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

Capex of around INR160 crores planned primarily for rolling mill expansion. Rolling mill capacity to cross 50,000 tons with this capex. Billet availability expected to peak at around 260,000 tons; capacity to serve about 230,000 to 240,000 tons. Rolling mill shutdown planned in Q3 (Nov-Dec) for about 15 days to install two new stands. Further capex planned for adding Kocks block and reheating furnace to increase capacity up to 240,000-250,000 tons. Total capital employed targeted to remain below INR900 crores despite expansion. No immediate plans for equity raise as net debt equity is low (0.2

Future growth expectations in sales/revenue/volumes?

Targeting around 210,000 to 220,000 tons volume in FY'25, a 5% increase over FY'23. Rolling mill capacity to increase to about 50,000 tons annually with ongoing capex. Expected growth in mix towards car sector sales. Proportion of EV sector steel in sales anticipated to increase, currently around 7-8%. Expansion of business with Aichi and increased sales to Southeast Asia via Toyota Tsusho. Consolidation phase continues through FY'24 with shutdowns/upgrades supporting future volume growth. Anticipated price increases in H2 FY'24 may improve margins and revenues. Introduction of new capital equ

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

H1 results were at the lower end of guidance; management aims to improve performance towards mid or upper end. Second half expected to have better EBITDA, around INR 8,000 to 9,000 lakhs, driven by anticipated price increases. Price reductions in Q2 fully accounted for; Q3 expected to see price hikes reflecting cost pressures (coking coal, iron ore). Volume consolidation year ongoing with expected gradual capacity increase to about 210,000 tons in FY25. Rolling mill capex (adding two stands) to increase capacity by 8,000-10,000 tons from Q4 FY24 onward, potentially improving quality.

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Vardhman Special Steels LtdQ3 FY23Industrial Products

Vardhman Special Steels Ltd Q3 FY23 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 3

Fundraise

Order

N/A

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→Targeting around 210,000 to 220,000 tons volume in FY'25, a 5% increase over FY'23.
→Rolling mill capacity to increase to about 50,000 tons annually with ongoing capex.
→Expected growth in mix towards car sector sales.
→Proportion of EV sector steel in sales anticipated to increase, currently around 7-8%.
→Expansion of business with Aichi and increased sales to Southeast Asia via Toyota Tsusho.
→Consolidation phase continues through FY'24 with shutdowns/upgrades supporting future volume growth.
→Anticipated price increases in H2 FY'24 may improve margins and revenues.
→Introduction of new capital equipment expected to raise rolling mill capacity and efficiency by Q4 FY'24.
→Revenue contribution from exports remains around 5%.
→Positive outlook driven by renewable, sustainability, and ESG-related business opportunities.

Margin guidance

Category 3

→H1 results were at the lower end of guidance; management aims to improve performance towards mid or upper end.
→Second half expected to have better EBITDA, around INR 8,000 to 9,000 lakhs, driven by anticipated price increases.
→Price reductions in Q2 fully accounted for; Q3 expected to see price hikes reflecting cost pressures (coking coal, iron ore).
→Volume consolidation year ongoing with expected gradual capacity increase to about 210,000 tons in FY25.
→Rolling mill capex (adding two stands) to increase capacity by 8,000-10,000 tons from Q4 FY24 onward, potentially improving quality.
→Growth opportunity driven by approvals in key accounts like Suzuki (import substitution) and increasing share in EV steel segments (currently 7-8%, expected to grow).
→Renewable and sustainability initiatives (solar power reducing carbon footprint and energy cost) expected to improve profitability.
→Overall positive outlook with business gains expected from ESG and renewable trends in next 1-2 years.

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Fundraise plans

- No current plans for equity fundraising as the company aims to keep total capital employed below INR 900 crores despite planned expansions. - Net debt equity ratio is low at 0.2, indicating a strong balance sheet. - Future equity infusion might occur around two triggers in the next 2-3 years: - When the complete switchover with Toyota happens (around end of 2025). - If major capex plans for a new plant or large expansion are concretized. - The company does not currently require additional capital and is managing expansions through internal accruals and debt within a controlled range. - Short-term borrowings have increased temporarily to offset carry forward short-term capital losses but expected to return to or below previous levels by March. Overall, no immediate fundraising through debt or equity; potential equity funding may happen aligned with major growth milestones in next few years.

Order book

The transcript provided does not mention specific details about the current or expected order book or pending orders for Vardhman Special Steels Limited. However, related insights include: - The company is undergoing a smooth switchover for Toyota platform orders expected to complete by end of FY 2025, which will impact future volumes positively. - Approval received from Suzuki Japan for substitution of imported materials indicates potential future order flow from Maruti Suzuki. - The company expects volume targets around 210,000 tons in FY'25, reflecting steady demand. - Positive customer inputs from Aichi Steel and Toyota Tsusho indicate growing interest and potential investments in India, which could lead to order expansions. - Export contribution is around 5%, with some orders heading to Southeast Asia through Toyota Tsusho. - Discussions suggest ongoing business continuity with exposure mainly in the automotive sector, but no explicit orderbook figures disclosed. No exact orderbook or pending order values were disclosed on page 17 or surrounding pages.

Capex plans

Yes

→Capex of around INR160 crores planned primarily for rolling mill expansion.
→Rolling mill capacity to cross 50,000 tons with this capex.
→Billet availability expected to peak at around 260,000 tons; capacity to serve about 230,000 to 240,000 tons.
→Rolling mill shutdown planned in Q3 (Nov-Dec) for about 15 days to install two new stands.
→Further capex planned for adding Kocks block and reheating furnace to increase capacity up to 240,000-250,000 tons.
→Total capital employed targeted to remain below INR900 crores despite expansion.
→No immediate plans for equity raise as net debt equity is low (0.2).
→Solar power plant installation to cover ~50% of power by March 2025, reducing costs and carbon footprint.
→Strategic partnership with Aichi with potential stake increase in the next 2-3 years tied to supply switchover and future capex triggers.

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