RHI Magnesita Charts Profitable Course

Ashwin Thakker

— 1 min read

Key Facts

  • Sales volume growth targeted at 8-9% year-on-year.
  • EBITDA margin expected to align with previous full year performance (around 13.7%) as raw material costs normalize.
  • Q2 and Q3 margins are anticipated to improve sequentially.
  • Record capital expenditure (approximately INR 150 crores) planned for plant modernization.
  • Expansion of the 4 PRO model and strategic partnerships aim for long-term growth and enhanced margins.

RHI Magnesita India Limited delivered a robust Q1 FY'26, reporting a 9% year-on-year revenue increase and a 13% rise in shipment volumes. This strong start underpins a confident outlook. The company's guidance emphasizes strategic growth, improved profitability, and operational excellence amidst competitive market conditions. Management is focused on recovering margins and expanding high-value offerings for future performance.

Sustained Volume Growth and Margin Recovery

RHI Magnesita targets 8-9% annual volume growth, backed by strong orders and pricing. Q1 FY'26 EBITDA margin improved to 10.8% sequentially, but high alumina costs impacted profitability. The company expects input costs to normalize as high-cost inventory clears by September, anticipating margin improvements in Q2 and Q3. Full-year profitability aims to reach prior levels (around 13.7% EBITDA margin). Strategic pricing and cost optimization are key to this outlook amidst market competition.

Strategic Initiatives and Future Investments

RHI Magnesita's forward strategy centers on its "4 PRO model," an integrated solution aiming for long-term contracts and enhanced margins. The company is advancing automation, including India's first complete robotics solution in a continuous casting plant. Strategic acquisitions, like Ashwath Technology, bolster steel flow control and integrate high-margin products from group entities such as Resco. A substantial capital expenditure of INR 150 crores, doubling last year's, is earmarked for modernizing the Dalmia plant. These efforts, combined with ongoing cost optimization and R&D, aim to fortify market position and achieve double-digit Return on Invested Capital (ROIC), ensuring sustained profitability.

RHI Magnesita's strong Q1 and clear guidance signal strategic growth and margin recovery. With differentiated solutions like 4 PRO, disciplined capital allocation, and operational efficiency, the company is well-positioned to strengthen market leadership. This approach aims to deliver sustained value by evolving into a key solution partner for industrial customers.

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