HEG:: Re-rating expected post uptick in volumes:: Quant

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HEG -Re-rating expected post uptick in volumes
India Equity Research I Engineering & Capital Goods Initiating coverage

We initiate coverage of HEG with a BUY rating and a 12-month price target of Rs324,
implying 22% potential upside from current levels. We believe HEG is an attractive play
on the graphite electrodes (GE) industry and it is expected to benefit by the recovery in
the steel cycle. A steady improvement in capacity utilization levels based on increased
capacity with a recovery in margins is likely to result in steady growth in earnings even
with muted realizations. The company’s focus on cost controls and assuring raw
materials and power supplies in advance is likely to provide for stable operating margins
and higher capacity utilization rates. The stock trades at 5.6x FY12E EV/EBITDA and 7.8x
FY12E earnings, which, in our view, is not justified, given a potential rebound in return
ratios from FY12 and another Rs42/share upside from the possible Bhilwara Energy (BEL)
listing.



Recovery in steel production to prop up demand: With global steel production
expected to increase by 11% in 2010, largely due to a pick-up in demand from
emerging markets as per quant Metals and Mining Analyst, Kalpesh Makwana, after
registering a sharp drop of 8% in 2009. In addition to planned EAF capacity additions in
Asia and the Middle East, HEG should be able to return to 75%-plus utilization levels
over the next two years, but realizations are expected to remain muted due to
competition. We expect Indian players to continue to take away market share from
global majors on account of cost advantages, especially on labour and freight charges.

Cost control measures to improve profitability with needle coke prices holding firm:
We expect margins to recover on account of 77 MW of captive power with an option of
merchant selling, increasing utilization levels, lower manpower costs, economies of
scale and advance booking of needle coke requirements despite lower realizations in
core business. These should keep HEG ahead of global peers in terms of profitability
and capacity utilization. With needle coke prices expected to remain firm due to high
crude oil prices and tight supply, profitability will to a large extent be dependent on
cost control measures.

BEL listing to unlock further value: HEG holds a 26% stake in BEL, which is expected to
get listed in CY11 to unlock further value for HEG shareholders. We have arrived at a
value of Rs42/share assuming a 2x P/B for its completed projects. However, as per a
recent stake dilution in BEL, HEG’s investment value works out to Rs126/share.

Management on course to increase capacity: HEG continues its organic growth
through a continuous capacity buildup in GE and captive power, helped by
management’s technological expertise and single-location advantage. The company
plans to raise its GE capacity from 66,000 tonnes to 80,000 tonnes at an estimated
capex of Rs2.75 bn, which is expected to be completed by September 2011.

Profitability and valuation: With an expected recovery in ROCE back to 15-16% levels
and a sustainable business model, we value HEG at 5.8x FY12E core EV/EBITDA, which
will be a 10% discount to its five-year average one-year forward EV/EBITDA and ascribe
a value of Rs42/share to its stake in its associate company, BEL.

Risk factors have the potential to derail growth common to the GE industry: A
decrease in realizations due to competition or lower-than-expected EAF steel
production can lead to margin contraction, in the event HEG — which has limited
pricing power — is unable to pass on cost increases to steel majors. Non-availability of
needle coke and currency fluctuations also pose as major risks to earnings.



Investment summary
Volume growth to lead to a recovery in earnings
We estimate a 4% revenue CAGR for HEG during FY10-FY12, leading to a revenue of Rs12.33 bn in
FY12. This is led by our estimated sales volume of 55,100 tonnes in FY11 and 59,400 tonnes in FY12
against 45,600 tonnes in FY10. With capacity expansion to 80,000 tonnes from 66,000 tonnes
expected to be completed in FY12E, capacity utilisation levels are expected to go up to 83.5% in
FY11 and 74% in FY12, much better than the 67% HEG managed in FY10. On the realisation front,
after a strong couple of years when realisations grew by 30% and 5% in FY09 and FY10, respectively,
we are factoring in a fall of 12% in FY11E and a recovery of 5% in FY12E, led by demand recovery as
electric arc furnace (EAF) steel production gets back on track over the next few quarters.
We expect a muted EBIDTA performance over FY10-FY12E as needle coke prices are estimated to
remain high and likely will offset any benefits on account of operational efficiencies, although we
can see improvement from FY13. We expect PAT to remain muted over the same period on account
of higher interest costs and depreciation due to expanded capacity, as absolute PAT levels in FY10
were at record highs. Profitability may decrease on account of lower sales of power due to captive
consumption once expanded capacity gets commissioned. Again, absolute PAT levels should start
improving from FY13.
HEG is currently trading at 5.6x FY12E EV/EBITDA and 7.8x FY12E EPS of Rs33.9 versus a five-year
average one-year forward EV/EBITDA of 6.5x and 8.1x earnings. The stock has been under pressure
in the past two quarters on account of disappointing volumes over the past few quarters and
slower-than-expected demand pick-up after the recovery in the steel cycle. But, we believe that
with the steel recovery underway, EAF steel production will rebound strongly, and, thereby, result
in a strong recovery in demand for graphite electrodes. This should help HEG operate at above 85%
capacity utilisation level based on current capacity, which should help the company to start trading
again near its historic multiples with a continuation of improving operating efficiencies and robust
return ratios.
We value HEG at 5.8x FY12E core EV/EBITDA, which is at a discount of 10% to its five-year average
one-year forward EV/EBITDA, given subdued earnings and return ratios in the near term, ascribing a
target value of Rs282 for the core business. A value of Rs42/share for the stake in BEL leads to a 12-
month price target of Rs324, implying potential upside of 22% from current levels. We expect the
stock to re-rate once realisations stabilise at higher than current levels and the needle coke contract
is tied up until CY11. Another factor which could unlock further value for HEG shareholders could be
the listing of group company Bhilwara Energy (BEL), where HEG holds a 25.8% stake valued at Rs126
per share based on a recent deal done with IFC and India Clean Energy Fund. However, we have
assigned a value of Rs42/share to the BEL investment for our target price calculation assigning a 2x
P/BV to only completed projects.


Macro drivers for the GE industry indicate a recovery
Graphite electrode, a major product by HEG, is a consumable used in steelmaking through the
electric arc furnace (EAF) route. It is used in high intensity melting and one electrode is consumed in
approximately eight to 10 hours, as per management. Therefore, demand for GE is directly related
to the production of steel through the EAF route. Normally, one tonne of steel requires between
1.5kg and 2.0kg of GE depending on the grade used. This puts the current GE market size at around
US$3-4 bn globally given capacity of about 1 mn tonnes and prices in the range of US$3,000-4,000
per tonne.


We expect global steel production, after dipping in 2008-09, to recover sharply from 2010. The
share of steel manufactures through the EAF route has also declined to 28.1% in 2009, the first time
it has been below 30% for the past 10 years. This has happened on account of China adding large
blast furnace (BF) capacities and production & inventory cuts by manufacturers hit by the global
recession. Typically, in case of a slowdown in demand, EAF steel facilities get hit first before BF
facilities as they are smaller and cheaper and easy to stop and restart. This has led to a significant
decline in GE production across the globe with global majors like SGL Carbon (SGL GY, Not rated)
and Graftech (GTI US, Not rated) recording a significant decline in volumes of more than 20% in
2009, as per press releases of SGL Carbon and Graftech.


We expect this declining EAF production scenario to change from CY10 and volumes to strengthen,
as manufacturers start restocking inventory and restart EAF facilities. In our view, our Metals &
Mining Analyst Kalpesh Makwana believes there is strong growth visibility for steel demand over
the next few years, which should encourage steel manufacturers to increase GE inventory levels.
Furthermore, upcoming EAF facilities in China and the Middle East would also help in bringing back
the share of EAF in total steel production to above 30% in the next few years.


Demand for GE is inelastic as it is an important consumable in steel production using the EAF route.
As of now, there are no reliable substitutes for ultra high power (UHP) grade GE in the market,
which can pose a demand threat, we believe. As GE is a critical component in the steelmaking
process, steel manufacturers do not prefer using other substitutes and prefer to use materials from
a specific supplier. As GE costs less than 2% of total operating cost, steel manufacturers prefer
higher grade GE from known players even if they have to a pay slightly higher costs. This keeps
demand for UHP GEs sustainable and reduces significant fluctuations in GE realisations, in our view.
The share of EAF in total steel production has been around 30% except in 2009 when it declined to
28.1%. Longer term, we expect the share of steel production through this route to increase over the
traditional BF route, owing to advantages like lower capex requirements, flexible production
schedules due to easy restarting option and better product mix capabilities, although cost
advantage over the BF route is difficult to comment on as it is highly dependent on steel scrap as
availability is region-specific and its prices are volatile.


Strong entry barriers keep new players in check
There are only a few global players in the GE industry (refer to exhibit 5) as it requires a high degree
of technological expertise to manufacture customised UHP electrodes from each furnace. Although
other players have tried to copy this method, product quality varies and fails to meet standards set
by global steel majors. The GE industry is also relationship-driven, whereby referrals from top steel
manufacturers are critical, in our view. Getting approvals and referrals from steel manufacturers’
takes years as most prefer to do business only with tried-and-tested suppliers because they would
rather not risk the quality of products on a relatively low-cost item like GE which constitutes only
about 2% to the total cost of production of steel. Another key entry barrier is the supply of needle
coke, which needs established relationships with limited suppliers in the world.


The pricing power enjoyed by the GE industry is high due to the consolidated nature of the industry.
There are only eight large producers of GE globally, with the top two controlling about 47% of the
market share. India has emerged as a strong force, with HEG and Graphite India (GRIL IN, CMP:
Rs93, Not rated) together controlling 15% of the world market. We believe this has helped GE
producers to maintain margins despite significant increases in needle coke prices, a major raw
material. Passing on the increase in raw material costs becomes easier as it does not affect the cost
structure of a steel manufacturer, in our opinion.


GE realisations have been on a strong uptrend since 2005 and reached record levels of more than
US$5,000 per tonne in FY10, as per HEG management. These high realisations persisted despite
muted steel prices as most global GE majors resorted to production cuts, thereby reducing volumes
and capacity utilization rates. The costs of needle coke, the key raw material, were also on an
increasing trend and were passed on easily to end-users due to the small proportion of GE costs in
total costs of a steel manufacturer and the consolidated nature of the GE industry.


Assured raw material supplies remain a concern
A major raw material for UHP-grade GEs is needle coke, a special variety of coke and a derivative of
crude oil manufactured by just four players globally, with Conoco Phillips (COP US, Not rated)
controlling 60% of the global needle coke market, as per press reports. Capacity utilization rates for
the GE industry tend to be lower, owing to non-availability of needle coke in some cases. Against
current GE capacity of around 0.94 mn tonnes, needle coke capacity currently is around 0.80 mn
tonnes, according to press reports. A tonne of needle coke is required to produce a tonne of GE.
With the tight supply scenario, we believe this shortage will keep needle coke prices high and
further price increases can hamper margins of GE players (needle coke contracts are set on a yearly
basis and after a sizeable price increase in 2009, they have been kept at similar levels in 2010).


Most GE players try to reduce availability on outside power
Power, the second-biggest cost component after needle coke, accounts for 13-20% of total costs, is
another determinant of profitability for GE players. The GE manufacturing process is power
intensive and requires 5,000-6,000 kwh of power for producing one tonne of GE. Therefore, most
companies are trying to reduce this cost by setting up captive power capabilities. Captive power is
cheaper and players can bank on a ready supply of power to boost production.

Indian players to continue to grab market share from global peers due to cost advantages
In an industry where prices are determined on a global level with no significant product
differentiation, higher volumes leading to better utilization rates remain key drivers of profitability.
Although fixed costs can be reduced to an extent by individual players by increasing efficiency,
capacity utilization tends to be the big differentiator as far as profitability is concerned. The plant
capacity utilisation of Indian players has been higher than global peers on account of lower cost
structures. Indian manufacturers have been gradually grabbing market share from global majors by
providing quality products at lower prices and maintaining margins, primarily due to lower labour
and freight costs.









Niche player set to gain from steel recovery
We believe HEG is an attractive play on the GE industry, expected to benefit by the recovery in the
steel cycle. A steady improvement in utilization levels based on increased capacity with stable
margins is likely to result in steady earnings growth even with muted realizations. The company’s
focus on cost controls and assuring raw materials & power supplies may lead to stable operating
margins and higher capacity utilization rates.


The company has been maintaining margins over 20% over the past five years despite a continuous
increase in coke prices, its key raw material. Margins on a per tonne basis have shown a sharper
increase than raw material prices as the company was able to pass on input cost increases while
increasing efficiency at the same time. Although record margins attained in FY10 are not
sustainable, in our view, because realisations are high and margins came on very thin volumes as
capacity utilization rates dropped below the 70% level. We believe margins will come under
pressure as realisations correct and raw material prices remain high due to supply shortages. HEG
should be able to sustain operating margins in the range of 24-26% over the next few years, a
decline of about 400-600bp from the 30% level seen in FY10.


Captive power and merchant selling pushes up topline and bottomline
The company has 77 MW of captive power capacity, which meet its power requirements in the GE
manufacturing process and also provides an additional stream of revenue by way of merchant
selling of excess power. The company’s power division comprises two thermal power plants with
combined capacity of 64 MW and a hydro power plant with 13-MW capacity. HEG sold about a third
of its power in FY10, but this is expected to come down to just 5% by FY12 as new 14,000 tonne
capacity gets commissioned. Its power revenue in FY10 was Rs680 mn, which we expect to decline
to Rs400 mn in FY11 and Rs200 mn in FY12 as most power generated is consumed internally






Sales mix to remain focussed on exports
HEG derives more than 80% of total revenue from exports, with a clientele of more than 100
customers in over 30 countries. Key global customers include Arcelor Mittal (ARCELOR LX, Not
rated), Nucor (NUE US, Not rated), Posco (005490 KS, Not rated). This diversified client base reduces
client concentration risk to a large extent, in our view. The company has got its UHP-grade GE
certified by these players, and, therefore, finds it easy to sell its products to new customers without
any quality issues. But such a geographical base needs active forex management by the company
and leaves it prone to currency volatility risk, we believe. As it imports all of its needle coke from
outside India, those imports act a natural hedge against HEG’s currency risk on exports to an extent,
in our view.


Increasing realisations expected to cool down after hitting record highs
HEG has been able to increase realizations consistently for the past six years as it has been able to
pass on the price increase in needle coke on to steel manufacturers. Aggressive price increases for
GE have not negatively affected demand as it constitutes only about 2% of total costs for a steel
producer, and as GE is a critical component in the EAF process. Volumes have decreased in the past
two years as a result of EAF capacity shutdowns globally, but GE prices did not drop due to the
oligopolistic nature of the global GE industry, which made up for lost volumes by charging higher
prices. Prices touched a high of more than US$8,000/tonne in some contracts in FY10 and averaged
around US$5,500/tonne for the whole year. For FY11, we expect at least a 10% reduction in average
realisations as prices come down to more sustainable levels. But HEG should more than make up for
the loss in realisations by a substantial pick-up in volumes. Realisations are also protected by shortterm
volatility as customers enter into short-term purchase contracts of three to six months
duration.


Lower manpower costs than global peers give better margins
HEG’s relatively low labour costs give it significant advantage over global peers. The top two global
players — SGL and Graftech — have plants across Europe and North America where labour costs are
significantly higher. For the past three years, manpower costs for HEG have been below 4% of sales,
while it is in the range of 15-20% for the top two global players. In the past, this lower cost has
helped HEG gain market share, but as realisation differences dissipate across global players, HEG
can use this cost advantage to keep margins higher than global peers, we believe.


Single location offers economies of scale and reduces fixed costs
SGL Carbon, the biggest global player, has 39 plants across Europe, North America and Asia with
total capacity of 220,000 tonnes. Graftech also has five plants in Europe and Latin America with
similar capacity, as per the company website. HEG has capacity of 66,000 tonnes and is increasing it
to 80,000 MT at the same facility in Mandideep near Bhopal, Madhya Pradesh. Its thermal power
plant is based at the same site while the hydro power plant is about 70 km away at Tawa Nagar,
Madhya Pradesh. In our view, this helps HEG save on fixed costs versus higher costs involved in
operating plants at multiple sites and also saves on freight and manpower costs, which is likely to
help it operate at above-industry average margins in the range of 25-28%.


HEG has been expanding capacity in a phased manner at its Mandideep site in the past few years.
According to guidance, capacity is slated to grow to 80,000 tonnes by mid-FY12, which will increase
its global market share from the current 5.5% to about 7.5% in FY12. With the steel cycle showing
signs of a recovery, HEG should benefit in terms of higher volumes post the commissioning of new
capacity. HEG is one of very few players who are expanding capacity currently as global players are
still operating at utilization rates of between 50-60%. But HEG has had a much higher utilization
level for some time, owing to its cost leadership, and, therefore, it expects utilization levels of more
than 75% by FY12-FY13.


Subsidiary listing can unlock further value
HEG holds a 25.8% stake in group company Bhilwara Energy (BEL) (Not listed). BEL, incorporated in
2006, is the flagship entity in the power sector business of the LNJ Bhilwara Group and acts as the
principal holding company for its power ventures. The company has guided for 2500 MW of power
generation capacity by 2017 in the renewable energy sector. It currently has operational capacity of
86 MW and recently commissioned a 192 MW hydro power project. BEL holds a 51% equity stake in
Malana Power Company (Not listed) based in Kullu, Himachal Pradesh, a JV with SN Power, Norway
(Not listed). It holds 44.9% of AD Hydro Power based in Manali, Himachal Pradesh, indirectly, since
MPC holds an 88% stake in AD Hydro Power.

BEL recently raised Rs2.3bn, ie, US$50 mn (US$25mn each) by diluting a 10.8% stake to
International Finance Corporation (IFC), Washington and India Clean Energy Fund to fund its power
projects in India and Nepal. Post this dilution, HEG has a 25.8% stake in BEL valued at Rs5.37 bn or
Rs126/share as per the stake sale price.

But due to insufficient information available on BEL financials, we have taken a conservative view
and valued only two completed projects at 2x P/B. We have not ascribed any value to our other
approved projects, which are still in the pre-construction stage. Assuming a 2x P/B and giving a 20%
holding company discount, the fair value of HEG’s stake in BEL comes out to be Rs42/share, which
can go up further once the company makes significant progress in its new projects and launches an
IPO.




Expected growth from FY12 supports further upside
HEG has demonstrated consistent growth in revenues and profitability over the past five years, led
by gradual capacity increases leading up to rising volumes. The company has also been able to
maintain profitability due to its cost reduction initiatives and higher efficiency. The business remains
working capital-intensive, which HEG has been able to manage quite well, in our view. After
increasing significantly in FY09, working capital trends return to normal in FY10


Steady top-line growth in the past, future growth to be driven by higher volumes
HEG has reported a 20% CAGR in revenue during FY10-FY12, on account of a steady increase in
realisation until FY08, although FY09-FY10 has seen a dip in volumes. But, we expect HEG to post an
11% CAGR in revenue during FY10-FY13E, which would primarily be driven by an 18% CAGR in
volumes over the same period, although we expect realisations to dip from current levels. We
expect HEG to commission its new facility by FY12 and project capacity utilisation rates to go above
75% on expanded capacity in FY13E.


HEG has maintained healthy operating margins in the range of 25-30% for the past three years and
achieved record margins of 30.3% in FY10. Although we expect profitability to cool off as
realisations are expected to decline, the company is likely to maintain margins of around 24-26% as
it gains from lower fixed costs due to a single site advantage, and lower power and manpower costs.
The company has historically been able to pass on any raw material price increases so the risk of
erosion in profitability on account of higher needle coke prices is mitigated to an extent.


Strong balance sheet coupled with robust cashflow generation
HEG has a strong balance sheet with a debt-equity ratio of 1.05% as at the end of FY10, with
Rs4,798 mn in short-term debt to fund its working capital needs. The company expects to complete
capacity expansion primarily through internal accruals with minimal amount of fresh debt. We
expect the company’s debt-equity ratio to drop to 0.8% by FY12E after capex completion. In our
view, its cashflow will also improve after capex is completed in FY12, with strong free cashflow
expected from FY12.

HEG looks reasonably priced compared to global peers
We believe HEG deserves to trade at a premium to global peers on account of a higher margin
profile and lower cost structure of its core business. The value of its investments also provides
significant downside protection. It has maintained a strong financial profile over the past five years,
and although FY11 is expected to be a poor year in terms of financial performance, we expect
valuations to return to premium levels once profitability stabilises and capacity utilisation levels
return to historical levels of 80%-plus.





First half performance was poor but improvement expected from 2H FY11
HEG’s results for 1H FY11 were disappointing, due to lower capacity utilisation in 1Q and
underperformance of its power division due to maintenance issues at its thermal power plant and
lower merchant prices. Realisations for GE have also declined sharply to sustainable levels of about
Rs197,000 per tonne in 1H FY11 from unusually high levels Rs222,182 per tonne witnessed in the
past year. Raw material prices have increased from 37.4% of sales in 1H FY10 to 42.4% of sales in 1H
FY11 on account of lag effect of a change in crude oil prices. But with input prices stabilising and
realisations expected to inch up from current levels supported by higher utilisation rates, we expect
a gradual recovery in operational performance, especially EBITDA margins, over the next 4-6
quarters.


Valuations
We initiate coverage of HEG with a BUY rating and a 12-month price target of Rs324, implying 22%
potential upside from current levels. We value the core business at 5.8x FY12E EV/EBITDA, which
will be a discount of 10% to its five-year average of one-year forward EV/EBITDA, given subdued
earnings and return ratios in the near term. We note that ROCE of 15.5% in FY12E is slightly better
than the average ROCE of the past five years. We ascribe a value of Rs42/share for the BEL stake
and value the core business at Rs282/share, arriving at our target price of Rs324. We expect the
stock to re-rate once capacity utilisation starts showing a positive trend and realisations stabilise at
current levels. Another factor, which could unlock further value for HEG shareholders, is the listing
of group company, BEL.

Historically, HEG has traded at a five-year average forward EV/EBITDA of 6.5x, and we expect it to
trend toward these levels once raw material concerns recede and realisations stabilise. We estimate
HEG’s ROCE to gradually come back to historical levels of around 15.5% from FY12. The company
should continue to remain FCF positive as it is estimated to generate adequate internal accruals to
fund its Rs2,750-mn capex with minimal debt.


Key risks and concerns
Pricing power for GE manufacturers has deteriorated and moved to spot pricing for a few
months from annual contract-based pricing earlier on account of higher capacities globally and
a big decline in GE demand as a result of the shutdown of a number of EAF steel capacities.
But, with steel demand picking up again and no significant capacity expansions, we expect
some sort of pricing power to return to GE manufacturers.
Availability and pricing of needle coke, the chief major raw material used in steel
manufacturing, has always been an issue for GE producers, with Conoco Philips controlling
more than half of the market share. Needle coke producers have greater pricing power than GE
producers due to supply shortage, and, therefore, maintain annual pricing contracts. We do
expect this supply shortage to continue albeit there is no significant increase in needle coke
prices during FY11-12. With an improving demand outlook, GE producers should be able to
maintain margins by passing on any price increases to end users.
Excess currency volatility will remain a risk for HEG as more than 80% of total revenue comes
from overseas, although the company does actively hedge its foreign exchange risk.
Emerging competition from Chinese manufacturers can also pose a risk in the longer run if they
are able to gain access to advanced technology for manufacturing high grade UHP electrodes.
Currently, most Chinese producers do not have the required know-how and technology, in our
view.



Company Background
HEG, a flagship company of the LNJ Bhilwara group, is Asia’s leading GE manufacturer and exporter.
The company was set up in 1977 at Mandideep near Bhopal in Madhya Pradesh, and has graphite
manufacturing technology, which was originally sourced from ‘SERS’ – a subsidiary of Pechiney,
France. Currently, the company has interests in GE and power generation, with installed capacity of
66,000 MT of UHP GE and 77 MW of power, respectively. After the exit of its French partner,
Pechiney in 1992, the company started to grow and expand capacity rapidly. Since 1990s, HEG has
invested more than Rs8 bn in capex and has increased its GE capacity from 10,000 tonnes to 66,000
tonnes and also set up its captive power base to save on power costs. The company exports about
80% of its production overseas to more than 100 customers across 30 countries. It has an
established global customer base, comprising steel majors like Arcelor Mittal, Nucor, Posco and Tata
Steel.
Graphite electrodes are primarily consumed by the steel industry, ie, steel mills which manufacture
steel through the electric arc furnace (EAF) route. Global consolidation in the GE industry coupled
with an unprecedented worldwide boom in the steel industry ensures a strong demand pull for the
industry. However, the sustained upsurge in prices of key raw materials and availability issues, ie,
needle coke has capped growth of GE manufacturers. To counter this, HEG has unfolded plans to
expand its GE capacity to 80,000 tonnes by FY12. Also, to emerge as a focused player, the company
had disposed off its steelmaking division in August 2007 for Rs1.2 bn. The company also holds a
25.8% stake in the unlisted power entity of the group, Bhilwara Energy.