HEG Ltd., a graphite electrode manufacturing company, has fallen sharply to the extent of 40% on a month to date basis due to some of the factors cited by an expert from the broking industry. In today's trade also the stock has fallen by some odd 7%. The stock of HEG Ltd. was last trading at Rs. 1974.60, down 10% on the BSE.
One prime reason for the sharper than expected fall in HEG Ltd. and its peer Graphite India is due to a drastic fall in the price of steel which has corrected in price by 10-15%. Plus over time, the demand for steel is likely to see a fall globally. Hence, for the graphite electrode supplies, the negotiation for steel makers has been rendered tough.Consequently, the price of graphite electrode has also come down.
The contract rise is seen in case of needle coke which is the main raw material for graphite electrode and has been settled at around USD 800 to more than USD 1000.
Also, there has been a surge in the export of low-quality graphite electrodes from China which is putting pressure on the margin.
Furthermore, Iran sanctions is another reasons as now there has been a stoppage on the exports of graphite electrode to Iran, which otherwise accounted for nearly 8% of its supply, adding pressure on the price in the domestic market which have trended lower by 10-15 %.
The board of directors of HEG at their meet on November 26, 2018 had approved a buyback of 1.36 million shares i.e. 3.41 per cent of the company's equity share capital at a rate of Rs 5,500 per share
Meanwhile, in separate regulatory filing, HEG said that the results of postal ballot for resolution for the approval for buyback of equity shares of the company and approval for investments/loans/ guarantees/securities will be declared on or before 17:00 hours IST on Tuesday, January 29, 2019.