Vardhman Special Steels Limited — Investor Meet, 14-11-2024: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:** Vardhman Special Steels reported its highest sales ever for Q2, achieving 59,000 tonnes—a 20% increase from 49,000 tonnes YoY. Revenue rose to Rs. 494 crore, up from Rs. 415 crore, reflecting a 20% increase. For H1, sales totaled 1,09,000 tonnes compared to 96,000 tonnes last year, yielding revenues of Rs. 909 crore (up 10.31%). EBITDA for H1 stood at Rs. 96 crore, a 31% increase YoY, with EBITDA per tonne of Rs. 8,800, within the target range of Rs. 7,000 to Rs. 10,000.

**Future Outlook and Growth Drivers:** Management highlighted plans for a new Greenfield plant, with final decisions expected mid-next year. The expansion will enhance production capabilities, aiming for 300,000 tonnes capacity. Talks around green steel trends indicate potential future market advantages, driven by sustainability interests from automobile OEMs.

**Order Book and Operational Updates:** Current melting capacity successfully tested at 285,000 tonnes, with expectations to reach 300,000 tonnes. A new Kocks Block equipment investment is underway, requiring a scheduled shutdown for smooth implementation that may affect sales but should ultimately enhance margins.

**Analyst Q&A Insights:** Analysts inquired about sustainability's impact on profitability and the potential for improved margins amid pressures from Chinese imports. Management conveyed confidence in achieving elevated EBITDA per tonne targets, citing cost reductions from solar power and optimized internal processes.

**Strategic Focus Areas:** The company's strategic emphasis on the four-wheeler market aims to boost automotive component sales from 38% to 50% of total revenue. Additionally, a shift towards direct OE supply is anticipated to enhance margins.

**Investor Insight:** Vardhman’s solid financials, proactive capacity expansion, and focus on sustainability position it favorably for future growth. Given the current trajectory, the outlook supports a ‘buy’ position, contingent upon successful implementation of strategic plans and anticipated market recovery.