As decarbonization gains urgency, Electric Arc Furnace (EAF) technology is emerging as the preferred route for sustainable steelmaking. About 11 million tonnes (MT) of new EAF capacity is already operational, with another 54 MT expected between 2025 and 2027.
Unlike traditional blast furnaces, EAFs produce steel with a much lower carbon footprint, making them central to the sector’s green transition. This shift is driving fresh demand for graphite electrodes (GE) and refractory materials, both critical to EAF operations.
Meanwhile, the supply side is tightening. Four GE plants have shut down and another four have cut capacity across Western markets, reducing global capacity (excluding China and Russia) by nearly 18%.
The stage appears set for market stabilization and a gradual price recovery—potentially a multi-year opportunity for investors.
Here are the five largest electrode and refractory stocks by market capitalization to watch through 2026 as the green steel cycle gathers pace. (Vesuvius India was excluded due to insufficient data.)
Graphite India
Graphite India manufactures and sells graphite and carbon products, which account for 90% of its revenue.
It is India’s largest graphite electrode producer and one of the largest globally, with a total annual capacity of 98,000 tonnes (TPA) spread across Durgapur, Nashik (India) and Nürnberg (Germany). Capacity utilization stood at 82% in Q1 FY26.
The company’s revenue fell 8.7% YoY to ₹6.6 billion in Q1 FY26, with margins slipping to 29%, leading to a 43.6% decline in profit after tax (PAT) to ₹1.3 billion.
To tap EAF-led demand, Graphite India is expanding capacity by 25,000 TPA through a ₹6 billion investment, rolled out in two phases over 36 months. It is also diversifying into advanced materials and battery technology — holding a 31% stake in Godi India, which focuses on next-gen EV and energy storage solutions.
Additionally, its US subsidiary has developed proprietary graphene technology for industrial applications, while ongoing projects include carbon-carbon brake discs for fighter aircraft and CSiC components for defence use.
HEG
HEG Ltd, a global leader in graphite electrodes, produces ultra-high-power and high-power electrodes used in EAF steelmaking.
It runs the world’s largest single-site integrated graphite electrode plant with an annual capacity of 100,000 tonnes, operating above 90% utilization.
Exports account for 65–70% of output and 66.5% of FY25 turnover, spanning 35 countries and top global steel producers.
In Q1 FY26, HEG reported 8% YoY revenue growth to ₹6.2 billion and a 4.5x surge in PAT to ₹1 billion, driven by higher volumes and operating leverage.
To capitalize on rising EAF adoption, HEG plans to add 15,000 tonnes of new capacity by FY28 through a ₹6.5 billion investment, with an expected double-digit internal rate of return (IRR) and a 4–5-year payback.
The company is also entering the anode business for lithium-ion batteries via its subsidiary TACC, which is building a 20,000-tonne anode plant ( ₹18–19 billion project cost). In parallel, a corporate restructuring is underway to demerge and list the core graphite business under HEG Graphite.
RHI Magnesita
RHI Magnesita (RHIM) produces heat-resistant refractory materials, vital for steel and cement manufacturing.
With eight plants and 25+ project sites in India, RHIM serves 6,000 domestic and 75 international clients. The steel sector accounts for 65% of India’s refractory demand, and cement plus steel together make up 75%.
In Q1 FY26, revenue rose 13% YoY to ₹9.6 billion, though margins dropped to 10.8% due to higher raw material costs. PAT halved to ₹350 million.
RHIM is deepening its presence in iron-making solutions, targeting blast furnaces and hot metal ladles, currently 10% of revenue. Its new 4 PRO model shifts focus from being a content supplier to a strategic solutions partner.
The company’s market share in this segment has grown from 2% to 13% in two years, with a 25–30% goal over the next three.
The acquisition of Ashwath Technology strengthens RHIM’s position in steel flow control machinery, and it plans to ramp up exports from 2026 to West Asia, East Asia, and Africa. A ₹1.5 billion modernization plan is also underway.
Raghav Productivity Enhancers
Raghav Productivity Enhancers is the world’s largest manufacturer of silica ramming mass—a specialised refractory material used to line induction furnaces. It has a consolidated capacity of about 414,000 MTPA, making it India’s foremost producer and the only pan-India supplier in a traditionally fragmented and unorganised market.
The company has a technical collaboration with JWK AB, Sweden, and operates a fully automated plant in Newai, Tonk (Rajasthan)—the world’s first of its kind for ramming mass production.
Raghav supplies to secondary steel producers across India and exports to over 36 countries, with exports contributing 46% of total revenue in FY25. In Q1FY26, revenue rose 30% YoY to ₹640 million, while PAT jumped 55.5% to ₹140 million.
The company aims to optimise its enhanced capacity to meet rising demand efficiently and is developing an improved version of its ramming mass to boost margins and performance. It’s also exploring new applications in high-value silica-based industries and expects full utilisation of the expanded capacity within two years of commissioning.
Looking ahead, Raghav plans to deepen its presence in the high-margin foundry and casting markets, while acquiring new clients both domestically and globally, alongside increasing wallet share with existing customers.
IFGL Refractories
IFGL Refractories manufactures and trades specialty refractory goods and related equipment primarily used in steel plants and also provides after-sales services.
The company operates across 10 manufacturing units in Asia, Europe, and North America, serving over 50 countries. However, near-term challenges persist in the US and European markets.
In Q1FY26, consolidated income grew 8% YoY to ₹4.5 billion, but profitability came under pressure due to high raw material and employee costs, and a global slowdown. Margins slipped to 8.5%, while PAT declined 56% to ₹247 million.
Management expects standalone Indian operations to grow 15–20% over the next two years without fresh capex. The company is diversifying beyond its core flow control business into the non-ferrous refractory segment, opening growth avenues in cement, glass, coke, and gasification industries.
A ₹3.5 billion greenfield project for Dolomite Bricks is underway, expected to be operational by FY28, alongside a joint venture with Marvels Refractories to produce magnesite bricks by FY29.
Additionally, the transfer of Shotcrete technology from its UK arm, Sheffield Refractories, is expected to be completed by Q3FY26, further enhancing its technological edge.
Should you invest in electrode and refractory stocks?
The structural shift towards Electric Arc Furnace (EAF) steelmaking is transforming demand across the electrode and refractory value chain.
With rising EAF capacity, tightening supply, and a global decarbonization push, the industry appears poised for a multi-year upcycle.
Among the five players—Graphite India, HEG, RHI Magnesita, Raghav Productivity Enhancers, and IFGL Refractories—those expanding capacity, integrating advanced technology, and scaling exports stand to gain the most through FY26 and beyond.
That said, investors should look beyond the green steel narrative and carefully examine financials, governance standards, and long-term growth visibility before investing.
Happy investing!
Disclaimer: This article is for information purposes only and not a stock recommendation.
Syndicated from Equitymaster.com