HEG Ltd-Good long term value

HEG ltd is the largest Indian Manufacturer of graphite electrodes which is used in Electric arc furnance to manufacturer speciality steel.The usage of electric arc furnance route to manufacture specialised steel is growing as percentage of total steel produced in the world is growing year on year.There have no new manufacturer of graphite electrode in world after HEG set up its facility near Bhopal twenty years back.This industry has become highly technology oriented so that there is high entry barrier for any new player.HEG has recently increased its capacity to 54000 tonnes per annum and the reflection of that will happen in FY 08 and beyond.The prices of graphite electrode has been steadily rising in the last few months and it is expected to be stable to a steady uptrend in the next few years.HEG exports over 80% of its production.HEG has a captive power generation of 52 MW (power is one of the major costs in the manufacturing of graphite electrodes.The company has also has a sponge iron unit and has recently forward integerated that unit with facility for manufacturer of Billets.

The company has strong financials ability and a able management team to grow steadily in the future.Buy with a long term view to make good returns.