Graphite India Share Price Monthly Analysis (2020)

INDEX:

1. Introduction
2. History of Graphite India Limited
3. Products of Graphite India Limited
4. Graphite India Share Price Analysis

Introduction

Graphite India Share Price means the share price of Graphite India Limited. GIL is the pioneer in India for the manufacture of Graphite Electrodes with Carbon plus Graphite Speciality products. GIL’s manufacturing facilities have been spread across the six plants in India and have also got 100% owned subsidiary at the Nuremberg, Germany, by name Graphite COVA GmbH. With efficient global partners and the proximity of our manufacturing facilities to the inland customers and seaports. GIL has been able to ensure timely deliveries to customers.

The corporate philosophy of this Company puts emphasis on the consistent quality of products and services across its divisions, which culminated in an enviable track record in the industry arena.

1. History of Graphite India Limited

Having started in the year 1967 in collaboration with the erstwhile Great Lakes Carbon Corporation that is GLCC, GIL has constantly been improving the product quality plus services, thus reaching to the newer heights of excellence with customer recognition. The journey has been fueled by their reliance on cutting-edge technology, a natural penchant for innovation and creativity, an eco-friendly approach in the production process, consistency of product quality and services, as well as productivity and cost optimization.

Currently, GIL has a very strong international presence and is also among the top few electrode manufacturing industries with respect to the capacity, bondage of the customer, and outstanding quality and service. The Company is ISO 9001 accredited, thereby also adopting eco-friendly processes. It focuses on the following:

a) ETHICS

The Company believes in following the highest ethical standards and complying with all the laws plus regulations.

b) INTEGRITY

The Company conducts its business based on the principle of free and fair competition. It gives the highest priority to safety while striving to maintain and improve the working environment. This helps them in upholding the interest of its stakeholders

c) GROWTH

The Company regularly upgrades knowledge to stay ahead of all the contemporary developments plus to offer the best output for the Company.

The Company is also committed to sharing new ideas & upgrading our technology.

2. Products of Graphite India Limited

a) Graphite Electrodes:

This is one of the finest applications in the manufacturing unit of Steel and other non-ferrous metals through the process of Electric Arc Furnace with the Laddle Furnace routes. It is also consumable for conducting high current at a low voltage that is necessary for melting and/or alloying processes.

b) Glass Reinforced Plastic Pipes:

Graphite India Limited is the pioneer in this field of manufacturing of the large diameter Glass Fiber Reinforced Plastic pipes. The venture was started in the year 1989 with the Technical plus financial collaboration of Veroc technology AS, Norway.

c) Powmex Steels Division:

High-Speed, Alloy Tool and Powder Metallurgy Steels for cutting tool industry have been manufactured by the GIL in Powmex Steels Division which is located at Titilagarh, accessible by:

1. Road: 250 km from Raipur airport.
2. Rail: from all the major cities in our country.

3. Graphite India Share Price Analysis

Shares of Graphite India have continued to remain under pressure and slipped 5% on Thursday to hit a 30-month low of INR 242 on BSE on the concerns of weak earnings going forward. The stock of graphite electrode maker was trading at the lowest level since August 22, 2017. In the past five weeks, it has ranked 25 percent after reporting a solid net loss of INR 353 crore in the December quarter (Q3FY20), because of the steep fall in prices of electrodes. This was the Graphite India’s first quarterly loss in more than a full decade. Earlier, in June 1997 quarter, the GIL had posted net loss of INR 2 lakh.

Its lower volumes and the realization have impacted the sales and margins as compared to the same period last year. In addition, EBITDA, which is earnings before interest, tax, depreciation, and amortization were impacted due to fair value adjustment of inventory amounting of INR 490 crore in Q3FY20. The management of GIL said that during the quarter, the Company’s performance was a bit impacted due to the lower volumes and the realizations.

With the global and the domestic steel market turning tough, and resulting fall in demand for electrodes, Graphite’s Q3FY20 production has declined by 6,400 tons to 10,800 tons. This capacity utilization has slipped to as low as 54 percent. Also, the over-capacities in the industry led to tight and squeezed realizations for all the products. Graphite India’s realizations have slipped to $7,594 a tonne, $4,886 lower than the year-ago.

According to analysts, against the backdrop of the steel demand slowdown globally, the volume pressure would continue for some time. A pick up in the realizations looks more than far-fetched. Despite the valuations appearing attractive, no turn around in the near future can ever be expected, the brokerage firm said in the company update report.

Thus, far in the financial year of 2019-20 (FY20), Graphite India’s stock price has been tanked to 46 percent against a 3 percent rise in the S&P BSE Sensex.

The global slowdown due to the US-China trade war has led to a fall in the steel demand, which has affected demand for electrodes. China is the biggest producer of the graphite electrodes, which have been used in the automobile and steel industries.

During September 2018, India removed the anti-dumping duties on graphite electrodes, which were imported from China, which led to an increase in its imports. Steel prices also continue to remain under pressure till now, and a combination of these factors has resulted in significant correction of all the electrode prices.

Share Market Update currently is that Sensex ends 202 points lower that is Nifty at 12,150 as told by GAIL, IndusInd Bank top losers

This has also adversely affected the financial performance of Graphite India since 2018.

In the September 2018 quarter, the net sales have risen to INR 2,345 crore. Since then, net sales have also been falling constantly. Sales fell to INR 1,855 crore in December 2018, followed by INR 1,693 crore sales for the quarter ended in March 2019.

In the third quarter of the current fiscal, net sales fell to INR 643 crore, which was a decline of 65 percent year on year.

Graphite India is engaged in the manufacturing of graphite electrodes, graphite equipment, Steel, glass-reinforced plastic pipes and tanks with the generation of hydel power. The Company also operates through three segments, namely: Graphite and carbon, Steel and others.