Any current/future new fundraising through debt or equity?

Talks are ongoing with Aichi regarding an increase in their stake in Vardhman Special Steels Limited. Timing for Aichi's stake increase is expected within the next 1 to 2 years, potentially linked to the announcement and progression of the new plant project. With the new plant announcement and plans in next 1-2 years, promoter equity infusion is also expected to prevent excessive dilution of stakes. The new plant capex will be funded partly through this equity infusion from promoters and likely increased stake by Aichi. No specific mention was made of new debt fundraising during the call. Mana

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

Ongoing capex of INR160-180 crores primarily related to rolling mill upgrades including Kocks Block and reheating furnace; to be capitalized in FY 2025-26. Installation of a second Non-Destructive Testing (NDT) line starting FY 2025-26, commissioned in the following year to support high-quality and sophisticated product testing. Environmental and furnace-related investments pending but relatively minor (less than INR 10 crores). Solar power project: Vardhman holds 26% equity (~INR 19 crores) in the group captive solar plant, expected to be ready by March-April 2025, to reduce power costs

Future growth expectations in sales/revenue/volumes?

Current year (FY '25) sales volume guidance: ~215,000 to 220,000 tons, on track despite shutdowns. Next year (FY '26) volume expected around 225,000 to 230,000 tons, focusing on stabilization and consolidation. By FY '27, volume target is approximately 245,000 to 250,000 tons. Capacity expansion to 270,000 tons rolling capacity expected to support growth over next 3-4 years. EBITDA per ton guidance: INR7,000 to INR10,000 for FY '25; INR8,000 to INR11,000 for FY '26 and '27. New projects including Kocks Block and reheating furnace to enhance capacity and quality, final commissioning b

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

FY '25 Q4 EBITDA guidance: INR 7,000 to INR 10,000 per ton, maintaining previous range amid adverse market conditions. FY '26 EBITDA guidance: Target INR 8,000 to INR 11,000 per ton, with confidence to hit this range by FY '26-'27. Volume growth: Current capacity tested at 300,000 tons; planned to reach 270,000 tons of rolling capacity by end of FY '25-'26, enabling 3-4 years of growth runway. Planned capacity expansion and stabilization expected to improve margins and earnings post FY '25. New projects (Kocks Block, reheating furnace) to complete by FY '25-'26, enhancing quality and reducing

Current/ Expected Orderbook/ Pending Orders?

Vardhman Special Steels Limited has secured an order win with a large Indian OE where the company will be a Tier 1 supplier, replacing Japanese steel imports. Supplies to this OE are expected to start within a year. There is progress in shifting some orders from imported steel (from Korea) to local supply, where VSSL acts as a Tier 2 supplier. Expansion projects (Kocks Block and reheating furnace) are underway to enhance capacity, supporting current and future order fulfillment. Discussions with European large OEs for potential new inquiries driven by low carbon credit demands are ongo

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Vardhman Special Steels LtdQ4 FY26Industrial Products

Vardhman Special Steels Ltd Q4 FY26 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

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Current year (FY '25) sales volume guidance: ~215,000 to 220,000 tons, on track despite shutdowns.
→Next year (FY '26) volume expected around 225,000 to 230,000 tons, focusing on stabilization and consolidation.
→By FY '27, volume target is approximately 245,000 to 250,000 tons.
→Capacity expansion to 270,000 tons rolling capacity expected to support growth over next 3-4 years.
→EBITDA per ton guidance: INR7,000 to INR10,000 for FY '25; INR8,000 to INR11,000 for FY '26 and '27.
→New projects including Kocks Block and reheating furnace to enhance capacity and quality, final commissioning by FY '26.
→New greenfield plant planned in Punjab with announcement expected by April, supporting longer-term growth.
→Talks on forging business indicate potential diversification and additional growth avenues in 1-2 years.

Margin guidance

Category 3

→FY '25 Q4 EBITDA guidance: INR 7,000 to INR 10,000 per ton, maintaining previous range amid adverse market conditions.
→FY '26 EBITDA guidance: Target INR 8,000 to INR 11,000 per ton, with confidence to hit this range by FY '26-'27.
→Volume growth: Current capacity tested at 300,000 tons; planned to reach 270,000 tons of rolling capacity by end of FY '25-'26, enabling 3-4 years of growth runway.
→Planned capacity expansion and stabilization expected to improve margins and earnings post FY '25.
→New projects (Kocks Block, reheating furnace) to complete by FY '25-'26, enhancing quality and reducing costs.
→Board expected to announce new plant project in Punjab by April 2025, possibly leading to further growth and equity infusion.
→Power cost savings from solar plant expected to improve margins from FY '26 onward.
→Strategic efforts in forging business could contribute to growth in next 1-2 years.

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Fundraise plans

Yes

→Talks are ongoing with Aichi regarding an increase in their stake in Vardhman Special Steels Limited.
→Timing for Aichi's stake increase is expected within the next 1 to 2 years, potentially linked to the announcement and progression of the new plant project.
→With the new plant announcement and plans in next 1-2 years, promoter equity infusion is also expected to prevent excessive dilution of stakes.
→The new plant capex will be funded partly through this equity infusion from promoters and likely increased stake by Aichi.
→No specific mention was made of new debt fundraising during the call.
→Management plans to finalize project contours and potentially announce the new plant and related fundraising details by April 2025.

Order book

→Vardhman Special Steels Limited has secured an order win with a large Indian OE where the company will be a Tier 1 supplier, replacing Japanese steel imports.
→Supplies to this OE are expected to start within a year.
→There is progress in shifting some orders from imported steel (from Korea) to local supply, where VSSL acts as a Tier 2 supplier.
→Expansion projects (Kocks Block and reheating furnace) are underway to enhance capacity, supporting current and future order fulfillment.
→Discussions with European large OEs for potential new inquiries driven by low carbon credit demands are ongoing but still at a preliminary stage.
→The company aims to announce a new project with clearer timelines in the April meeting, which may further impact future orderbook visibility.

Capex plans

Yes

→Ongoing capex of INR160-180 crores primarily related to rolling mill upgrades including Kocks Block and reheating furnace; to be capitalized in FY 2025-26.
→Installation of a second Non-Destructive Testing (NDT) line starting FY 2025-26, commissioned in the following year to support high-quality and sophisticated product testing.
→Environmental and furnace-related investments pending but relatively minor (less than INR 10 crores).
→Solar power project: Vardhman holds 26% equity (~INR 19 crores) in the group captive solar plant, expected to be ready by March-April 2025, to reduce power costs.
→New greenfield steel plant planned in Punjab (Ludhiana district), with land negotiations underway; major planning expected by April 2025 and announcement targeted at April Board meeting.
→Discussions with Aichi regarding increased stake and equity infusion aligned with new plant capex.
→Forging business expansion plans expected to materialize within 1-2 years.
→Capex largely to end by FY 2025-26, after which only normal maintenance capex expected.

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