Rhi Magnesita India Limited

RHI Magnesita commenced FY26 with robust performance, reporting INR 960 crores in revenue from operations, a 9% year-on-year and 5% sequential growth. Shipment volumes increased by 13% YoY to 129 kilotons, while production grew 9% YoY to 85,000 tons, leading to an improved capacity utilization of 66%. Operating EBITDA for the quarter stood at INR 103 crores, reflecting a 10% sequential increase and an EBITDA margin of 10.8%, up from 10.2% in Q4 FY25.

Despite sequential margin improvement, the company's overall margins declined by 51% year-on-year, primarily due to the impact of elevated high-cost alumina prices flowing from inventory to the P&L. Management anticipates these high-cost inventories to be consumed by September, expecting an upside in margins in Q2 and Q3. The company is actively pursuing cost optimization through recipe optimization, circular economy initiatives, and energy cost efficiencies across its plants to mitigate margin pressures.

RHI Magnesita is transitioning from a material supplier to a strategic solution partner, driven by its 4 PRO business model, which integrates products, processes, performance, and digital solutions. This model, an evolution of traditional refractory management, incorporates advanced robotics, AI, and digitalization to add value and differentiate from competitors. A notable achievement is the deployment of India's first complete robotics solution in a continuous casting plant, with JSW requesting feasibility studies for two additional plants.

The company maintains a strong financial position, with its net debt-to-EBITDA ratio improving from 0.3x to 0.2x quarter-on-quarter. Operating cash flows were robust at INR 88 crores in Q1, a 36% sequential increase. Capital expenditure for the quarter was INR 28 crores, fully funded through the balance sheet. For the full fiscal year, the company plans a total capex of INR 150 crores, almost double last year's, primarily allocated to plant modernization, particularly for the acquired Dalmia facilities, and productivity improvements.

RHI Magnesita successfully regained market share across various segments, contributing to its volume growth. In the iron-making segment, market share has grown from 2% to 15%, with a target to reach 30% within three years. The company also aims for 25-30% market share in the commodity magnesia carbon brick business within 2-3 years, up from the current 13%, despite intense competition from Chinese traders. An overall volume growth of 8-9% is expected for the full year.

While projects in the non-ferrous and glass industrial segments have been deferred to 2026-2027, the company is leveraging its recent acquisition of Resco, an American firm with niche, high-end products, to serve clients like Reliance and PSU refineries. Export growth in flow control products is anticipated to increase in 2026, with trials currently in advanced stages. The Hi-Tech plant, despite initial challenges, is demonstrating strong performance, such as a 26-hour casting time in thin slab casters, positioning it for significant export opportunities.