RHI Magnesita India (534076) Q2 24/25 earnings summary

Executive summary

• The company achieved resilient EBITDA margins despite challenging market conditions, including India becoming a net steel importer, increased competition from lower-priced refractories, and raw material cost pressures, particularly in alumina-based materials.

• Revenue for H1 FY25 was ₹174,582 lakhs, down from ₹191,487 lakhs in H1 FY24, reflecting market headwinds and pricing pressure from imports.

• Strategic initiatives in iron, pellet, and DRI segments, including a strong order book and the establishment of a Center of Excellence in Jamshedpur, are expected to drive sustainable growth.

• Operational efficiencies and cost management supported resilient margins despite raw material cost pressures.

• Board approved unaudited consolidated and standalone financial results for the quarter and six months ended September 30, 2024.

Financial highlights

• Q2 FY25 consolidated revenue from operations was ₹86,706.56 lakhs; H1 FY25 was ₹174,582.45 lakhs, down 8.8% year-over-year.

• Q2 FY25 EBITDA was ₹12,200 lakhs with a margin of 14.1%; H1 FY25 EBITDA margin improved to 16% from 14.9% year-over-year.

• Profit after tax for H1 FY25 was ₹11,879.21 lakhs, with PAT margin at 6.8%, nearly flat year-over-year.

• Net debt to EBITDA ratio reduced to 0.3x from 0.6x at the start of the year, reflecting strong cash generation.

• Operating cash flow increased 22% to ₹25,208 lakhs compared to H1 FY24.

Outlook and guidance

• Management maintains a sustainable EBITDA margin guidance of around 15%.

• Volume growth is expected to outpace industry growth by 1-2%, with anticipated 8%+ volume growth if market conditions remain stable.

• Positioned to benefit from capacity expansions in 2025, especially in the cement sector, and strategic investments in local manufacturing.

• India remains the highest growth major market for refractories, with 6-8% CAGR forecast.

• Revenue guidance is not provided due to volatility in raw material prices and project-based business.