RHI Magnesita India Ltd

About RHI Magnesita India

RHI Magnesita India manufactures and supplies refractory products, systems and solutions for high-temperature processes across steel, cement, nonferrous metals, chemicals, energy and glass. Its portfolio includes Magnesia and Alumina-based bricks and mixes, as well as specialty products such as Isostatic products and Slide Gates. The Steel division contributes ~75% to 80% of revenue, while the Industrial Division serves other industries. The company was formed in 2021 through the integration of three former Indian subsidiaries of the global RHI Magnesita group.

Investment Rationale

• Established position: The company describes itself as a market leader with 30% share in India.
• Indian market demand: The note cites a 6% to 8% CAGR forecast for India, described as the highest-growth refractory market globally.
• Recurring replacement demand: Refractory materials can last from a few hours to days, supporting continuous replacement demand.
• Group support: The company is backed by RHI Magnesita Group and can leverage its products and technology transfers.
• Volume and margin initiatives: Management cited initiatives to increase market share, including iron-making work in Blast Furnace and Hot Metal Ladle. It guided for FY26 volume growth of 8%-9% Y-o-Y and EBITDA margin improvement from Q2FY26 onwards, targeting sustainable 14% to 15%.
• Customer engagement model: The 4 PRO Model was deployed in JSW under a 5 year contract; the note says it is expected to support higher margins and long-term customer stickiness.

RHI Magnesita India Key Financials

The table shows FY25 revenue and EBITDA below FY24, alongside a return to positive PAT. FY26(E) and FY27(P) are the report’s estimates and projections.

Valuation and Target Price

At the CMP of INR 497.30/-, the note cites a TTM PE of 62.2x and FY25 PE of 50.5x. It does not provide a Minerva target price, upside or formal rating, and says it would adopt a cautious approach while monitoring delivery of volume growth and margin improvement. The note separately reports that Axis Securities assigned a target price of 550, with upside of ~10% in 3-6 months.

INR 497.30/-

CMP (21-Aug’25)

62.2x

TTM PE

50.5x

FY25 PE

Steel Industry

The note cites CRISIL’s expectation that Indian steel demand will outpace other major steel-consuming economies in CY25, with growth of 8% to 9%. It links this outlook to steel-intensive construction in housing and infrastructure and demand from engineering, packaging and other segments.

• Global demand: Global steel demand in 2025 is expected to inch up by 0.5 %to 1.5%; India is expected to lead demand growth.
• Domestic steel prices: The note says HRC prices declined 9% and CRC prices declined 7% in 2024 as net imports increased material availability.
• Steel demand intensity: The note highlights that steel now uses 8-13 kg of refractories per tonne, compared with 10-15 kg previously.

Key Risks

• Industry capacity and pricing: The note flags industry overcapacity and competitive pricing as headwinds.
• Lower refractory consumption: Refractory consumption per tonne of steel has declined to 8-13 kg from 10-15 kg previously, which may affect demand.
• Raw material costs: Higher alumina prices contributed to recent margin pressure; the note also cites uncertainty around tariffs and demand.
• Margin execution: Margins may compress as the company increases iron-making market share to 25% to 30% in the next 2-3 years from 13% currently.

Our View

Minerva’s view is cautious at the cited valuation, with the investment case dependent on the company delivering volume growth and margin improvement from Q2FY26 onwards. The note also identifies overcapacity, lower refractory use per tonne of steel and alumina costs as key headwinds; it does not state a formal rating or Minerva target price.

Standard disclosures

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Regulatory disclosures

Minerva Capital Research Solutions is an independent investment advisory firm founded by Nishant Gupta(SEBI registration no. INH000018896).

Registration granted by SEBI and certification from NISM in no way promise or guarantee that the research recommendation will provide any assured, minimum or risk-free return to the investors.

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For any queries or grievances: Mr. Nishant Gupta | Email: nishant.gupta@mcapital.in | Contact Number: 8171433387 | Website: www.mcapital.in | Twitter: @Mcapital_In

Rating rationale

Minerva Capital Research Solutions endeavors to provide objective opinions and recommendations. Ratings are assigned to stocks according to their fair value vs current market price and then categorizes them as Buy, Hold, Reduce, Sell. The performance horizon is one year unless specified and fair value is defined as analyst’s valuation for a stock.

• Buy: > 15%
• Hold: -5% to 15%
• Reduce: -15% to -5%
• Sell: <-15%