RHIM - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.2

📊 Long-Term Investment Analysis: RHI Magnesita India Ltd (RHIM)

RHIM presents a cautious long-term investment case, with strengths in stability and niche industry positioning, but notable concerns around valuation and profitability.

✅ Positives

Debt-to-Equity of 0.09: Extremely low leverage, indicating strong financial stability

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Stable Market Position: RHIM aims to capture 40% of India’s refractory market by 2029, backed by acquisitions and local production

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Piotroski F-Score of 8: Suggests solid financial health

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EPS Growth (YoY +301%): Indicates a turnaround in earnings

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❌ Concerns

High P/E of 50.5 vs Industry PE of 41.2: Overvalued on earnings basis

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Low ROE (5.16%) and ROCE (7.01%): Weak capital efficiency

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PEG Ratio of -5.57: Implies negative earnings growth outlook.

Dividend Yield of 0.50%: Not attractive for income investors.

Quarterly PAT Decline (-11.7%): Indicates margin pressure and earnings volatility.

🎯 Ideal Entry Price Zone

Based on valuation and technical trends

Fair Value Estimate: ₹420–₹450 (based on DCF and historical P/E compression)

Ideal Entry Zone: ₹460–₹480

Near 50 DMA (₹480) and below 200 DMA (₹498)

Offers technical support and margin of safety

🧭 Exit Strategy / Holding Period

If you already hold RHIM

📌 Holding Period

2–3 years minimum, to allow margin recovery and integration of recent acquisitions (e.g., Resco in the US)

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🚪 Exit Strategy

Partial Exit: If price crosses ₹550–₹580 without ROE improving above 10%.

Full Exit: If PEG remains negative or quarterly PAT continues to decline.

Watch for

Margin expansion in steel and industrial segments

Successful integration of M&A synergies

Improvement in ROCE and net profit margin

📉 Summary Table

Metric Value Verdict

P/E 50.5 Overvalued ⚠️

ROE 5.16% Weak ⚠️

ROCE 7.01% Below par ⚠️

PEG Ratio -5.57 Negative ⚠️

Dividend Yield 0.50% Low ⚠️

Debt-to-Equity 0.09 Excellent ✅

Entry Price Zone ₹460–₹480 Cautious Buy ⚠️

Exit Price Trigger ₹550+ Profit Booking Zone ⚠️

Would you like a peer comparison with other refractory or industrial material stocks like Vesuvius or Orient Ceratech?

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www.topstockresearch.com

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www.bizzbuzz.news

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ticker.finology.in

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ir.rhimagnesita.com

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