Alpha | RHI Magnesita India Ltd.- Equity Research Desk

RHI Magnesita India – Magnifying Performance

RHI Magnestia India ltd earlier known as Orient Refractories Limited (ORL) is in the business of manufacturing and marketing special, basic, and non-basic refractory products, systems, and services to the steel industry in India and Globally. The Company is the market leader for refractories in India and has many global customers for its international quality products. The Company produces nearly 1,40,000 tons of refractory per annum including customized products. Refractory products are mainly used in high-temperature manufacturing processes in the iron and steel industry, metal smelters, cement, glass industry, and other industrial products. RHI recently merged its Indian entities – RHI India Pvt. Ltd., RHI Clasil Ltd with Orient Refractories to create India’s largest refractory manufacturing and trading company called RHI Magnesita India (RHIM).

Valuation:

We expect better than peer volume growth in FY23 on the back of product (aggressive Capex plan of Rs.4bn) & customer additions and rising steel demand. This, combined with a healthy balance sheet i.e., being net cash makes the stock very attractive. We recommend a BUY rating in the stock with the target price (TP) of Rs.740, 30x FY24E EPS.