HEG Gets NCLT Approval For Demerger Plan In 1:1 Share Ratio

Market snapshot: HEG Limited has obtained formal sanction from the Hon'ble National Company Law Tribunal (NCLT), Indore Bench, for its Composite Scheme of Arrangement. This regulatory clearance marks a crucial turning point, enabling the company to execute its restructuring plan and split into two distinct, independently listed entities to optimize value for shareholders.

Data Snapshot

• HEG's demerger scheme grants existing shareholders new shares in the demerged graphite business in a 1:1 ratio.
• Standalone revenue from operations for Q1 FY27 reached ₹681 crore, reflecting an 11% year-on-year expansion.
• Standalone EBITDA surged by 38% year-on-year to ₹211 crore, with EBITDA margins expanding to 29%.

What's Changed

• The corporate architecture divides into two separate listed structures: HEG Limited (retained for graphite electrodes) and HEG Greentech Limited (the restructured parent vehicle focusing on clean energy).
• Direct value unlocking is initiated via a 1:1 share distribution to all equity holders, separating mature manufacturing cash flows from green-tech project execution.

Key Takeaways

• NCLT Mandate: The Indore Bench's sanctioning order, uploaded on August 18, 2026, officially transitions the composite restructuring into its active execution phase.
• Conglomerate De-risking: Segregating the mature graphite electrode business from clean-tech operations allows distinct management teams to pursue tailored capital allocation strategies.
• Green Transition Platform: The existing entity will absorb Bhilwara Energy Limited (BEL) and focus on advanced battery materials (via subsidiary TACC), hydro power, and battery storage.
• 1:1 Equity Swap: Shareholders receive one fully paid-up share in the resulting graphite company for every share held in the parent, alongside their existing holdings.

SAHI Perspective

The NCLT-approved demerger is a decisive structural catalyst that addresses the market's historic conglomerate discount on HEG. By establishing two independently listed pure-plays, the restructuring isolates the high-beta, cash-generative cyclicality of the graphite electrode segment from the secular, high-growth battery material and clean-tech platforms. The graphite business will remain a globally competitive leader in Electric Arc Furnace (EAF) consumables, while the surviving entity (to be renamed HEG Greentech Limited) provides a highly targeted vehicle for investors looking to capture India's clean energy storage and battery material supply chain expansion.

Market Implications

The separation of businesses is highly supportive of structural multiple re-rating. While graphite manufacturing has historically faced cyclical pricing pressures, the pure-play green energy and battery anode businesses could command significantly higher valuation multiples once commercial-scale projects begin generating material revenues.

Trading Signals

Market Bias: Bullish

NCLT's clearance clears the main regulatory roadblock for the 1:1 demerger. Supported by a strong standalone financial showing in Q1 FY27 (revenue of ₹681 crore, up 11% YoY, and EBITDA of ₹211 crore, up 38% YoY), the restructuring provides a highly tangible value-unlocking timeline for shareholders.

Overweight: Industrial Manufacturing, Green Energy, Advanced Materials

Trigger Factors:

• Filing of the certified NCLT order copy with the Registrar of Companies (RoC) to make the scheme effective.
• Formal announcement of the record date for the 1:1 share allotment.
• Listing of the demerged graphite business on the stock exchanges.

Time Horizon: Medium-term (3-12 months)

Industry Context

The global steel industry's ongoing shift toward Electric Arc Furnaces (EAF)—which generate significantly lower carbon emissions than traditional blast furnaces—continues to drive long-term demand for high-performance graphite electrodes. Simultaneously, the expanding domestic battery supply chain in India offers major tailwinds for HEG's synthetic graphite anode business under its subsidiary TACC, positioning the green-tech entity in a highly lucrative, high-entry-barrier industry.

Key Risks to Watch

• Execution and operational scale-up risks associated with the newly formed green-tech and battery energy storage segments.
• Cyclical shifts in global steel demand and EAF operating capacities that could affect the core graphite electrodes market.

Recent Developments

In Q1 FY27, HEG recorded standalone operations revenue of ₹681 crore (up 11% YoY) and a standalone EBITDA of ₹211 crore (up 38% YoY), with margins climbing to 29%. On July 29, 2026, the company commenced dispatching formal communication to physical shareholders, advising them to dematerialize their holdings ahead of the demerger's record date to ensure seamless allotment of the new HEG Graphite Limited shares.

Closing Insight

By separating mature, heavy-industrial cash flows from high-potential green-tech ventures, HEG's restructuring is a structured roadmap for long-term shareholder wealth creation.

High Performance Trading with SAHI.