Economy & Finance

RHI Magnesita confident of achieving 15% margin this year

Parmod Sagar, the company’s Managing Director and CEO, stated that input costs remain a challenge and may lead to product price hikes, which would support the topline.

RHI Magnesita confident of achieving 15% margin this year

Parmod Sagar, Managing Director and CEO of RHI Magnesita says price increases will help the company deliver a stronger revenue performance in the second half of the year.

He maintains the target to achieve a blended margin of 14-15% for 2024-25.

RHI Magnesita supplies refractory products, systems, and solutions to a variety of industries.

These are the edited excerpts of the interview. 

Q. Volumes have recovered on a quarter to quarter basis. What kind of volume growth are you looking and have realisations bottomed out?

A. We’re looking at pricing from two perspectives. One is input cost, and the other is market condition. Raw material pricing is going up. To some extent, freight still remains volatile and elevated. So we believe, pricing should remain stabilised, but should increase at the same time, because this is not sustainable thing. We are expecting market to improve with planned new commissioning of new plants in next six months or so.

Q. So volumes will pick up but there are still some challenges on the raw material side. Now, give us two details. Earlier, you told us the blended margins should move up to around 14-15%. Do you stick to that guidance? In the past quarter, was around 12.5%.

A. I always maintain it should be around 15%.

Q. What about revenues that declined at the half year mark. For the year can you give some growth?

A. Yeah, that’s what I’m saying that because the pricing was down, the revenue looks depressed. But there is 4.8% growth in volume this quarter. But now we’ll have a correction in pricing. So revenue will go up in next quarter.

Q. The Dalmia asset will start growing now, you said, maybe by mid-teens. Has that happened? What is the guidance on both in growth and margin band?

A. We are now looking at a consolidated number. We talk about 14-15% growth in Dalmia plants. At that point of time, we were looking at a robust export, which is not happening because of the geopolitical situation globally. So it has impacted us. But at the same time, we grew exponentially in our cement business.

We are growing in iron making business through this Dalmia plants, and we are still very positive that we will deliver in medium term whatever we are guiding to the market. When it comes to profitability, it was a less than 7% EBITDA when we took and we are at 11.4 or 11.5%. Our mission is to still maintain 12 to 13% and I’m very sure in coming days, we will be able to deliver that as well.

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