RHI Magnesita India: FY26 Outlook and Growth Drivers

Ashwin Thakker

— 2 min read
  • Sales/Volume: Anticipates 8-9% volume growth for FY26, driven by a strong order book and regained market share across segments. Exports, particularly Hi-Tech and flow control products, are projected to see a significant upswing from 2026.
  • Margin/Profitability: Forecasts a sequential upswing in margins for Q2 and Q3 FY26. The full-year EBITDA margin is targeted at 13.7%, aligning with prior year's profitability. This improvement is expected from realized price increases and normalizing raw material costs, especially alumina, by September. Cost optimization, improved capacity utilization (66% in Q1), and the 4 PRO business model are key margin drivers.
  • Capex: Plans INR 150 crores in capital expenditure for FY26, double last year's, focused on modernizing the Dalmia plant. Capex is expected to return to FY24 levels in FY27.

RHI Magnesita India is set for a strong FY26, targeting an 8-9% volume surge and sequential margin improvement. Despite a commoditized market and past raw material cost pressures, strategic initiatives and price actions position the company for robust growth and enhanced profitability, as detailed in their latest earnings call.

Driving Sales and Margin Recovery

RHI Magnesita India Limited projects a strong performance for FY26, targeting an 8-9% volume growth. This outlook is supported by a robust order book and successful market share recovery across key segments. Parmod Sagar, Chairman, MD, and CEO, noted,

"We have a very strong order book... we expect 8% to 9% volume growth."

The company anticipates a sequential upswing in margins through Q2 and Q3, largely due to price increases and the normalization of high-cost alumina inventory by September. CFO Azim Syed highlighted,

"our aim is to achieve the profitability percentage that we had last full year results."

This implies a full-year EBITDA margin target of around 13.7%, a significant recovery from Q1's 10.8%. Beyond raw material costs, the firm's focus on cost optimization through recipe enhancements, productivity gains, and energy efficiency programs underpins this positive margin outlook.

Strategic Investments and Innovation for Long-Term Growth

Beyond immediate financial targets, RHI Magnesita India is strategically investing for sustained long-term growth. The company plans a capital expenditure of INR 150 crores for FY26, double last year's outlay, primarily to modernize its Dalmia plant and enhance productivity. Azim Syed emphasized that investments are guided by a long-term ROIC (Return on Invested Capital) threshold of over 10%, not just quarterly profits. A key differentiator is the "4 PRO" business model, evolving from a material supplier to a comprehensive solution partner. This model, which integrates robotics and digital solutions, is expected to secure long-term contracts and improve margins. Parmod Sagar confirmed,

"as far as margins are concerned, yes, automatically, if we will go in this model, the margin will be better in long term."

This strategic shift aims for consistent profitability and deeper customer partnerships, positioning RHI Magnesita for future market leadership.

RHI Magnesita India is navigating market challenges with clear strategic direction. Expected volume growth, margin recovery driven by pricing and cost controls, and significant capex for modernization signal a strong trajectory. The company's shift to a solution-centric "4 PRO" model and long-term ROIC focus underscore its commitment to sustainable growth and shareholder value in the Indian industrial landscape.

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