Midcap RHI Magnesita India share price rises 9% post Q1 results: Ebitda margins at highest levels post acquisitions

Stock Market Today; Midcap RHI Magnesita India Ltd saw its share price gained more than 9% in the morning trades on Friday post Q1 results that were declared after market hours on Thursday. RHI Magnesita India Ebitda margins surged to highest levels post completion of acquisitions of Hitech Chemicals in October 2022 and Dalmia Bharat refractories in January 2023.

Midcap RHI Magnesita India share price opened at ₹625.00, more than 5% higher than the previous close of ₹591.95. However the Midcap RHI Magnesita India share price gained further to ₹647.50 on the NSE on Friday, marking gains of more 9%.

Volumes decline but realisations support

Consolidated revenue, at ₹878.76 Crore , dipped 7% sequentially, primarily due to lower volume at 113,916 tonnes, which declined 8% sequentially. RHI Magnesita said that subdued customer activity due to unprecedented heatwave, India election, import of steel from South East Asia & China and temporary export volume reduction.

The revenues were however supported by a marginal improvement in realisation that at ₹77,084 per tonne were up 1.3% sequentially owing to improved product mix and partially offsetting decline in revenues.

Analysts at Nuvama said that Midcap RHI Magnesita India's exports continue to be affected due to poor demand as well as delays emanating from the Red Sea turbulence.

Margins improve

Gross margin improved to 45% (from 43% in Q4FY24) driven by a better product mix and one-time high-margin order. Employee cost though rose led by bonus provisions, however other expenses fell 9% sequentially.

The same mean that the Earnings before interest tax depreciation and amortisation (Ebitda) at ₹154 crore (as per analysts calculations) improved 4% sequentially, leading to an Ebitda margin of 17.5% compared to 15.7% in previous quarter (Q4FY24).

Parmod Sagar, MD & CEO of RHI Magnesita India Ltd. in a statement said that, “We are pleased to report that we have delivered the highest margins since the completion of acquisitions over a year ago.

Near term headwinds but order book strong

While the outlook remains firms and RHI has a robust orderbook, however near term headwinds remain lead to some caution. Analysts at Nuvama Institutional Equities said that RHI has lost market share in stable businesses such as cement and steel due to competition from Chinese suppliers. Also , there is a delay in shipments of raw materials from China, which would persist in Q2FY25. Meanwhile, RHI Magnesita India has strong order books for blast furnace, iron making, tap clay and pellets, whose revenue as per Nuvama should reflect Q1FY26 onwards

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