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Introduction & Market Context
Vardhman Special Steels Limited (VSSL) recently presented its Q2 and H1 FY26 results, showcasing improved profitability metrics despite facing revenue challenges. The company, which specializes in steel bars for automotive applications, continues to leverage its strategic alliance with Aichi Steel Corporation to enhance its market position in the Indian special steels segment.
As shown in the company's title slide for the quarterly presentation:
Quarterly Performance Highlights
Vardhman Special Steels reported a mixed financial performance for Q2 FY26, with revenue declining but profitability metrics improving significantly. The company achieved a revenue of Rs. 432.27 crores, representing a 12.64% year-over-year decrease, while EBITDA reached Rs. 56.48 crores and profit after tax (PAT) grew to Rs. 34.56 crores, marking a substantial 33.86% increase compared to Q2 FY25.
The detailed financial performance is illustrated in the following table:
Sales volume for Q2 FY26 stood at 55,536 tonnes, down from 59,018 tonnes in the same period last year. Despite this volume decline, the company achieved an impressive EBITDA per ton of Rs. 10,170, demonstrating enhanced operational efficiency and improved cost management.
For the first half of FY26, Vardhman reported a total revenue of Rs. 865.97 crores, a 4.80% decrease year-over-year, while volumes increased marginally by 1.64% to 111,109 tonnes. The H1 FY26 EBITDA per ton stood at Rs. 8,623.
The H1 FY26 financial performance is summarized in the following table:
Mr. Sachit Jain, Chairman and Managing Director, described Q2 FY26 as a "stable quarter" in his management message. A key financial achievement highlighted was the repayment of borrowings, resulting in a debt-free balance sheet. This financial strength positions the company well for future growth initiatives.
The balance sheet highlights as of September 30, 2025, show a significant increase in equity to Rs. 1,208.11 crores from Rs. 797.91 crores as of March 31, 2025, reflecting the company's strengthened financial position:
Strategic Initiatives
Vardhman Special Steels continues to strengthen its strategic alliance with Aichi Steel Corporation (ASC), which has increased its equity stake to 24.09%. This partnership is evolving through multiple phases, from initial technology sharing to capacity expansion and eventually establishing a new greenfield steel plant in Punjab with a planned capacity of 500,000 MT per annum.
The strategic alliance with Aichi is outlined in the following slide:
The alliance with Aichi Steel brings several advantages to Vardhman, including access to patent steel grades developed for special applications in electric vehicles, hybrid and conventional cars, as well as in-house R&D capabilities. Additionally, the company has received environmental clearance for expansion from 200,000 MT to 280,000 MT per annum of rolled capacity.
These advantages are highlighted in the presentation:
Vardhman Special Steels operates state-of-the-art manufacturing facilities with annual capacities of 300,000 TPA for the Steel Melting Shop, 200,000 TPA for the Rolling Mill, and 48,000 TPA for Bright Bars. The company employs advanced technologies throughout its production process to ensure high-quality outputs.
The manufacturing facilities are showcased in the following slide:
Competitive Industry Position
Vardhman Special Steels has established itself as one of India's leading steel bar producers for automotive applications. The company serves over 200 reputed customers, including major automotive manufacturers like Toyota, Hero Moto Corp, and Caterpillar. Its product applications span various automotive components such as axle gears, stabilizer bars, pistons, and crankshafts.
The company's diverse and prestigious customer base is illustrated here:
Vardhman's key strengths include state-of-the-art manufacturing facilities, advanced R&D capabilities, diversified product offerings, experienced management, stringent quality standards, and a strong brand image. These competitive advantages position the company well within the special steels market.
The key strengths are summarized in this slide:
Forward-Looking Statements
Vardhman Special Steels has outlined an ambitious roadmap for future growth, targeting to become the #1 special steels manufacturer in India by 2030. The company's phased approach includes continuous improvement initiatives (2019-2022), capacity expansion to 250,000 MT (2022-2025), and further growth to 300,000 MT annual production with 60,000 MT in exports by 2028.
The company's timeline for these activities is presented below:
Vardhman is also focusing on ESG initiatives, including investments in fume extraction systems, commitments to increase tree coverage to 1,000 acres over the next 15 years, and replacing furnace oil with natural gas. These environmental commitments align with global sustainability trends and position the company favorably for the growing demand for green steel.
Looking ahead, Vardhman Special Steels is well-positioned to capitalize on the anticipated growth in the Indian auto steel market, which is expected to reach 8-10 million cars by 2035. While export challenges persist due to international tariffs and currency fluctuations, the company's strategic alliance with Aichi Steel and its debt-free status provide a solid foundation for navigating market dynamics and pursuing its expansion plans.
Full presentation:
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