HEG Advanced Materials plans ₹5,500 crore expansion capex

HEG Advanced Materials has outlined a ₹5,500 crore capex plan covering anode, graphene and crucible projects, with funding largely through debt and internal equity commitments. The company plans to invest approximately ₹3,400 crore through debt and ₹2,000 crore through equity. Its anode capacity target has been increased from 20,000 tonnes to 44,000 tonnes following customer interest from large OEMs and battery cell manufacturers. The first 20,000-tonne phase is expected to commence in Q1 CY27, while the full capacity is targeted by Q4 CY29. The Battery Energy Storage System (BESS) business, operated through Replus, is approaching EBITDA break-even on revenue of around ₹500 crore. Management expects revenue to reach approximately ₹2,000 crore in FY28, with EBITDA margins of 8-10%. Higher order volumes should improve operating leverage as fixed costs get absorbed. My view: The expansion is significant because HEG is moving beyond its traditional graphite electrode business into the battery materials value chain. Increasing anode capacity before the initial project reaches full scale indicates management is seeing meaningful customer interest. However, customer traction still needs to translate into confirmed orders, commercial production and consistent utilisation. The ₹5,500 crore investment also brings execution and debt-servicing risks, particularly if demand or commissioning timelines fall short. I will be watching the first anode project commissioning in Q1 CY27, BESS margin improvement and order conversion over the next few quarters. The graphite electrode business remains an important source of cash generation to support this expansion. My stance: Long-term business prospects look encouraging, but execution, capacity utilisation and return on invested capital will determine whether this capex creates shareholder value.

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