HEG Shares Tumble On GST Demand Notice, 83% Profit Drop

Shares of HEG Ltd. tumbled over 8% on Wednesday after the board acknowledged the receipt of a show cause notice concerning the recovery of integrated goods and services tax refunds and a penalty totalling Rs 282.34 crore for the tax period spanning July 2017 to March 2018.

The company intends to contest the notice and is drafting a detailed response. The ultimate financial impact will depend on the final tax liability and any associated penalties or interest, according to a stock exchange notification.

Additionally, the company's net profit fell by 83% in the first quarter of fiscal 2024.

The net profit of the carbon and graphite product manufacturing company fell 83.4% year-on-year to Rs 23 crore in the first quarter of fiscal 2025. During the same period, revenue decreased 14.9% year-on-year to Rs 571 crore.

Operating income—earnings before interest, taxes, depreciation, and amortisation—fell 33% year-on-year to Rs 74.4 crore. The Ebitda margin contracted to 6.8% from 22.5% in the same period in the previous year.

The board also approved the proposal for a share split on Tuesday. The company will split one equity share into five shares.

On approval from shareholders, the face value of equity shares will change to Rs 2 per share from the earlier Rs 10 apiece, according to an exchange filing.

Shares of the company fell as much as 8.28% to Rs 1,990 apiece, the lowest level since Aug. 6, 2024. It pared losses to trade 7.32% lower at Rs 2,011 apiece as of 11:15 a.m. This compares to a 0.01 decline in the NSE Nifty 50 Index.

The stock has risen 5.33% on a year-to-date basis. Total traded volume so far in the day stood at 1.19 times its 30-day average. The relative strength index was at 41.42.

Out of 5 analysts tracking the company, 2 maintain a 'buy' rating and 3 recommend a 'hold', according to Bloomberg data. The average 12-month consensus price target implies an upside of 30.3%.