Q4FY24 Concall Highlights
HEG is restructuring itself. It will separate the legacy business from the new age business. The concall is very detailed.
Highlights
Industry Overview:
- Global steel demand expected to rebound with a 1.7% increase in 2024.
- India expected to have an 8% growth in steel demand driven by infrastructure investments.
- Decarbonization process leading to increased demand for electric arc furnaces. German company SMS report
- Positive outlook for the electrode market due to increasing demand for green technologies.
- Ninety million tons of Greenfield capacities are announced. Currently nine million tons are already operational. 30 million tons are coming in next one year.
- Graphite demand (ex China) is currently 500,000 to 550,000 tons It will increase to 700,000 to 750,000 tons by 2030
Graphite Electrode Business:
- HEG has been gaining market share due to high capacity utilization. No req Requirement for inventory write-offs.
- Needle coke prices have been aligned with electrode price drops, minimizing margin impact.
- Optimistic about future demand growth for electrodes due to increasing electric arc furnace capacities globally.
- Volumes have been around 69,200 to 69,500 during the last 3 fiscals.
- The company plans to provide utilization or volume numbers in quarterly presentations.
- Revenue split: Roughly 70-75% from ultra high-power graphite electrodes.
- Margins have reduced due to a reduction in selling price caused by steel production degrowth.
- No existing players have announced capacity . greenfield capacity takes four to five years and brownfield capacity picks two to three years.
RE plus is also into Battery pack manufacturing for battery energy storage and vehicles. This is good for TACC as part of the anode powder will be consumed by the cell supplier.
Disclaimer: Was invested , currently tracking for better price