Shares of Rhi Magnesita India Ltd experienced a significant decline on Monday, falling 12.95 per cent to Rs 353.60, following the release of its fourth-quarter (Q4 FY26) financial results. The company's adjusted EBITDA for Q4 FY26 came in at Rs 113 crore, falling short of Nuvama Institutional Equities' estimate of Rs 145 crore.
This performance represents a 6 per cent year-on-year (YoY) and a substantial 39 per cent quarter-on-quarter (QoQ) decrease. Nuvama attributed the decline primarily to lower volumes and increased other expenses. During the quarter, volumes reportedly dropped 14 per cent sequentially. The brokerage also noted that the adjusted EBITDA margin contracted by 160 basis points (bps) to 12.1 per cent, while adjusted EBITDA per tonne stood at Rs 9,688, below their estimate of Rs 10,600 per tonne, reflecting a 12 per cent QoQ decline.
Nuvama Maintains 'Buy' Rating Despite Target Price Cut
Following the earnings announcement, Nuvama Institutional Equities revised its target price for Rhi Magnesita India shares downward to Rs 557 from the previous Rs 600. However, the brokerage retained its 'Buy' rating on the stock, valuing it at 32x FY28E EPS, noting the stock currently trades at 23x FY28E PE.
Nuvama revised its earnings estimates, cutting FY27E and FY28E Profit After Tax (PAT) by 12 per cent and 7 per cent respectively, to account for higher costs of production (CoP).
Outlook for Future Margins
Despite the Q4 performance, Nuvama anticipates an improvement in EBITDA margins in the first quarter of FY27. This optimistic outlook is supported by price hikes agreed upon with customers. Furthermore, the company boasts a strong order book extending 18 months, which is expected to mitigate pressure on commoditised products and bolster margins to 13 per cent in FY27E and 13.5 per cent in FY28E.
The brokerage also highlighted Rhi Magnesita India's robust balance sheet, reporting a net cash position of Rs 69 crore as of Q4 FY26, an increase from Rs 35.2 crore at the end of Q3 FY26. Nuvama believes the company's strategic focus on Value Added Products (VAP) and integrated solutions will contribute to higher margins in the future.