Vardhman Special Steels Ltd Q4 FY26 Earnings Analysis

- Current steel production and sales are about 2,25,000 tons, expected to more than triple to over 6,75,000 tons in the next 3-4 years including forging business. - Target to raise steel production to 2,70,000-2,75,000 tons within 3 years before new steel plant commissioning in July 2029. - New steel plant with a capacity of 5,00,000 tons to be operational by July 2029, further boosting volumes. - Overall steel production capacity expected to reach around 8 lakh tons after all capex. - Focus on expanding into forging and non-automotive steel segments for diversified growth. - Revenue and sales growth will align with volume increases as pricing depends on raw material fluctuations. - EBITDA per ton guidance is INR 8,000-11,000 sustainably, aimed to improve with operational efficiencies. - Full capacity utilization anticipated to take a few years post commissioning of new plant and capex projects.

- Vardhman Special Steels plans to triple sales volume from ~2.25 lakh tons currently to over 6.75 lakh tons in the coming years with new capacity additions. - Sustainable EBITDA per ton target is INR 8,000 to INR 11,000; aspirational target around INR 12,000 per ton post full capacity commissioning. - Full capacity utilization expected to be achieved before the new steel plant commissioning in July 2029. - The new billet capacity of 5 lakh tons will come up by July 2029, augmenting existing 3 lakh tons. - Launch of forging business expected to contribute to revenues with decent returns once fully operational in next 2 years. - New projects like non-destructive testing line (coming online by mid-2026) and reheating furnace (Q4 FY '26) will enhance product quality and operational efficiency. - Strong support from major shareholders Aichi Steel and Vardhman Group for capital raises to fund growth. - Company expects margin improvement and working capital efficiency gains as new projects stabilize.

- **Ongoing Capex:** - Reheating furnace capex likely to be commissioned by March 2026, with full benefits from May 2026. - Non-destructive testing line capacity to be ready by June/July 2026. - **Future Capex:** - New forging plant with an investment of INR 475 crores, commissioning target July 2028. - New steel plant with 500,000 tons capacity planned for commissioning by July 2029. - Potential expansion of melting shop capacity from 300,000 tons to 500,000 tons subject to government license. - **Strategic Investments:** - Support and funding willingness from major shareholders, Aichi Steel (24.9% stake) and Vardhman Group, for capital raising needed for new projects. - Exploration into non-automotive steel segments planned within 1-1.5 years. - **Renewable Energy:** - Solar power plant near commissioning, expected to reduce carbon footprint and lower power costs.

- Vardhman Special Steels Limited has full support from its major shareholders for capital infusion. - Aichi Steel has increased its stake to 24.9% and is willing to invest more funds as and when required. - The Vardhman Group has also expressed willingness to add capital whenever needed for new projects. - No new capex plan announced; current focus is on implementing earlier announced capex plans. - The company is prepared to raise capital through existing shareholders rather than seeking external debt or equity fundraising at this time.

- The transcript does not explicitly mention the current or expected order book or pending orders of Vardhman Special Steels Limited. - However, it highlights ongoing discussions with major customers, including Maruti Suzuki and other car OEMs, showing strong interest in the company’s products. - The management expects growing demand aligned with upcoming capacity expansions such as the new melting shop and reheating furnace commissioning. - The forging project and new steel plant (commissioning targeted by July 2029) are expected to boost sales significantly, helping to triple current volumes. - Increasing demand is supported by emerging green steel initiatives and non-destructive testing capabilities planned by mid-2026. - Overall, the order intake outlook appears robust given capacity expansions and strong customer engagement, although no exact order book figures are disclosed.