RHI Magnesita

RHI Magnesita reported a record revenue of ₹1,092 crores in Q3 FY26, demonstrating a 5.5% sequential growth over Q2 FY26 and an 8% year-on-year increase. This performance was achieved despite prevailing macroeconomic challenges, underscoring the company's resilience. EBITDA grew significantly by 36% QoQ and 14% YoY to ₹150 crores, with margins expanding to 13.7% from 10.7% in the previous quarter. Profit after tax also saw a substantial increase of 61% QoQ and 29% YoY, reaching ₹62 crores.

The notable improvement in EBITDA margins was primarily attributed to a favorable product mix, shifting away from lower-margin cement orders towards higher-margin OEM orders, including converters and RH degassers. Average realization per metric ton increased to ₹80,410 in Q3 FY26 from ₹73,237 in Q2 FY26, partly due to one-time^📎 performance bonuses from guarantee clauses. The company also implemented operational excellence programs focused on better manpower planning, machine-level loading, and tighter control over discretionary spends, further contributing to cost optimization.

The quarter saw the highest ever operating cash flow at ₹289 crores, representing an impressive 627% quarter-on-quarter increase. This strong cash generation, combined with disciplined working capital management, particularly tighter inventory control and improved collections, significantly bolstered the company's financial position. Net debt reduced from ₹200 crores in Q2 FY26 to a net cash position of ₹35 crores in Q3 FY26, leading to a net debt to EBITDA ratio improvement from 0.5x to minus 0.1x, a first since the acquisition.

The refractories industry continues to face structural pressures from domestic overcapacity and an oversupply of imported commoditized products. Key end markets like steel and cement are also challenged, with steel producers contending with Chinese steel dumping and the cement sector operating at 55-60% capacity utilization. However, government initiatives such as a 10% capex growth, the Construction and Infrastructure Equipment Scheme, and a ₹20,000 crores carbon capture fund are expected to stimulate demand for steel and cement, creating structural opportunities for refractory suppliers.

RHI Magnesita's strategic initiatives are gaining traction, focusing on strengthening the core business and driving sustainable long-term growth. Key areas include expanding the 4PRO (total refractory management with sustainability) footprint across cement, steel, and iron making sectors. The company is also enhancing its presence in coke oven and blast furnace areas with new DRI products and solidifying its Hydrocarbon Processing Industry (HPI) business. A new 4PRO contract with Tata Steel Ludhiana is anticipated to add ₹50-60 crores in additional business in the next fiscal year.

The company is committed to localizing the production of specialized products, particularly for cement and high-end technical solutions, to meet local market demand and reduce reliance on imports. This gradual increase in domestic production is expected to improve margins and reduce transit times. Furthermore, RHI Magnesita aims to increase its recycling rate beyond the current 19% to over 20% in the coming year, aligning with circular economy initiatives and contributing to cost optimization.

RHI Magnesita maintains its market leadership with approximately 32% share in the steel sector and 40-41% in the cement sector. Despite high competitive intensity and industry challenges^🌐, management expressed cautious optimism for the future. The company's outlook is supported by a robust order book, ongoing pricing initiatives, and efforts in input cost optimization. The average realization of ₹76,000-80,000 per ton is considered sustainable in the short term.