1 HEG share price target reports by brokerages below. See what is analyst's view on HEG share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
While global graphite electrode prices have witnessed a softening trend, the uptick in prices of key raw material (viz. needle coke) is likely to impact thecompany’s margin profile. We downward revise capacity utilisation level to 70.0% for FY20E (from 85% earlier) and to 75%for FY21E (from 85% earlier). We value the stock at 6x FY21E EPS and arrive at a target price of | 900. We maintain our REDUCE rating on the stock.
While global graphite electrode prices have witnessed a softening trend, the uptick in prices of key raw material (viz. needle coke) is likely to impact thecompany’s margin profile. We have modelled capacity utilisation of 85% for both the years FY20E and FY21E. We value the stock at 6x FY21E EPS and arrive at a target price of Rs 1700. We have a REDUCE recommendation on the stock.
While HEG reported a healthy 9MFY19 on the back of favourable realisations and relatively subdued operating costs, we expect operating profit margins to decline from supernormal levels of 73.8% in 9MFY19 to ~41% in FY20E. This is on account of a steep rise in price of key raw material (needle coke) and the fall witnessed in price of graphite electrodes in both UHP grade (on account of recent weakness in steel prices) and HP grade (on account of removal of anti-dumping duty from China) electrodes. Taking into account the same, we downward revise our graphite electrodes realisation assumption for FY20E while we upward revise the needle coke costs estimate. Aligning with the contraction witnessed in P/E of global graphite electrodes majors, we now value the stock at 6x FY20E P/E. Hence, we arrive at a target price of Rs 2400 and assign a BUY rating on the stock.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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