Rain Industries Limited — Q3 FY25 earnings call

Call held 25 Feb 2025

Management summary

Rain Industries reported a mixed performance for Q4 FY25, with consolidated revenue declining but adjusted EBITDA showing a significant increase driven by the Carbon and Advanced Materials segments. The Cement segment faced substantial headwinds. Management highlighted the rebalancing of GPC-CPC prices and the strategic re-integration of its global blend strategy in India as key positive developments for the Carbon segment, while also focusing on cost optimization and new opportunities in Battery Anode Materials.

Highlights

  • Consolidated Net Revenue for Q4 2024 was ₹36.49 billion, a 10.54% decline YoY from ₹40.79 billion in Q4 2023.

  • Consolidated Adjusted EBITDA for Q4 2024 increased by ₹1.12 billion YoY, reaching ₹3.90 billion.

  • Full-year 2024 EBITDA stood at ₹14.98 billion.

  • Carbon segment revenue decreased by 10.91% YoY to ₹26.13 billion, while its Adjusted EBITDA increased by ₹0.88 billion.

  • Advanced Materials segment revenue grew by 7.22% YoY to ₹7.72 billion, with Adjusted EBITDA increasing by ₹0.90 billion.

  • Cement segment revenue declined by 38.1% YoY, and its Adjusted EBITDA saw a downturn of ₹0.66 billion.

  • Net debt to LTM EBITDA ratio was 3.9x at quarter-end, with a target to gradually approach 3.0x.

  • The company spent approximately $78 million USD on maintenance capital expenditures and plant turnarounds in 2024.

Concerns

  • Raw material supply and pricing challenges for Carbon segment

  • Demand slowdown and declining realizations in Indian Cement industry

Key financials

2 periods

Headline

  • Consolidated Net Revenue
    ₹36.49 Bn
    YoY -10.5%
  • Consolidated Adjusted EBITDA
    ₹3.9 Bn
    YoY +40.3%
  • Full Year EBITDA
    ₹14.98 Bn
  • Gross Debt
    918 million us
  • Net Debt
    699 million us

LTM

  • EBITDA
    179 million us

What they filed

Q1 FY27: revenue up 17.4%, net profit up 310.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,934 3,676 3,768 4,401 4,476 +14%4,301 +17%4,521 +20%5,167 +17%
EBITDA216 346 380 629 627 +190%501 +45%697 +83%964 +53%
Net profit-155 -134 -115 83 130 +184%38 +128%158 +237%341 +311%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenueAdjusted EBITDA Increase
Carbon Segment₹26.13 Bn₹0.88 Bn
Advanced Materials Segment₹7.72 Bn₹0.9 Bn
Cement Segment——

Guidance & targets

Profitability

  • Normalized Operating Margins Profitability · Calendar Year 2025 · Medium confidence re-establish
    As we enter the new year, our focus is on re-establishing our normalized operating margins to stabilize our overall performance. This step is crucial for achieving our Calendar Year 2025 objectives, and we remain cautiously optimistic about our prospects in the current Calendar Year.

    — Jagan Reddy Nellore, Managing Director

Debt

  • Net Debt to EBITDA Ratio Debt · next few quarters · Medium confidence 3.0x

    From 3.9x today

    Over the next few quarters, as performance improves and debt gets paid, we anticipate this leverage ratio to gradually approach 3.0x.

    — T. Srinivasa Rao, Chief Financial Officer

Volume

  • CPC Sales Volumes Volume · 2025 · Medium confidence increase
    Looking forward from the end of 2024, we expect CPC sales volumes to increase during the course of 2025, building up gradually throughout the year, as we continue to ramp up our vertical shaft calciner production capacity in our SEZ plant in India and begin to re-start our unique, integrated, global blend strategy almost after a gap of six years.

    — Jagan Reddy Nellore, Managing Director

  • Carbon Distillation Business Volumes Volume · Q1 2025 · Medium confidence modestly higher
    Entering the first quarter of 2025, we expect modestly higher volumes in our carbon distillation business, attributable to some of the expected volume demand increase from European aluminium smelters.

    — Jagan Reddy Nellore, Managing Director

Revenue Mix

  • Aluminium Sector Revenue Contribution Revenue Mix · end of 2025 · Medium confidence 44%

    From 42% today

    you will see that the aluminium sector accounted for approximately 42% of our total consolidated revenues in 2024. We anticipate a rebound to the usual range of 44% by the end of 2025.

    — Gerard Sweeney, President of Rain Carbon Inc.

Realization

  • Coal Tar Raw Material and Pitch Prices Realization · Q1 2025 · Medium confidence roll over
    Meanwhile, prices for the first quarter are expected to roll over for both coal tar raw material and finished coal tar pitch.

    — Jagan Reddy Nellore, Managing Director

Sales Growth

  • Indian Cement Industry Sales Growth Sales Growth · 2025 · Medium confidence 8%

    From 4.5-5.5% today

    Despite these challenges, the industry anticipates an 8% growth in sales by 2025.

    — Jagan Reddy Nellore, Managing Director

Risks & concerns

  • Raw material supply and pricing challenges for Carbon segment

    high

    Obtaining right quality raw materials at favorable prices has posed significant challenges, especially with robust GPC demand from the BAM sector.

    Management acknowledged

  • Demand slowdown and declining realizations in Indian Cement industry

    high

    The Indian cement industry faced challenges in 2024 including moderate capacity utilization, lower sales realization, and margin contraction due to heatwave, labor shortages, and monsoon.

    Management acknowledged

  • Market competition and margin pressures in Carbon segment

    medium

    Volume and margins in the Carbon segment continue to face pressures due to market competition and unique raw material supply circumstances.

    Management acknowledged

  • Raw material disruption and weak global steel industry impacting distillation business

    medium

    Continued raw material disruption from the war in Europe, coupled with drastic curtailments in a weak global steel industry, reduced coal tar availability and increased costs.

    Management acknowledged

  • Proposed US tariffs on imports from Canada and Europe

    medium

    Management is committed to a thorough analysis once tariffs are officially initiated and guidelines published.

    Management monitoring

3 min read 6 chapters

Detailed narrative

Consolidated Financial Performance Overview

Rain Industries reported a consolidated net revenue of ₹36.49 billion for Q4 2024, marking a 10.54% reduction from ₹40.79 billion in Q4 2023. Despite the revenue decline, consolidated adjusted EBITDA increased by ₹1.12 billion YoY, reaching ₹3.90 billion. The full-year 2024 EBITDA stood at ₹14.98 billion, indicating an improvement over the previous year's quarterly results, though not yet reaching normalized targets.

Carbon Segment Dynamics and Strategic Re-alignment

The Carbon segment's revenue decreased by 10.91% YoY to ₹26.13 billion in Q4 2024, primarily due to lower blended realizations. However, its Adjusted EBITDA increased by ₹0.88 billion, driven by increased volumes and cost optimization. Management highlighted a significant structural shift with the Battery Anode Materials (BAM) sector driving robust Green Petroleum Coke (GPC) demand, leading to a rebalancing of GPC-CPC prices and ascending CPC prices in early 2025. The company plans to maximize sales in India and re-start its global blend strategy following the relaxation of import restrictions.

Advanced Materials Segment Resilience and Outlook

The Advanced Materials segment demonstrated resilience, with revenue increasing by 7.22% YoY to ₹7.72 billion in Q4 2024. Its Adjusted EBITDA also saw a positive increase of ₹0.90 billion. While Engineered Products volumes declined due to seasonality, Chemical Intermediates volumes rose by 27% due to higher throughput. The segment finished 2024 with a strong performance and is expected to continue performing well into 2025, supported by improving economies in Europe and the US.

Cement Segment Challenges and 2025 Growth Prospects

The Cement segment faced significant headwinds in Q4 2024, experiencing a 38.1% decline in revenue and a ₹0.66 billion downturn in Adjusted EBITDA. This was attributed to a 12.4% fall in realizations and a 29.4% reduction in volumes, stemming from a demand slowdown, capacity additions, and industry consolidation in India. Despite these challenges, the Indian cement industry anticipates an 8% growth in sales by 2025, driven by increased rural consumption, urban housing demand, and government infrastructure spending, offering a promising outlook for Rain Industries' operations in South India.

Debt Management and Liquidity Position

Rain Industries concluded Q4 2024 with a gross debt of $918 million USD and a net debt of $699 million USD. The net debt to LTM EBITDA ratio stood at 3.9x, with management anticipating a gradual approach to 3.0x over the next few quarters. The company maintains a strong liquidity position with $428 million USD, comprising $219 million USD in cash and $209 million USD in undrawn credit facilities, positioning it well to manage upcoming debt obligations, including $44 million USD in Secured Notes due April 2025.

Strategic Initiatives in Battery Anode Materials

The company is actively pursuing opportunities in the emerging Battery Anode Materials (BAM) sector, recognizing it as a permanent shift in GPC demand. Rain Industries has announced a new R&D laboratory and demonstration plant for Energy Storage Materials and BAM in Canada, supported by government grants in Canada and Germany. These initiatives, coupled with existing expertise as a supplier to the Chinese battery market, are aimed at solidifying RAIN's position as a significant player in the EV and battery markets.

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