Revenue and Operating Performance Trends
HEG's consolidated net sales have shown considerable volatility over the past six years. The company recorded a peak revenue of over ₹6,500 crores in the fiscal year ending March 2019, followed by a sharp decline in subsequent years. From March 2020 onwards, sales stabilised in the range of ₹2,100 to ₹2,400 crores, with the latest fiscal year ending March 2025 reporting net sales of approximately ₹2,160 crores. This indicates a significant contraction from the 2019 peak, suggesting a period of adjustment or market realignment.
Operating profit margins, excluding other income, have mirrored this trend. The margin was exceptionally high at over 70% in 2019 but dropped sharply thereafter, settling at around 12% in the most recent fiscal year. This decline reflects increased raw material costs, power expenses, and other operating costs, which have risen steadily. For instance, raw material costs decreased from ₹1,611 crores in 2019 to around ₹955 crores in 2025, while power costs nearly doubled from ₹183 crores to ₹332 crores over the same period.
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Profitability and Earnings Analysis
HEG's profitability has experienced a marked decline since the fiscal year 2019. The consolidated net profit was an impressive ₹3,026 crores in 2019 but fell sharply in the following years, with a loss recorded in 2021. The company returned to profitability thereafter, posting a net profit of ₹115 crores in the fiscal year ending March 2025. Earnings per share (EPS) have followed a similar trajectory, with a peak EPS of nearly ₹784 in 2019, dropping to a negative figure in 2021, and recovering to ₹5.96 in 2025.
Operating profit (PBDIT) excluding other income also declined from ₹4,658 crores in 2019 to ₹255 crores in 2025, reflecting the challenges faced in maintaining margins amid fluctuating sales volumes and rising costs. Despite these pressures, HEG has managed to sustain a positive gross profit margin of nearly 16% in the latest fiscal year, indicating some operational resilience.
Balance Sheet and Financial Position
HEG's balance sheet demonstrates a stable financial foundation. Shareholders' funds have grown steadily from ₹3,495 crores in 2021 to ₹4,454 crores in 2025, supported by increasing reserves. The company maintains a conservative debt profile, with total debt around ₹585 crores in 2025, slightly lower than previous years. Notably, HEG has no long-term borrowings, which reduces financial risk.
Asset quality has improved, with net block assets rising from ₹684 crores in 2021 to ₹1,894 crores in 2025, reflecting ongoing capital investments. Current assets remain robust at approximately ₹2,457 crores, supported by inventories and current investments. Cash and bank balances, however, have declined from ₹410 crores in 2024 to ₹147 crores in 2025, indicating increased utilisation of cash resources.
Cash Flow and Liquidity
Cash flow from operating activities has fluctuated significantly, with a positive inflow of ₹279 crores in 2025, down from ₹612 crores in 2024. Investing activities have consistently seen cash outflows, reflecting capital expenditure and investments, with ₹206 crores spent in 2025. Financing activities also show net outflows, indicating debt repayments or dividend payments. Overall, the company experienced a net cash outflow of ₹86 crores in 2025, following a positive inflow in the previous year.
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Summary of Historical Performance
In summary, HEG's historical performance reflects a company that has undergone significant transformation. The dramatic revenue and profit contraction since 2019 highlights the cyclical nature of its industry and operational challenges. However, the firm has demonstrated an ability to stabilise its operations, improve margins, and maintain a strong balance sheet with manageable debt levels. Investors should note the recovery in profitability post-2021 and the ongoing capital investments that may support future growth.
While the company’s earnings and margins remain below their historical peaks, HEG’s financial discipline and asset base provide a foundation for potential recovery. The fluctuations in cash flow and cash reserves warrant close monitoring, but overall, the company’s fundamentals suggest resilience amid a challenging market environment.
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