a need for around 1.5 lakh tonnes of graphite anode. HEG plans to capitalise on this growth by establishing a 20,000-tonne graphite anode production facility with a projected capex of ₹1,800 crore. The company aims to complete this venture by FY27E, offering further value for investors looking to invest in stocks in the growing battery component market.
Wrapping up
HEG’s decision to implement a 10:2 stock split reflects its efforts to enhance the stock’s liquidity and make it more appealing to retail investors. With its dominant position in the graphite electrode market and expansion into the Li-On battery space, HEG offers solid growth prospects for investors looking to invest in stocks with long-term potential. The company’s upcoming ventures, combined with favourable market trends, position HEG as an attractive option for those aiming to benefit from future industry developments.
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