Shares of HEG Ltd fell over 7 percent on August 14 after the graphite electrode maker reported weak Q1 earnings. The company's net profit fell 84.43 percent on-year to Rs 23.04 crore and revenue slipped 15 percent YoY to Rs 571.46 crore in the April-June quarter.
The company's EBITDA margin for the June quarter declined to 6.7 percent from 21 percent during the same quarter last year. Margins were hit by a 37 percent increase in other expenses, which were 26 percent of sales in the June quarter compared to 16 percent in the base quarter.
HEG's gross margin though, saw an expansion of 500 basis points on a sequential basis. Its earnings per share (EPS) slipped to Rs 5.97 in Q1 against Rs 36.05 in the corresponding quarter of the last fiscal. The firm also announced a stock split in the ratio of 1:5.
"Sub-division/ split of each equity share of face value of Rs 10/- each, fully paid-up into 5 equity shares of face value of Rs 2/- each, fully paid-up by alteration of Capital Clause of the Memorandum of Association of the Company, subject to the approval of the members of the Company to be sought through Postal Ballot," HEG Ltd in a regulatory filing.
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This is the first instance of the HEG deciding on a stock split. Earlier, the company carried out a buyback of equity shares in 2019 but has never issued a bonus. The record date for the sub-division/split of existing equity shares will be intimated in due course, HEG said.
HEG manufactures graphite electrodes, which are used as a raw material in steel production via the EAF route, significantly less polluting (three-fourths reduced emission) vs. the more traditional blast furnace or BF route.
At 1:12 pm, HEG shares were trading over 7 percent lower at Rs 2,014.95 on the National Stock Exchange (NSE). In the last one year, the stock has risen 16 percent. In comparison, benchmark Nifty's rose 25 percent during this period.
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