Vienna-based RHI Magnesita has announced the acquisition of the Indian refractory business of Dalmia Bharat Refractories Ltd. (DBRL) for ₹ 1,708 crores. The share swap deal will happen through its Indian subsidiary RHI Magnesita India Ltd.
“DBRL will transfer its business to Dalmia OCL (DOCL). Under the terms of a share swap agreement, RHI Magnesita will acquire all outstanding shares in DOCL in exchange for 27 million new shares in RHI Magnesita India Limited,” said Stefan Borgas, the company’s CEO.
Based on the issuance price of RHI Magnesita India Ltd at ₹632.50 a share, the Share Consideration had a value of approximately ₹1,708 crore (€208 million). RHI Magnesita will consolidate DOCL’s earnings and approximately ₹ 443 Crores (€54 million) of net debt held by DOCL.
Borgas added that this acquisition will significantly increase RHI Magnesita’s presence in the fast-growing Indian refractory market, with steel production in India expected to grow 12 percent in 2022, and a 7-8 percent compound annual growth rate until 2030.
Refractory is used by a wide range of industries, like steel, cement, non-ferrous metals and glass during the manufacturing process. RHI Magnesita India employs approximately 1,200 people in India and has an annual production capacity of over 3 lakh tonne refractory from five plants and raw material sites.
The acquisition will add production capacities in important industrial regions in the south and west region where the company had no assets. Further, it will underline their position as the leading player in the Indian refractory market.
RHI Magnesita India is in the business of manufacturing and marketing special refractory products, systems and services to the steel industry in India and Globally. It is a market leader for special refractories in India and has many global customers for its international quality products.
The company has a market capitalization of ₹ 10,390 crores and is a mid-cap company. Its shares were trading at ₹ 726.50 apiece at 02:27 PM on Monday. It has a good return on equity of 29.33% and an ideal debt-to-equity ratio of 0.06. Its shares are trading at a price-to-equity ratio (P/E) of 31.44, which is higher than the industry P/E of 22.35, indicating that it may be overvalued.
Written by Simran Bafna
