Vardhman Special Steels (VSSL) Q4 17/18 earnings summary

Executive summary

• FY18 delivered record production and sales volumes, highest-ever revenue and EBITDA, and higher profit despite rising input costs and constrained capacity.

• Expansion is the priority: steel-melting capacity is being raised to 240,000 TPA, with rolling and bright-bar capacity also planned to increase.

Financial highlights

• Revenue from operations was ₹87,788.73 lakh vs ₹75,312.90 lakh in FY17; exports rose 25% to ₹4,941.67 lakh.

• PBDIT was ₹6,803.68 lakh vs ₹6,548.09 lakh; PAT was ₹2,503.63 lakh vs ₹1,913.68 lakh.

• Basic EPS was ₹7.91 and diluted EPS ₹7.88; total comprehensive income was ₹2,473.86 lakh vs ₹1,891.01 lakh.

• Billet production rose 23.21% to 167,425 MT; rolled production increased 10.98% to 149,957 MT.

Outlook and guidance

• FY19 volume outlook was ~170,000 tons; management expected robust special-steel demand, with raw-material costs potentially rising in H1 and easing in H2.

• Expansion plans target 240,000 TPA steel melting, 220,000 TPA rolling and 45,000 TPA bright-bar capacity; the expansion was expected to complete by March or April 2019.

• Management planned to grow passenger-car OEM volumes, build global-brand approvals into sales, and expand non-automotive applications and export markets.