How to get rich quick is what everyone wonders, but only a few manages to do that. While hard work and intelligence is most important to make it big, luck, at times, also has a role to play into it, more so on Dalal Street. A lot of people managed to turn Rs 1 lakh crore into Rs 14 lakh crore in a year. We tell you how. 

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If you had invested Rs 1 lakh in graphite maker HEG, it would have grown to Rs 14 lakh, making you richer by 1300-odd per cent. That is the stupendous rate of return HEG logged in just a year. From Rs 250-odd last year, the stock has rallied to Rs 3,200-odd by Monday's closing price. By comparison, the Sensex gained just 12 per cent. HEG's peer Graphite India also witnessed a smart rally, gaining 550-odd per cent during the same period. Both stocks are the top two best performing ones on BSE-500 index. 

The prospects of future rally looks bright too thanks to rising demand on account of slowdown in graphite production in China. Just last month, investment management company Vanguard Group picked a large sum of HEG and Graphite shares, rekindling fresh interest in the stock. Vanguard bought 4.73 lakh shares of HEG at a price of Rs 3,152.52 per scrip, valuing the transaction at Rs 149.07 crore. It acquired 13.60 lakh shares of Graphite India for an average price of Rs 776.06. The transaction totalled Rs 105.54 crore.

Clearly, the graphite-linked firms are doing great on Dalal Street. "HEG and Graphite India gained significantly last year as around 21 per cent of the capacity of the graphite industry was shut down in last four years. Further, reports that China has embarked on its drive to shut down polluting steel plants and thereby increasing demand for electric arc furnace players. Electric arc furnace use 2 kg of graphite to produce 1 tonne of steel. This mismatch in demand and supply led to increase in prices of graphite electrode from $450/tonne to more than $8000/tonne. HEG has 10% of the total global capacity of graphite, making it the fifth largest player in the world. A similar spike was seen last year in Graphite India,” said Prateek Jain, director, Hem Securities to DNA Money. 

“A sustained positive outlook on the global graphite electrode segment coupled with healthy realisations of both global and domestic manufacturers has driven the strong rally,” said ICICdirect.com in a research note.  

“We expect the company to report a robust performance driven by healthy realisations. We continue to value the core business at 9x FY19E EV/EBITDA and assign a 50 per cent discount to HEG’s stake in BEL. Consequently, we arrive at a target price of Rs 3200. We maintain our BUY recommendation on the stock,” said the brokerage in a report dated February 5, 2018. Notably, the stock has already hit ICICIdirect’s target price. 

HEG outperformed on all parameters in the December quarter of FY18, primarily driven by higher-than-expected realisations. The top line for the quarter came in at Rs 842.7 crore, up 256.2 per cent YoY and 105.8 per cent QoQ. 

For the nine months to December 2017, the company reported net profit of Rs 447.33 crore. It had reported net loss of Rs 45.55 crore during the same period in FY16.

"Consolidation in graphite electrode industry coupled with rising demand will help in improving capacity utilisation going forward," said the company during investor presentation post Q3FY18 results.

"Expectations of higher production through EAF route in China as well as in the rest of the world, hopes of improving margins of steel industry in the near term, and expected stabilisation of electrode sale prices at improved levels considering supply‐demand tightness, will benefit HEG," the company added.  

The company's promoters own 61.04 per cent stake in the company, followed by institutional investors who own 15.05 per cent stake in HEG, data available with BSE as of December 31, 2017 showed.  

HEG is a leading graphite electrode manufacturer and exporter Globally, and exports approximately 60 per cent of its production to about 30 countries around the world.