Any current/future new fundraising through debt or equity?

Vardhman Special Steels plans a ₹2,000 crore capex with a target debt-to-equity ratio of 0.5:1. This implies around ₹1,000 crore each in new equity and debt funding. Existing equity includes ₹385 crore already raised from Aichi, now holding 24.9% stake. Further equity infusion may come from Aichi, Vardhman Group, or a Qualified Institutional Placement (QIP), depending on funding needs. Aichi intends to maintain its 24.9% stake, participating in further equity rounds to preserve this. Major fund needs are anticipated around 2028. The company aims to remain above 50% promoter holding but will su

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

INR 2,000 crores announced for a new steel plant, expected to start by July 2029, reaching full utilization in 2-3 years. Capex split roughly 1:1 debt to equity (INR 1,000 crores each). Promoters aim to maintain over 50% stake; further equity may come from promoters, Aichi, or QIP. Forging business capex will be additional to steel plant; details to be finalized in ~6 months. Forging line capacity planned at 12,000-15,000 tons/year initially, targeting 60,000-100,000 tons/year within 10 years. Attempts to establish forging line within existing plant to minimize additional land/building costs.

Future growth expectations in sales/revenue/volumes?

Target sales volume for FY 2025-26 is 225,000 tons, with expectations to meet this. Plan to increase sales volume from 215,000 tons (previous year) to 265,000-270,000 tons over the next 4 years. Capacity enhancements like new reheating furnace and second NDT line by mid-2026 will support volume growth up to ~265,000 tons. Expansion plant expected to start by July 2029, reaching full capacity in 2-3 years post commissioning. Revenue growth driven by volume increase and improved EBITDA per ton, targeted to rise from INR 7,000-10,000 to INR 8,000-11,000 next year. Introduction of specialized forg

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

Target production for FY '26 is 225,000 tons, indicating volume growth. Capacity expansion underway with new reheating furnace and NDT line to increase rolling capacity to ~265,000 tons by FY '27. New greenfield steel plant expected to commence by July 2029, with full utilization targeted within 2-3 years, aiming for 20%+ return on capital employed and eventual return to 25% ROCE. Forging business entering, with capacity of 12,000-15,000 tons/year, details to be finalized within 6 months; seen as major future business. EBITDA per ton expected to remain in INR7,000 to INR10,000 range fo

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Vardhman Special Steels LtdQ2 FY25Industrial Products

Vardhman Special Steels Ltd Q2 FY25 Earnings Call Analysis

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

Price: ₹279P/E: 22.2Market Cap: ₹2.7K CrSector: Industrial Products

Management growth scorecard

Revenue

Category 3

Margin

Category 1

Fundraise

Yes

Order

N/A

Capex

Yes

3 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Target sales volume for FY 2025-26 is 225,000 tons, with expectations to meet this.
→Plan to increase sales volume from 215,000 tons (previous year) to 265,000-270,000 tons over the next 4 years.
→Capacity enhancements like new reheating furnace and second NDT line by mid-2026 will support volume growth up to ~265,000 tons.
→Expansion plant expected to start by July 2029, reaching full capacity in 2-3 years post commissioning.
→Revenue growth driven by volume increase and improved EBITDA per ton, targeted to rise from INR 7,000-10,000 to INR 8,000-11,000 next year.
→Introduction of specialized forging line (12,000-15,000 tons capacity) expected to create new revenue streams, details to be finalized within 6 months.
→Strategic partnerships (e.g., with Aichi) will support future growth through product development and expanded market access.

Margin guidance

Category 1

→Target production for FY '26 is 225,000 tons, indicating volume growth.
→Capacity expansion underway with new reheating furnace and NDT line to increase rolling capacity to ~265,000 tons by FY '27.
→New greenfield steel plant expected to commence by July 2029, with full utilization targeted within 2-3 years, aiming for 20%+ return on capital employed and eventual return to 25% ROCE.
→Forging business entering, with capacity of 12,000-15,000 tons/year, details to be finalized within 6 months; seen as major future business.
→EBITDA per ton expected to remain in INR7,000 to INR10,000 range for FY '26, with potential increase to INR8,000 to INR11,000 next year due to operational efficiencies and solar plant benefits.
→Green steel products could potentially increase EBITDA per ton by INR1,000 to INR2,000 as sustainability becomes a market driver.
→Long-term growth backed by strategic partnership with Aichi, with plans for equity infusion and capacity expansion.

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Fundraise plans

Yes

→Vardhman Special Steels plans a ₹2,000 crore capex with a target debt-to-equity ratio of 0.5:1.
→This implies around ₹1,000 crore each in new equity and debt funding.
→Existing equity includes ₹385 crore already raised from Aichi, now holding 24.9% stake.
→Further equity infusion may come from Aichi, Vardhman Group, or a Qualified Institutional Placement (QIP), depending on funding needs.
→Aichi intends to maintain its 24.9% stake, participating in further equity rounds to preserve this.
→Major fund needs are anticipated around 2028.
→The company aims to remain above 50% promoter holding but will support Aichi increasing stake beyond 24.9% in the future.
→Currently, the company is largely debt-free with funds from Aichi used to repay debt.

Order book

The transcript does not provide specific figures or detailed information on the current or expected order book or pending orders for Vardhman Special Steels Limited. However, some relevant points related to demand and business outlook include: - The company has budgeted for a sales volume of 225,000 tons for the current financial year. - For the first quarter, sales volume was about 55,500 tons, indicating positive demand. - Demand is expected to be sustainable in coming quarters. - Export markets, especially Thailand, face pressures which have impacted export volumes. - Domestic demand remains robust with customers waiting eagerly for specialized forging products. - New forging line expected to cater to automotive business with capacity of 12,000 to 15,000 tons per year, targeting existing customers. - Talks with partners regarding forging are ongoing, more information expected in six months. No explicit mention of order book or pending orders numbers.

Capex plans

Yes

→INR 2,000 crores announced for a new steel plant, expected to start by July 2029, reaching full utilization in 2-3 years.
→Capex split roughly 1:1 debt to equity (INR 1,000 crores each).
→Promoters aim to maintain over 50% stake; further equity may come from promoters, Aichi, or QIP.
→Forging business capex will be additional to steel plant; details to be finalized in ~6 months.
→Forging line capacity planned at 12,000-15,000 tons/year initially, targeting 60,000-100,000 tons/year within 10 years.
→Attempts to establish forging line within existing plant to minimize additional land/building costs.
→Ongoing investments include commissioning of reheating furnace, 2nd NDT line, and solar plant which will aid margin improvement.
→Focus on capital-efficient growth with forging seen as modular business with lower incremental capex than steel.

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