Vardhman Special Steels' Q2 margin edges above its sector peer median
Management linked performance to volumes, realisations, operating leverage and lower-cost inventory, while outlining a large capacity expansion.
Filed 27 Oct 2026, 12:56 IST · Vardhman Special Steels Ltd (VSSL)
Key takeaways
- Standalone Q2FY27 operating margin was 11.52%, 0.26 percentage points above the 11.26% median for 32 Industrials peers.
- Management attributed the quarter's performance to higher volumes, improved realisations, operating leverage, lower-cost inventory and recent capex benefits.
- Management said the company is targeting a 500–600k TPA greenfield plant for commissioning in FY30.
Price around the results
Operating earnings were largely backed by operations
Vardhman Special Steels reported standalone operating profit of Rs 69.12 cr against profit before tax of Rs 70.56 cr. That narrow gap indicates that the Rs 14.74 cr of other income did not dominate reported pre-tax earnings, after interest and depreciation. The 25.6% tax rate resulted in net profit of Rs 52.49 cr.
Inventory and capex supported the 11.52% margin
Management said higher sales volumes, improved realisations and operating leverage supported the quarter. It also pointed to lower-cost raw-material inventory carried forward from the previous quarter and benefits from the Kocks Block and reheating-furnace capex. The resulting 11.52% operating margin was 0.26 percentage points above the 11.26% median among 32 Industrials peers.
Expansion plan extends beyond the current automotive focus
Management said the company is developing a Ludhiana forging facility with Aichi Steel Corporation to move into forged components, with the first forging line scheduled for commissioning in Q3 FY28. It also said the planned 500–600k TPA greenfield specialty-steel plant is targeted for commissioning in FY30, with Aichi providing technology transfer and anchor demand. The presentation flags diversification from the company's historical concentration in automotive steel, alongside a target of about 1 million tonnes of capacity and entry into eight sectors by FY35.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 |
|---|---|
| Revenue | ₹600 cr |
| Other income | ₹15 cr |
| Expenses | ₹531 cr |
| Operating profit | ₹69 cr |
| Operating margin (%) | 11.52% |
| Interest | ₹4 cr |
| Depreciation | ₹10 cr |
| Profit before tax | ₹71 cr |
| Tax | ₹18 cr |
| Net profit | ₹52 cr |
| EPS (₹) | ₹5.43 |
Operating margin of 11.52% compares with a Industrials sector median of 11.26% across 32 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- The company reported strong Q2 FY27 performance driven by higher volumes, revenue, profitability, demand, realizations and operating leverage.
- Lower-cost raw material inventory and benefits from the Kocks Block and reheating furnace capex supported quarterly performance.
Guidance & outlook
- The FY35 target is a revenue mix of about 70% automotive and 25–30% non-automotive.
- The company targets approximately 1 million tonnes of steel capacity and entry into eight target sectors by FY35.
- The first forging line is scheduled for commissioning in Q3 FY28.
Expansion
- The company plans a 500–600k TPA greenfield plant targeted for commissioning in FY30.
New initiatives
- The Ludhiana forging facility is being developed with Aichi Steel Corporation to enable forward integration into forged components.
- The company plans an ingot casting pilot for higher-alloy and larger-diameter products.
- Aichi Steel will provide technology transfer and anchor demand for the greenfield specialty-steel plant.
Problems & risks
- The company identifies its historical concentration in automotive steel as a dependence it is addressing through diversification.
What to watch
- Whether standalone operating margin remains at or above 11.52%.
- Whether the benefits from lower-cost inventory and the Kocks Block and reheating-furnace capex continue to support profitability.
- Progress towards the first forging line's scheduled commissioning in Q3 FY28.