Rain Industries (RAIN) Q2 2024 earnings summary

Executive summary

• Q2 2024 EBITDA reached INR 4.9 billion, with revenue from operations of INR 40.94 billion, reflecting progress toward normalized earnings but still below historical averages; the company operates in Carbon, Cement, and Advanced Materials segments, serving global industries.

• Margin recovery in the carbon segment, especially for CPC and CTP, as pricing and raw material costs stabilized after a challenging period.

• Advanced materials segment delivered consecutive quarters of volume and profitability growth, driven by strong demand in Europe and supply chain shifts due to Red Sea disruptions.

• Cement segment faced a revenue and volume decline due to a slowdown in Indian construction during elections, but industry forecasts remain positive for the coming fiscal year.

• Board approved unaudited standalone and consolidated financial results for Q2 and H1 ended June 30, 2024, with an unqualified review report from auditors; interim dividend of INR 1 per equity share declared.

Financial highlights

• Consolidated Q2 2024 revenue was INR 40,941.49 million, down from INR 46,271.47 million in Q2 2023; adjusted EBITDA was INR 4.90 billion, and adjusted net profit after tax was INR 0.07 billion.

• Adjusted EBITDA margin was 12.0% in Q2 2024, compared to 14.6% in Q2 2023.

• Consolidated net loss for Q2 was INR 448.66 million, compared to net profit of INR 2,065.43 million in Q2 2023; EPS (consolidated, Q2) was INR -0.66.

• Carbon segment revenue dropped 16.6% year-over-year to INR 27.95 billion, despite higher CPC volumes; average blended realization fell 24.1%.

• Advanced materials revenue rose 5.2% year-over-year to INR 9.4 billion, with higher BTX and HHCR sales volumes offsetting a 16.1% drop in average selling prices.

Outlook and guidance

• Gradual recovery toward normalized earnings expected, but not anticipated until Q1 2025; margin pressures in the carbon segment are expected to ease in H2 2024, with normalization projected in H1 2025.

• Advanced materials segment margins are expected to remain stable in upcoming quarters.

• Cement segment demand is forecast to rise due to increased infrastructure spending and government initiatives in India.

• Cost reduction strategies and efficiency plans are being implemented across all regions, including severance payments in Germany.

• Management continues to monitor geopolitical risks, especially the Russia-Ukraine conflict, but does not foresee significant impact on consolidated results.