HEG Ltd FY2007 PAT up by 90%, Q4FY2007 PAT higher 138% to Rs. 30 cr

HEG Limited, one of Asia's leading graphite electrodes manufacturers, today announced its financial results for the quarter and year ended 31 March 2007.

FY2007 review (all comparisons with FY2006)
Net revenues for the year improved by 55.7% Rs. 817.9 crore as compared to Rs. 525.3 crore in the previous year. Better realizations and higher volumes from expanded capacities in the graphite electrode business, combined with increased value added sales from the steel billets plant led to a strong revenue growth performance for FY2007. During the year, graphite revenues grew by 54.1% to Rs. 630.1 crore from Rs. 408.9 crore in FY2006. Revenues from the graphite electrode business could have been stronger if it were not for the rectiformer breakdown in Q2FY2007. HEG also continues to further consolidate its export revenues, which were higher by 69.3% at Rs. 491.9 crore.

The Company’s power business that includes three power plants continues to enjoy good growth as revenues from this segment improved by 36.8% to Rs. 122.9 crore from Rs. 89.8 crore from the previous year. In FY2007 revenues from the steel segment were better by 63.6% to Rs. 174.0 crore because of valued added sales from the forward integration of the steel business.

PBIDT in FY2007 grew by 60.3% to Rs. 194.8 crore from Rs. 121.5 crore and PBIDT margins for the year were better at 23.8%. During the year PBIT from the graphite business improved by 67.8% to Rs.89.2 crore as compared to Rs. 53.1 crore in FY2006. Earnings in the power segment were higher by 75.9% to Rs. 46.4 crore from Rs. 26.4 crore. PBIT in the steel segment was subdued as a result of significantly higher iron ore prices experienced during the year. Due to expanded capacities going on stream, interest and depreciation costs increased to Rs. 46.1 crore and Rs. 47.6 crore respectively. PBT for FY2007 was higher by 88.8% at Rs. 100.1 crore from Rs. 53.0 crore in the previous year. The Company reported strong growth in PAT which improved by 89.7% to Rs. 73.8 crore as compared to Rs.38.9 crore. Basic EPS nearly doubled to Rs 18.3 from Rs. 9.7 in FY2006.

Q4 FY2007 review (all comparisons with Q4 FY2006)
During Q4FY2007 net revenues were higher by 26.1% at Rs. 244.4 crore from Rs. 193.8 crore in the corresponding quarter last year. Graphite segment revenues improved to Rs. 194.1 crore an increase of 41.9% over Rs. 136.8 crore in Q4FY2006. HEG experienced strong growth in the graphite electrode business because of higher volumes and improved realizations. Revenues from the steel business were stable at Rs. 49.9 crore. HEG’s power business continued to show positive growth as revenues increased by 15.7% to Rs. 32.5 crore as compared to Rs. 28.1 crore.

For the quarter PBIDT was higher by 70.2% at Rs. 66.9 crore from Rs. 39.3 crore in Q4FY2007 and margins improved to 27.4%. PBIT in the graphite business were better by 41.3% at Rs. 27.3 crore from Rs. 19.3 crore in the previous corresponding quarter. The Company’s steel business also turned around its earnings performance on the back of improved realizations in the steel segment. PBIT from the steel segment increased to Rs. 1.1 crore from Rs. (-) 1.1 crore in Q4FY2006. The power business PBIT was higher by 75.9% at Rs. 13.7 crore as compared to Rs. 7.8 crore in the corresponding quarter last year.

Interest and depreciation charges were higher at Rs. 12.1 crore and Rs. 12.7 crore respectively as a result of expanded capacities being commissioned. PBT increased substantially by 143.4% to Rs. 41.9 crore from Rs. 17.2 crore in Q4FY2006. Net profit showed strong growth as it improved by 137.8% to Rs. 29.9 crore translating in a basic EPS of Rs. 7.4 as compared to basic EPS of Rs. 3.1 in the previous corresponding quarter.

Dividend
The Board has recommended a dividend of 50% (Rs. 5 per share) for the year, subject to shareholder approval. This will amount to a total payout of Rs 23.6 crore (including dividend tax), and represents a 32% dividend payout ratio.

Commenting on the results, Mr. Ravi Jhunjhunwala, Chairman and Managing Director, HEG Limited, said: "I am delighted to closed FY2007 on the back of a strong operating quarter, which was driven by better volumes and higher realizations in the graphite electrode segment. With our expanded capacities now stabilized and the positive demand scenario expected to continue in the graphite electrode business, outlook for FY2008 remains strong."

Commenting on the results, Mr. R.C. Surana, Executive Director and CEO, HEG Limited, said: "I am happy to report an improved operating performance in all our business segments. During the year we faced a few challenges in stabilizing our expanded capacities, which took longer than expected. But now we have stabilized our capacities and are in a strong position accelerate our growth profile. We have booked almost 90% of our capacities for FY2008 at higher prices and along with improved efficiencies, I expect HEG to deliver a robust financial performance going forward."

Source : Equity Bulls

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