Vardhman Special Q2 FY27 Earnings Call — Analysis (NSE: VSSL)
VSSL posted strong Q2 FY27 performance with revenue up 39% YoY and EBITDA/PAT up ~50% YoY driven by volume growth and contractual price hikes, while signalling higher capex for its greenfield plant alongside a potential 3-4 year dividend suspension.
Result quality: stable — Steady quarter. Management sentiment: optimistic.
The take
Q2FY27 Revenue from Operations ( +39% YoY ) . Guidance raised . But missed .
Results
Revenue up 39% YoY and EBITDA/PAT up ~50% YoY on 27% YoY sales volume growth (>70,000 tons in Q2).
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue from Operations | +39% | yoy · Q2FY27 | |
| Sales Volume | >70,000 tons | +27% | yoy · Q2FY27 |
| EBITDA | +50% | yoy · Q2FY27 | |
| PAT | +50% | yoy · Q2FY27 | |
| Borrowings | ₹162.93 Cr | point_in_time · Q2FY27 · Sep-26 | |
| Trade Receivables | ₹410 Cr | point_in_time · Q2FY27 · Sep-26 |
Guidance
Management targets full-year FY27 sales of ~260,000 tons while maintaining sustainable through-cycle EBITDA per ton guidance at ₹9,000–₹12,000.
What management committed to
- We expect sales of about 260,000 tons [for FY27]. — FY27
Key themes
Capacity constraints, pricing power, and capex expansion
Operational commentary
- Foundation stone for the new forging plant was laid in late July 2026; commissioning and full stabilization targeted by March 2028 with initial 15,000 tons annual steel absorption.
- Received approvals from a European OEM for mass manufacturing and successfully started mass manufacturing for a domestic high-end import substitution client (sales starting January 2027).
- Commissioning of new peeling line scheduled for early November 2026 and new NDT line by December 2026.
- Expanding captive solar capacity by 22.5 MW (20 MW for current plant and 2.5 MW for NDT line in forging plant).
- Operational efficiencies from Kocks Block and new reheating furnace driving yield improvements (longer 5.2m billets), lower rejection rates, and insourcing of external job work.
- Awaiting formal Environmental Clearance (EC) letter for brownfield capacity enhancement from 300,000 tons to 360,000 tons; brownfield capex estimated at ₹100–₹115 Cr requiring a 15-day shutdown.
Analyst Q&A
Q. What is the quantum of inventory gains contributing to the elevated EBITDA per ton in Q2?
Company switched to SAP S/4 HANA batch-wise costing with no quarter-end revaluation, but acknowledged some element of inventory gain and reiterated normalized guidance of ₹9,000–₹12,000/ton.
Q. What is the revised capex figure and payback period for the new greenfield steel plant?
Management declined to provide exact figures or percentages, stating project reconfiguration for non-automotive segments is ongoing and final numbers will be shared in March/April 2027.
Q. What volumes and contract terms are committed under the European OEM approval?
Disclosed that auto industry pricing operates on quarterly negotiations rather than spot, but refused to share customer-specific volume commitments, noting it will displace lower-margin customers.
Q. What is the expected ROCE and EBITDA margin for the forging facility capex?
Declined to guide on ROCE or EBITDA, clarifying that the single line is an entry phase with partner Aichi Steel and operational stabilization is the priority before metrics are guided.
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