Rs 42.50/Share Dividend: Mid-Cap Stock Sets Record Date For 425% Dividend Payout

During Friday's closing session, HEG LTD, a mid-size capital goods company, had a market cap of Rs 6,511.06 Cr. The company is the top producer of graphite electrodes in India. The company has declared a final dividend of 425% for FY23 and for the purpose of the same record date has been finalized.

HEG Dividend

"The Board of Directors have recommended a Final Dividend on Equity Shares at the rate of Rs. 42.50/- per Equity Share of the face value of Rs. 10 /- each, for the financial year 2022-23 subject to the approval of the Shareholders at the ensuing Annual General Meeting (AGM) of the Company. The dividend will be paid/ dispatched within 30 days from the date of the Ammal General Meeting," said HEG in a stock exchange filing.

While announcing the record date for the purpose of above-said dividend, HEG informed stock exchanges on Friday that "Pursuant to Regulation 42 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the Register of Members and Share Transfer Books of the Company will remain closed from Friday, 25th August, 2023 to Thursday, 31st August, 2023 (both days inclusive) for the purpose of Annual General Meeting and for payment of final dividend for financial year 2022-23, if declared at the AGM. Accordingly, the date for the purpose of determining entitlement of the members of the Company to receive Dividend is Thursday, 24th August, 2023."

HEG Financials

The company reported a net income of Rs 648.23 Cr in Q4FY23 down by 6.12% YoY from Rs 690.46 Cr reported in Q4FY22. During the quarter ended March 31, 2023 its net profit stood at Rs 99.72 Cr down by 22.86% YoY from Rs 129.27 Cr reported in the same quarter of FY22. Its quarterly EPS stood at Rs 25.84 in Q4FY23 as compared to Rs 33.49 in Q4FY22.

In the year ended FY2023, its net income was Rs 2576.38 Cr, up by 12.94% YoY from Rs 2281.16 Cr in the year ended FY2022. HEG said its net profit was Rs 532.36 Cr in 12MFY23 up by 23.50% YoY from Rs 431.05 Cr in 12MFY22. The company's annual EPS reached Rs 137.93 in FY23 compared to Rs 111.68 in FY22.

HEG is yet to declare its Q1FY24 results. "We wish to inform you that a meeting of the Board of Directors of the Company is scheduled to be held on Friday, the 11th August, 2023, to inter-alia consider, approve and take on record the Un-audited Financial Results (Standalone & Consolidated) of the Company for the quarter ended the 30th June, 2023," said HEG in a stock exchange filing.

HEG Share Price

On Friday, the shares of HEG closed on the BSE at Rs 1687 apiece up by 0.65% from the previous close of Rs 1676.15. The stock made a 52-week-high of Rs 1,747.00 on (20/06/2023) and a 52-week-low of Rs 919.00 on (31/03/2023).
During Q1FY24, the company reported promoter shareholding of 55.77%, FIIs stake of 6.73%, DIIs stake of 7.42% and public stake of 30.07%.

HEG Share Price Target

Deven Mehata, Equity Research Analyst - Choice Broking, said "The stock's current trading near 1686 levels suggests a breakout of a flag pattern on the daily chart. The breakout from the flag pattern implies that HEG's stock price may continue its previous uptrend after the consolidation phase. The Relative Strength Index (RSI) indicator's current trading range of 63 levels indicates strength in the stock's current trading momentum. With an RSI of 63, the indicator confirms that HEG's stock is showing strength and potential for further upward movement."

"HEG's stock is currently trading above all of its key moving averages. Also, Bollinger Bands on the daily chart of HEG are expanding, indicating increasing price volatility. HEG's stock price is trading above the centreline of the Bollinger Bands, indicating strength. A resistance level is placed near 1740 levels, which is also identified as a recent high for the stock. However, if HEG's stock successfully surpasses this resistance level, it would be considered a bullish breakout, opening the possibility for the stock to continue its upward movement up to 1785 levels. With a medium-term target price of 1785, we advise purchasing HEG at the CMP of 1686. If the price closes below 1620, our analysis will be regarded as being invalid," said Deven Mehata.

Nirav Karkera, Head of Research, Fisdom said, "HEG holds a crucial position in the steel industry, manufacturing graphite electrodes used in steel production through the electric arc furnace (EAF) route. EAF steel production, excluding China, has grown significantly, increasing from 44% to 49% between 2015 and 2022. The steel industry is expected to experience a demand rebound this year, with a projected growth rate of around 2.3%. In 2024, the sector is foreseen to sustain its growth trajectory, with an anticipated increase of 1.7%. Additionally, the industry's expected shift towards decarbonization makes EAF, where HEG's products play a crucial role, a more viable option. HEG's prospects are further strengthened by the company's future capex plans & expected increase in capacity utilization. The company boasts the world's Largest Single Site Graphite Electrode Plant with an annual capacity of 80,000 tons."

"In the short term, the company may face challenges due to the bearish outlook in the steel industry and the impact of global recession fears on steel demand. However, the medium- to long-term growth path for the electric arc furnace industry, which HEG caters, is up-and-coming. This perspective leads to optimism regarding the company's future potential from a long-term standpoint. HEG's extensive global market reach, built over the past 25 years, allows them to export two-thirds of their production to over 30-35 countries. This solid international presence further instils confidence in HEG's ability to thrive and identify opportunities in the electrode industry, which holds significant potential for the coming years," said Nirav Karkera.

"After experiencing a significant decline, HEG underwent a time-wise correction and consolidated in a rectangle pattern for over a year, trading within a range of 400 points. However, about a month ago, prices broke out strongly above the resistance of this pattern. Following the breakout, prices consolidated for a few weeks before resuming their upward trend and maintaining positions above the 21 and 50-week exponential moving averages. Notably, a bullish golden cross has recently occurred, where the 21 EMA crossed above the 100 EMA. As an investor, consider a strategic approach for buying HEG shares. Buying 50% of the desired quantity at the current market price (CMP) of 1686 could be prudent. Considering a possible dip in prices near 1565 levels, another 50% of the desired quantity could be acquired. Setting a stop-loss level at 1450 is recommended to protect against potential losses. The target price for this investment should be aimed at higher levels, potentially reaching 1900 and 1950 levels, as the stock continues its uptrend," Nirav Karkera further stated.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.