Revenue: Reached INR 1,001 crores in Q3 FY '25, a 17% increase quarter on quarter.
Shipment Growth: Increased by 20% in Q3 FY '25.
Production: Maintained at 86 kilotons, consistent with Q2 FY '25.
Capacity Utilization: Steady at 67%.
EBITDA: INR 132 crores, reflecting an 8% growth quarter on quarter.
Profit After Tax: Increased by 3.5% quarter on quarter to INR 48 crores.
Working Capital Intensity: Improved to 35%.
Dividend Payment: INR 51 crores.
Positive Points
RHI Magnesita India Ltd (BOM:534076) achieved a significant milestone by crossing INR 1,000 crore in quarterly revenue for the first time.
Revenue from operations for Q3 FY '25 grew 17% quarter on quarter, driven by a 20% increase in shipments.
The company maintained a steady capacity utilization rate of 67%, ensuring market demand was met through plant inventory releases.
Profit after tax increased by 3.5% quarter on quarter to INR 48 crores, supported by cost optimization measures.
RHI Magnesita India Ltd is actively addressing raw material security through policy advocacy and sourcing diversification, aiming for a 40% market share within the next four years.
Negative Points
The company faces challenges from increased competition and volatility in raw material prices, particularly in the cement sector.
Despite efforts, RHI Magnesita India Ltd has not been able to secure price increases from most customers, impacting margins.
Interest costs have risen due to hedging on ECB loans, influenced by rupee depreciation.
The company is experiencing margin dilution due to high raw material costs and increased competition.
Export growth remains static at around 10% due to geopolitical issues, with limited improvement expected in the near future.
Q & A Highlights
Q: Have you been able to secure price increases for your products amid rising raw material costs?
A: No, we have not been able to secure price increases from most customers. Despite leading the market, our competitors are not pushing for price hikes, making it challenging to pass on increased costs. We continue to push for price increases and hope for success in the future. - Parmod Sagar, CEO
Q: What is the outlook for margins given the current raw material price trends?
A: We expect margins to return to 15% by the second quarter of FY '26. If we can secure price increases sooner, we may see improvements earlier. - Parmod Sagar, CEO
Q: How are you managing the increased interest costs?
A: The higher interest costs are due to hedging on ECB loans. We are managing this through financial instruments to minimize the impact of currency volatility. We do not expect further worsening of hedging losses. - Azim Syed, CFO
Q: Can you provide an update on plant utilization rates?
A: Overall capacity utilization was at 67%. RSAM standalone was at 72%, OCL at 63%, and high-tech at 68%. We have seen improvements in utilization rates across our facilities. - Azim Syed, CFO
Q: What is the impact of recent capacity additions by major steel producers on your market share?
A: Our market share has increased with recent capacity additions by Tata Steel and JSW. We are often the preferred supplier for new projects, which has positively impacted our shipments and revenue. - Parmod Sagar, CEO
Q: How are you addressing the challenges posed by increased competition and imports?
A: We are focusing on operational efficiencies, cost control, and strategic market expansion. We are also advocating for policy changes to address raw material security and are diversifying our sourcing. - Parmod Sagar, CEO
Q: What is the current export to domestic sales ratio, and how do you see it evolving?
A: Exports account for about 9.5% to 10% of our sales, with the rest being domestic. This ratio is expected to remain stable due to geopolitical factors affecting global markets. - Parmod Sagar, CEO
Q: What are your long-term goals for working capital management?
A: Our long-term goal is to maintain a working capital intensity of 30%. We are closely monitoring customer demand and optimizing inventory management to support growth while maintaining financial discipline. - Azim Syed, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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