RHIM - RHI MAGNESITA INDIA LIMITED Share Price

Q1: "Management has highlighted that margins are expected to recover from both secured price increases and lower input costs. Can you provide some detail on the balance between these two drivers?"

A1: The market remains highly commoditized, making price increases challenging. However, through our 4 PRO solutions, where we add value, we successfully secured some price increases. Regarding Q2 and Q3, I can't provide exact numbers, but we anticipate a gradual upswing in margins rather than a significant spike. Our aim is to match last year's EBITDA levels over the year, which would be satisfying to us.

Q2: "What specifics can you share about the 4 PRO model and how it differs from previous total refractory management contracts?"

A2: The 4 PRO model enhances our previous Total Refractory Management (TRM) approach. We now offer a holistic solution that includes robotics, AI-driven monitoring, and addressing metallurgical challenges. While TRM focused merely on inventory management, 4 PRO integrates advanced technologies and improves our margins over time. Expect growth from this model in the next year, but it's a long-term differentiator rather than an immediate revenue generator.

Q3: "What's your assessment of the export environment and plans to ramp up exports?"

A3: We're at an advanced stage of trials for expanding exports beyond India, with significant plans for 2026. Although there have been challenges with geopolitical situations affecting production in key export markets, we aim to increase our flow control exports considerably next year as we establish stronger footholds in various regions.

Q4: "How is your capital allocation framework evolving to manage margin volatility and growth?"

A4: Our capital allocation begins with ensuring a positive cash flow and prioritizing maintenance capex for safe operations. Next, we consider dividends for shareholders, followed by strategic investments that enhance market share and productivity. Our recent acquisitions fit this strategy, aiming to balance between capacity growth and sustainability-linked initiatives, fostering longer-term profitability while maintaining a disciplined approach.

Q5: "How confident are you about achieving the desired volume growth despite the current competition?"

A5: We're optimistic about sustained volume growth, targeting an 8% to 9% increase this year. Our strong order book supports this expectation, and Q1's performance aligns with our forecast. While there's intense competition leading to price undercutting, our differentiation strategy through innovative offerings is designed to maintain both growth and margins.

Q6: "Can you provide insights into the employee cost forecast for the upcoming year?"

A6: We expect employee benefits costs to stabilize around 10% of our expenses, reflecting a reduction from last year's levels. This forecast considers ongoing productivity improvements and the stabilization of costs due to increased operational efficiency following strategic initiatives.

Q7: "What percentage of your revenue is attributed to the refractory management service?"

A7: Approximately 32% of our revenue comes from refractory management services, primarily in the steel sector. While there was a slight decrease from previous quarters due to pricing challenges, we are in the final stages of securing more contracts that should allow for growth in this aspect.

Q8: "What is the anticipated capital expenditure for this year?"

A8: We plan to double last year's capital expenditure, aiming for around INR 150 crores. This increase is allocated primarily toward modernizing our Dalmia plants and enhancing operational efficiency, ensuring a solid foundation for future growth.