HEG board approve of open offer for buy-back for price limit of Rs 350 per share. The company stated that it will buy-back of up to Rs 67.50 crore. This means the company will stop its buy-back on achieving this goal. The company indicated that it will buy-back a minimum of 3,86,000 equity shares, meanwhile it gave an indicative figure of 1,928,571 equity shares as the maximum buy-back number. The final decision will be taken in due course. The last date of buy-back is March 13, 2012
HEG is engaged in the manufacture of ultra high power (UHP) graphite electrodes. Among its peers it is one of the company with high operating margins. The company's share price has been on a down-trend since January 2010 and after December 15, 2010, its share price has seen some sharp falls. It has also declared dividend in February 2011, but this measure did not affect the falling share price, it kept going southward.
The announcement is either a desperate move on the company's part or an extreme confidence in its business. It will definitely raise its share price or put a brake on further fall. Meanwhile, Manvinder Singh Ajmani, CFO of HEG, in an interview with CNBC-TV18"s stated, “We believe that our stock is undervalued. Presently, it is on the annualised earnings for nine months, for which we announced results."
He also claimed that HEG will witness appropriately 20 per cent growth this year and another 25-30 per cent growth next year.
A clear picture of the future trend will arise after HEG announces the quarterly and annual results, which will come only after March 31, 2011.
HEG is among the leading graphite electrode manufacturers in India. The company is part of the LNJ Bhilwara group. Through its subsidiaries it has presence in hydro-power and sponge iron business also.
The promoters hold a stake of 52.27 per cent, followed by domestic institutional investors who have a claim of 13.88 per cent as per December 2010 quarter. The FIIs with 2.67 per cent in December 2010 quarter seem to never have much confidence in this company in the last one year, as in no quarter did their holdings manage to reach 3 per cent
Graphite electrodes are used mainly in electric arc furnaces (EAF) in steel plants. Therefore, graphite's demand is sensitive not to steel prices but to steel production volumes.