Rhi Magnesita India Limited

RHI Magnesita reported a consolidated revenue of ₹3,675 crores for FY25, marking a 2.8% decline year-on-year. Despite this, the company achieved a PAT of ₹203 crores, a significant turnaround from a loss in FY24, attributed to disciplined execution and tight cost controls. EBITDA for FY25 stood at ₹505 crores, with margins softening to 13.7% from 14.7% in FY24, primarily due to pricing pressures and higher raw material costs. The company demonstrated operational resilience amidst shifting market dynamics and geopolitical uncertainties, maintaining a strategic focus on innovation and customer engagement.

Q4 FY25 saw revenue decline 9.7% sequentially to ₹919 crores, with EBITDA at ₹94 crores and margins at 10.2%. PAT for the quarter was ₹36 crores. Despite these challenges, the company made significant progress in managing working capital and cash flow. Net debt was reduced by 53% during FY25, bringing the net debt to EBITDA ratio down to 0.3x from 0.6x, indicating improved financial health and operational discipline.

India's steel sector is expected to grow in FY26, fueled by infrastructure investment, and cement demand is projected to rise 6-8%. However, the refractory market faces significant challenges from overcapacity and Chinese imports, leading to price erosions. Alumina prices, a key raw material, surged from ₹60,000-₹65,000 to ₹95,000 per ton, severely impacting margins. Management highlighted that while they are market leaders, they strategically avoid low-margin orders to maintain profitability.

RHI Magnesita's strategy is anchored on five key pillars: strategic initiatives in iron making and flow control, innovation and technology (including R&D and digitalization), sustainability, operational excellence, and safety. The company aims to achieve 8-10% volume growth and aspire to 14-15% EBITDA margins. They are optimistic about FY26, expecting margin improvement from July onwards due to falling alumina prices and targeted price increases, alongside robust domestic demand in steel and cement sectors.

The company has earmarked ₹150 crores for CAPEX in FY26, primarily for the DOCL plant (65-70%) and RHIMIN plant, with commissioning expected by the end of this year or early next. This investment aims to enhance productivity and support new product development. Initiatives include local production of items previously imported from Europe/China, such as cement and fired magnesia bricks. These new products from Dalmia plants are expected to contribute approximately ₹200 crores in revenue for FY26 (₹100 crores from new products and ₹100 crores from magnesium carbon bricks).

Employee benefits increased by 2% for the full year and 16% in Q4 FY25. This increase was attributed to inflation correction, government-mandated wage increases (especially in Odisha), and the harmonization of HR policies across all three legal entities, including leaves and gratuity arrangements. Management stated that these changes are now base-lined and will be balanced with operational excellence initiatives to improve productivity and reduce manpower.