1. At a Glance
A small-cap steel stock trying to play in the big boys’ league — Vardhman Special Steels is making noise with a shiny new ₹2,000 Cr greenfield plant, a big Japanese investor (Aichi Steel now owns 24.9%), and some actual profits. But with falling margins and promoter stake dropping faster than molten metal, is it strength or stress beneath the alloy?
2. Introduction with Hook
Imagine a Maruti 800 dreaming of becoming a Toyota Land Cruiser. That’s Vardhman Special Steels. Born from the legendary Vardhman Textiles demerger, this company wants to go premium — think “green steel,” foreign JV, capex galore. But will it ride off into the alloy sunset or break down halfway through?
Q1 FY26 Net Profit? ₹20 Cr.
OPM? Just 7%.
Promoter holding? Dropped 9% in a quarter.
Plot twist? Japanese steel major Aichi Steel swooped in.
3. Business Model (WTF Do They Even Do?)
Vardhman makes Billets, Steel Bars, Bright Bars — basically fancy versions of what your building’s skeleton is made of. But not just for buildings — these go into auto components, high-end tools, and industrial machines.
They aren’t your cheap rebars. This is “Special” steel. Think:
- Low tolerance
- Alloyed precision
- High performance
- And now, green steel too
“Basically, they sell steel that makes other steel feel inferior.”
4. Financials Overview
| FY | Revenue | EBITDA | PAT | OPM |
|---|---|---|---|---|
| FY23 | ₹1,735 Cr | ₹141 Cr | ₹100 Cr | 8% |
| FY24 | ₹1,661 Cr | ₹142 Cr | ₹92 Cr | 9% |
| FY25 | ₹1,764 Cr | ₹148 Cr | ₹93 Cr | 8% |
| TTM | ₹1,783 Cr | ₹138 Cr | ₹87 Cr | 8% |
“They make solid steel, but margins softer than overcooked pasta.”
5. Valuation
- EPS (TTM): ₹10.64
- CMP: ₹261
- P/E: 22.9x
- Book Value: ₹97.6 → P/B = 2.69x
Fair Value Range:
- P/E 15–18x: ₹160 – ₹190
- P/B 2x: ₹195
“Paying 23x for a steel stock is like paying ₹400 for chai in a dhaba just because it comes in a ceramic cup.”
6. What’s Cooking – News, Triggers, Drama
- Aichi Steel Buys 24.9% Stake — Preferential issue at ₹260.60 raised ₹385 Cr.
- ₹2,000 Cr Capex Announced — Greenfield steel plant in Punjab; 5 lakh MT capacity by FY30.
- Dividend Growth: ₹3/share, payout now at 26%.
- Promoter Holding Drops 9% in Q1 FY26
- Q1 FY26 Net Profit: ₹20 Cr (flat YoY)
“More plot twists than a season of Shark Tank — but this time, the shark is from Japan.”
7. Balance Sheet
| Item | FY25 |
|---|---|
| Equity | ₹82 Cr |
| Reserves | ₹716 Cr |
| Borrowings | ₹120 Cr |
| Total Liabilities | ₹1,136 Cr |
| Fixed Assets + CWIP | ₹426 Cr |
| Cash | ~Minimal |
“Debt’s manageable. Assets are growing. But reserves have to carry the capex weight like a gym rat’s ego.”
8. Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net |
|---|---|---|---|---|
| FY23 | ₹74 Cr | -₹15 Cr | -₹49 Cr | ₹9 Cr |
| FY24 | ₹142 Cr | -₹50 Cr | -₹94 Cr | -₹2 Cr |
| FY25 | ₹127 Cr | -₹127 Cr | ₹3 Cr | ₹3 Cr |
“They generate cash. Then they immediately spend it. Just like you on payday.”
9. Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROCE | 16.7% |
| ROE | 12.3% |
| OPM | 8% |
| D/E | 0.15 |
| P/E | 22.9x |
“ROCE is respectable. ROE is decent. Valuation? That’s where it gets spicy.”
10. P&L Breakdown – Show Me the Money
| FY | Revenue | Net Profit | OPM |
|---|---|---|---|
| FY23 | ₹1,735 Cr | ₹100 Cr | 8% |
| FY24 | ₹1,661 Cr | ₹92 Cr | 9% |
| FY25 | ₹1,764 Cr | ₹93 Cr | 8% |
“Profits have plateaued harder than your friend who bulked once in college and never again.”
11. Peer Comparison
| Company | Sales (₹ Cr) | PAT (₹ Cr) | ROE % | P/E |
|---|---|---|---|---|
| APL Apollo | 20,885 | 801 | 19.4% | 53.7x |
| Jindal Saw | 20,828 | 1,473 | 13.7% | 9.6x |
| Ratnamani | 5,186 | 542 | 16.0% | 35x |
| VSSL | 1,783 | 87 | 12.3% | 22.9x |
“They’re the small kid trying to sit at the big kids’ table — and bringing snacks.”
12. Miscellaneous – Shareholding, Promoters
| Holder | Mar ‘25 | Jul ‘25 |
|---|---|---|
| Promoters | 60.37% | 51.13% |
| Aichi Steel (ASC) | 0% | 24.9% |
| FIIs | 0.64% | 0.49% |
| DIIs | 4.17% | 3.54% |
| Public | 34.88% | 44.85% |
“Promoters cashed out, but brought in a muscle-bound Japanese partner. Classic tag team strategy.”
13. EduInvesting Verdict™
Vardhman Special Steels is that underdog that might just pull it off. With Aichi Steel backing, ₹2,000 Cr capex, and a growing auto focus, the vision is solid. But current profitability is flat, and valuation already smells frothy. This ain’t a bargain basement steel pick — it’s steel with dreams (and a Japanese partner’s calendar).
A sturdy play — but wait for the molten metal to cool before shaping your position.
Metadata:
Written by EduInvesting Team | July 25, 2025
Tags: Vardhman Special Steels, Aichi Steel, Green Steel, EduInvesting Premium
