Vardhman Special Steels (VSSL) Q1 25/26 earnings summary

Executive summary

• Achieved 10.49% year-over-year volume growth to 55,574 tons in Q1 FY26, with revenue up 4.93% to Rs. 441.20 crore, despite pricing pressures and inventory valuation losses.

• Successfully commissioned the Kocks Block, with new reheating furnace and solar plant projects progressing, though the solar plant faces a minor legal delay.

• Aichi Steel Corporation increased its equity stake to 24.9% with an infusion of Rs. 384.91 crore, making the company debt-free and strengthening the strategic partnership.

• Strategic entry into the forging business with Aichi, targeting a new line of specialized products with no current domestic competition.

• Unaudited financial results for Q1 FY26 were approved and released following a Board meeting, with no material misstatements found by auditors.

Financial highlights

• EBITDA per ton for Q1 FY26 was Rs. 7,077, at the lower end of guidance due to pricing pressure and a one-time Rs. 6 crore inventory valuation loss.

• PAT for the quarter was Rs. 19.90 crore, down from Rs. 26 crore year-over-year.

• Revenue from operations for Q1 FY26 was Rs. 433.70 crore, with net profit after tax at Rs. 19.90 crore.

• Basic and diluted EPS for the quarter were Rs. 2.43, compared to Rs. 3.20 in the same quarter last year.

• Other income included Rs. 671.30 lakh from government incentives under the Industrial and Business Development Policy 2017.

Outlook and guidance

• Targeting 225,000 tons in sales for FY26, with a medium-term goal of 265,000–270,000 tons before the new plant is commissioned.

• EBITDA per ton guidance remains Rs. 7,000–10,000 for FY26, with expectations to move to Rs. 8,000–11,000 next year as new projects come online.

• New Greenfield steel plant in Punjab planned with a capacity of 500,000 MT per annum, targeting commissioning by FY 2029-30.

• Full benefits from the new steel plant expected within three years of commissioning (targeted July 2029), aiming for 20%+ return on capital employed.

• Additional government incentives will be recognized as conditions are met in future periods.