RHI Magnesita up 12% after company posts rise in Q1 profit, sees margin expansion

The company’s first-quarter total income fell from ₹931 crore to ₹882 crore last year while profit jumped from ₹47 crore to ₹73 crore.

RHI Magnesita attributed the weakness in revenue to subdued customer activity because of heatwave, elections and high imports.

Refractory products, also called heat shields of the industry, are made up of compounds such as alumina and magnesia, among others, and are used in manufacturing processes where temperatures exceed 1200 degrees. They have applications across industries like iron and steel production, cement and glass manufacturing and petrochemicals.

The company added that it has additionally appointed its MD and CEO Parmod Sagar as Chairman of the firm.

In the company’s earnings statement, Sagar said the company achieved the highest margin of 17.9% since the last calendar year when it made as many as four acquisitions. Its margin in the corresponding period last year stood at 16%.

“(Our) end user industries witnessed a slowdown due to cheaper imports and increased raw material and freight prices. Still, we successfully navigated this volatility by maintaining strong margins and achieving sustainable and profitable growth,” Sagar said.

RHI Magnesita shares are up about 20% over the past one year and are down 15% over the past five years.

This is partly because of the company’s struggles with profitability -- it has made a loss in four out of the past five years – and despite a fivefold jump in revenue.

Going forward, the company remains optimistic about the future, having garnered a market leadership position of 30%.

“Our recent acquisitions have created a balanced portfolio of refractory products and give us a strong platform for growth in India and in under-represented product markets,” it said, noting that India is the highest growth major market with annualised growth seen at 6-8%.