Any current/future new fundraising through debt or equity?

The company plans capex of around INR 160 crores aligned to the PLI scheme. The debt-to-equity ratio is maintained below 0.5 throughout. Current debt-to-equity is around 0.2 and is not expected to cross 0.3 in the near future. Specific details of how much capex will be funded through debt or internal accruals are not shared. No mention of any new equity fundraising or plans for equity issuance in the discussion.

Any current/future capex/capital investment/strategic investment?

A capex plan of INR 160 crores has been approved by the Board, aligned with the Production Linked Incentive (PLI) scheme. The capex includes investment in equipment expected to arrive by December 2024 to March 2025, leading to quality improvements. FY'24 capex expected at around INR 40 crores excluding land acquisition; if land parcels are finalized, could rise to approx. INR 90 crores. No new capacity beyond existing plans; recent orders for a 50,000-ton capacity increase are part of the original plan. Peak capacity expected around 230,000 to 240,000 tons of saleable steel by FY'26, m

Future growth expectations in sales/revenue/volumes?

The company targets a peak saleable steel capacity of around 230,000 to 240,000 tons by FY '26, with melting capacity around 250,000 to 260,000 tons. Volume guidance for FY '24 is around 205,000 tons, consistent with previous guidance. Export volumes to Aichi (Toyota Tsusho) are expected to reach about 25,000 tons by FY '25-'26, part of an aspirational export target of 25% (~60,000 tons). Volume growth in PV segment is strong, while motorcycles segment is recovering; exports have seen some impact due to global economic conditions. The company aims to increase production of specified steel grad

Future growth expectations in earnings/operating earnings/profits/EPS?

Target EBITDA per ton: INR 7,000 to INR 10,000 for near term, with an aspirational target of INR 10,000 to INR 12,000 by FY '25-'26 (Page 15-16). Peak capacity planned around 230,000 to 240,000 tons (saleable) by FY '26, with melting capacity 250,000 to 260,000 tons (Page 16). Absolute EBITDA guidance between INR 7,000 to INR 10,000 lakhs, avoiding percentage margin targets due to price volatility (Page 15-16). Expected PLI scheme benefits: INR 25 to 30 crores over 4-5 years starting from FY '26 (Page 14). Volume expected steady, with some accounting delays; full-year sales likely similar to l

Current/ Expected Orderbook/ Pending Orders?

The company has announced a capex plan as part of the original plan to increase capacity by 50,000 tons. Orders related to this capex have been finalized or are about to be placed, approved by the Board. (Page 9) The current peak saleable capacity after capex is expected to be around 230,000 to 240,000 tons, with melting capacity at 250,000 to 260,000 tons. (Page 16) Export target aspirationally set at 25% of volumes, around 60,000 tons by FY '25-'26. Aichi business alone is expected to contribute about 25,000 tons. (Page 9, Page 7) The company is handling OEM orders actively, with the largest

Vardhman Special Steels LtdQ2 FY24

Vardhman Special Steels Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹353P/E: 22.2Market Cap: ₹3.2K Cr

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Order

N/A

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→The company targets a peak saleable steel capacity of around 230,000 to 240,000 tons by FY '26, with melting capacity around 250,000 to 260,000 tons.
→Volume guidance for FY '24 is around 205,000 tons, consistent with previous guidance.
→Export volumes to Aichi (Toyota Tsusho) are expected to reach about 25,000 tons by FY '25-'26, part of an aspirational export target of 25% (~60,000 tons).
→Volume growth in PV segment is strong, while motorcycles segment is recovering; exports have seen some impact due to global economic conditions.
→The company aims to increase production of specified steel grades as per PLI scheme to gain incentives of INR 25-30 crores over 4-5 years.
→Solar power plant commissioned by FY '25-'26 expected to provide cost savings and support growth goals.
→Consolidation year focused on stabilizing systems before next phase of volume and profitability growth.

Margin guidance

Category 3

→Target EBITDA per ton: INR 7,000 to INR 10,000 for near term, with an aspirational target of INR 10,000 to INR 12,000 by FY '25-'26 (Page 15-16).
→Peak capacity planned around 230,000 to 240,000 tons (saleable) by FY '26, with melting capacity 250,000 to 260,000 tons (Page 16).
→Absolute EBITDA guidance between INR 7,000 to INR 10,000 lakhs, avoiding percentage margin targets due to price volatility (Page 15-16).
→Expected PLI scheme benefits: INR 25 to 30 crores over 4-5 years starting from FY '26 (Page 14).
→Volume expected steady, with some accounting delays; full-year sales likely similar to last year (Page 6).
→Cost savings expected from new solar power plant from FY '25-'26, improving margins and reducing carbon footprint (Pages 4,16).
→Consolidation phase this year before growth resumes (Page 12).
→Fixed costs expected to remain stable or decrease per ton with increased volume (Page 7).

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Fundraise plans

→The company plans capex of around INR 160 crores aligned to the PLI scheme.
→The debt-to-equity ratio is maintained below 0.5 throughout.
→Current debt-to-equity is around 0.2 and is not expected to cross 0.3 in the near future.
→Specific details of how much capex will be funded through debt or internal accruals are not shared.
→No mention of any new equity fundraising or plans for equity issuance in the discussion.

Order book

→The company has announced a capex plan as part of the original plan to increase capacity by 50,000 tons. Orders related to this capex have been finalized or are about to be placed, approved by the Board. (Page 9)
→The current peak saleable capacity after capex is expected to be around 230,000 to 240,000 tons, with melting capacity at 250,000 to 260,000 tons. (Page 16)
→Export target aspirationally set at 25% of volumes, around 60,000 tons by FY '25-'26. Aichi business alone is expected to contribute about 25,000 tons. (Page 9, Page 7)
→The company is handling OEM orders actively, with the largest 4 OEs consuming about 4,500 to 5,000 tons monthly. (Page 5)
→No separate specific number on pending orderbook disclosed; discussions revolve around capacity utilization and gradual build-up post capacity expansion. (Page 16)

Capex plans

Yes

→A capex plan of INR 160 crores has been approved by the Board, aligned with the Production Linked Incentive (PLI) scheme.
→The capex includes investment in equipment expected to arrive by December 2024 to March 2025, leading to quality improvements.
→FY'24 capex expected at around INR 40 crores excluding land acquisition; if land parcels are finalized, could rise to approx. INR 90 crores.
→No new capacity beyond existing plans; recent orders for a 50,000-ton capacity increase are part of the original plan.
→Peak capacity expected around 230,000 to 240,000 tons of saleable steel by FY'26, melting capacity 250,000 to 260,000 tons.
→A solar power plant is planned, targeted for commissioning by FY 2025-26, expected to supply 50% of power needs and reduce carbon footprint significantly.
→Focus on consolidating operations, strengthening internal systems, and preparing for further growth over the next 5-7 years with a focus on sustainability and quality.

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