HEG Stuns with 355% Profit Surge in Q1 2026, Marking a Strong Comeback

HEG Ltd, one of India’s leading graphite electrode manufacturers, has surprised the markets with an exceptional turnaround in its Q1 2026 performance. The company, which had posted a loss in the previous quarter, reported a staggering 355% year-on-year (YoY) jump in net profit, reaching ₹105 crore for the quarter ended June 2025.

This impressive growth is a clear indication that HEG has managed to regain its operational efficiency and is well-positioned for a stronger 2026. The sharp rise in earnings, coupled with significant improvement in EBITDA and sales, has caught the attention of both investors and analysts, prompting renewed interest in the stock.

A Sharp Recovery from the Red

The company’s Q4 2025 numbers were deeply concerning, with a net loss of ₹73.7 crore. However, in just one quarter, HEG not only reversed the losses but posted its highest quarterly profit in recent times. The EPS (earnings per share) saw a similar turnaround, surging from ₹-3.82 in March 2025 to ₹5.43 in June 2025 — a growth of 356% YoY compared to ₹1.19 in Q1 2025.

This drastic improvement is not just a statistical recovery but reflects structural changes in the company’s strategy, operations, and possibly cost management.

Sales Performance Shows Steady Growth

Sales for the quarter rose 8% YoY to ₹617 crore, up from ₹571 crore in Q1 2025 and ₹542 crore in Q4 2025. While this may appear moderate compared to the massive growth in profit, it’s crucial to note that the graphite electrode industry remains volatile and is largely influenced by global steel demand and raw material prices.

The consistent growth in sales shows HEG’s resilience in sustaining its revenue streams despite headwinds. It also reflects better capacity utilization and a more favorable product mix.

EBITDA Growth Indicates Operational Strength

Perhaps the most telling indicator of HEG’s turnaround is the 172% jump in EBITDA. From a negative ₹66 crore in Q4 2025, the company has bounced back with ₹105 crore in operating earnings in Q1 2026. Compared to ₹38.7 crore in Q1 2025, this growth shows a return to core operational strength.

The improvement in EBITDA margin reflects better pricing, cost control, and efficient production strategies. This is especially important in an industry where margin volatility can derail even the strongest balance sheets.

Valuation: A High PE but Room for Optimism

HEG’s current Price-to-Earnings (PE) ratio stands at 57.8, which is on the higher side compared to its historical average. This valuation could raise concerns for value investors. However, given the drastic improvement in profitability and the likelihood of further earnings stability, the premium may be justified.

What investors will look for next is sustainability. If HEG can repeat or improve upon these Q1 numbers, it might pave the way for further re-rating of the stock.

Market Cap and Stock Outlook

At a current share price of ₹589 and a market capitalization of ₹11,365 crore, HEG sits in the mid-cap segment. Its stock has remained under pressure over the past year, weighed down by weak earnings and volatile industry conditions. However, the recent performance could mark the beginning of a re-rating cycle.

The stock’s resilience, despite global economic uncertainty, may attract institutional interest. The numbers indicate not just a blip but a possible trend reversal that could play out over the rest of 2026.

Sectoral Headwinds and HEG’s Advantage

The graphite electrode industry has been under stress due to rising input costs, uneven steel demand globally, and trade restrictions. However, HEG appears to have taken strategic steps to weather these challenges. Cost rationalization, better procurement of raw materials, and diversified exports may have played a role in achieving the current results.

Furthermore, HEG benefits from a strong presence in the export market, which helps hedge against domestic demand fluctuations. As global infrastructure and manufacturing activities begin to stabilize, demand for steel — and thus electrodes — is expected to pick up, which could benefit HEG in the coming quarters.

Investor Sentiment and What to Watch

After such a remarkable Q1 performance, investor expectations from HEG will be high. The upcoming quarters will need to demonstrate consistency in earnings, operational efficiency, and market growth.

Here are a few key points investors should monitor:

• Sustainability of EBITDA margins

• Input cost pressures, especially needle coke prices

• Export performance and international demand trends

• Capex or expansion plans, if any

• Management commentary in the next earnings call

Conclusion: HEG’s Comeback Is No Fluke

The numbers from Q1 2026 mark more than just a quarterly recovery — they signify the resilience and turnaround capability of HEG Ltd. From a net loss to a triple-digit profit, the transformation is both dramatic and strategically significant.

If this momentum continues, HEG could re-emerge as a strong performer in the mid-cap manufacturing space. With improving fundamentals, increased investor interest, and favorable global cues, the company is positioning itself for a solid run in 2026 and beyond.

For now, all eyes will be on how HEG navigates the next two quarters. But one thing is clear — this is not the same company it was a year ago.

FAQs

Q1: What caused the sharp rise in HEG’s Q1 2026 net profit?
HEG reported a 355% YoY increase in net profit due to improved EBITDA, cost optimization, and better sales performance. The company reversed a previous quarter’s loss, indicating operational recovery.

Q2: How much did HEG’s sales grow in Q1 2026?
Sales rose 8% YoY to ₹617 crore, reflecting stable demand and better utilization of production capacity.

Q3: Is the high PE ratio a concern for investors?
At 57.8, HEG’s PE ratio is high, but may be justified if the earnings growth sustains. Investors will watch the next few quarters closely.

Q4: What are the major risks for HEG going forward?
The company faces risks such as raw material price volatility, global steel demand fluctuations, and foreign exchange impacts on exports.

Q5: Why is EBITDA growth significant in this case?
EBITDA jumped 172% YoY, from a loss in the previous quarter to ₹105 crore. This shows a strong turnaround in core operations and improved cost control.

About TOD News Desk: TOD News Desk is a team of dedicated digital journalists who specialize in breaking down complex news across business, tech, and markets into simple, insightful stories. Our mission is to help readers stay ahead with timely, accurate, and helpful updates that matter.

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