HEG Share Price Surges 6% to 52-Week High Amid ₹172 Crore Block Deal

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The HEG share price rose by over 6% during Thursday’s trading session, touching a 52-week high of ₹619.25, driven by news of a ₹172 crore block deal. The stock opened at ₹589.90 on the BSE and fluctuated between an intraday high of ₹619.25 and a low of ₹573.80.

Key Highlights

1. Block Deal Sparks Rally

The surge in HEG’s share price to a 52-week high of ₹619.25 was primarily driven by a significant block deal worth ₹172 crore. This deal underscores strong investor confidence in the company’s prospects.

Key Details of the Block Deal

  • Shares Traded:
    • Approximately 2.88 million shares, equivalent to 6% of the company’s total equity, were exchanged.
  • Average Price:
    • The shares were traded at an average price of ₹600 per share, representing a 3% premium over Wednesday’s closing price.

Market Impact

  • The block deal created positive sentiment, leading to increased trading activity and a 6% intraday gain in HEG’s stock price.
  • The premium pricing further boosted market confidence, reinforcing the stock’s potential for future gains.

Investor Insights

  • Rajesh Bhosale, Angel One:
    • The deal, combined with HEG’s recent strong momentum, has positioned the stock for an extended up move toward ₹640.
    • Advice:
      • Existing investors are encouraged to hold.
      • New investors should wait for a price correction near ₹570 before making an entry.

2. Analyst Insights

HEG’s remarkable surge, driven by the ₹172 crore block deal and favorable market conditions, has prompted varied perspectives from analysts. Here are key takeaways:

. Strong Recent Performance

  • Rajesh Bhosale, Angel One:
    • HEG’s stock has experienced a 36% gain in just three sessions, signaling robust upward momentum.
    • Despite the rally, technical indicators suggest the stock is now in the overbought zone, indicating a possible pause or correction.

. Recommendations

  • Existing Investors:
    • Hold current positions with an extended price target of ₹640, as the upward momentum remains intact.
  • New Investors:
    • Avoid fresh positions at the current price.
    • Analysts recommend waiting for a dip near ₹570, which serves as a key support level, before entering.

. Caution on Overbought Signals

  • While the stock’s fundamentals remain strong, its recent vertical run may invite short-term profit booking.
  • Investors should monitor market dynamics and trade volumes for further cues.

. Favorable Long-Term Outlook

  • The block deal and shifting global dynamics in the graphite market are seen as positive growth drivers for HEG, making it a stock to watch for sustained gains.

3. Boost from China’s Trade Ban

HEG’s share price rally has been further fueled by China’s trade restrictions, which have reshaped the global graphite market dynamics. The decision by China’s Ministry of Commerce to ban exports of certain materials critical to chip-making has created new opportunities for Indian companies like HEG.

. Details of the Trade Banheg

  • Restricted Exports:
    • China, the largest exporter of graphite and other critical chip-making materials, has imposed an outright ban on these exports to the United States.
  • Reason for the Ban:
    • The move was prompted by concerns over potential military applications of these materials, adding a geopolitical dimension to the trade restrictions.

. Impact on HEG

  • Increased Demand:
    • With China restricting its exports, global demand for graphite and related products is expected to shift toward Indian manufacturers, benefitting HEG significantly.
  • Strategic Advantage:
    • HEG, as a leading graphite producer, is well-positioned to capture this market gap, especially with its strong operational and financial fundamentals.

. Analyst Commentary

  • Market experts view the trade ban as a game-changer for HEG and other Indian players in the graphite sector.
  • The restrictions are expected to drive long-term growth opportunities by increasing global reliance on Indian suppliers.

. Industry Implications

  • The shift in trade dynamics highlights India’s potential to strengthen its position in the global graphite market.
  • HEG’s ability to scale production and meet growing international demand will likely play a pivotal role in sustaining its recent momentum.

4. HEG’s Financial Performance

  • Q2 FY25 Results:
    • Revenue: ₹568 crore (vs. ₹614 crore in Q2 FY24).
    • EBITDA: ₹140 crore (vs. ₹130 crore in Q2 FY24).
    • Net Profit (Consolidated): ₹82 crore (vs. ₹96 crore in Q2 FY24).
  • Financial Strength:
    • The company is free of long-term debt and holds a treasury size of ₹923 crore as of September 30, 2024.

5. Market Sentiment

  • The rally reflects investor optimism about HEG’s strong fundamentals and favorable market conditions.
  • Analysts believe that the block deal, coupled with geopolitical shifts, positions HEG for sustained growth in the near term.

Conclusion

HEG’s share price surge to a 52-week high is backed by strong market momentum, a significant block deal, and favorable global trade dynamics. While existing investors are advised to hold, new investors should wait for a dip before entering.

By Shehnaz Shaikh
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