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Vardhman Special Steels Q4 FY26 and FY26: Profits Rise on Higher Volumes and New Capacity Levers

Vardhman Special Steels closed FY26 with a clear message to investors: track the business through volumes and EBITDA per ton, not just headline revenue growth. For the full year, revenue from operations was INR 1,754.43 crore, marginally lower by 0.57 percent year on year, largely due to softer steel prices. Yet profitability improved meaningfully. EBITDA rose to INR 208.82 crore, up 17.87 percent, and PAT increased to INR 122.02 crore, up 31.08 percent.

The March quarter reinforced that trend. Q4 FY26 revenue from operations grew 6.98 percent year on year to INR 457.92 crore, while PAT jumped 72.20 percent to INR 33.98 crore. Volumes in Q4 rose to 59,370 tonnes from 53,834 tonnes in Q4 FY25, helping offset price pressure.

FY26 in numbers: Stable revenue, stronger earnings

Two operating data points stood out in the company’s narrative.

First, volumes increased. FY26 volumes were stated at 225,620 tonnes versus 215,843 tonnes in FY25 (the company notes the FY25 comparison as only rolled products). Management also indicated that FY26 volumes were in line with budget.

Second, EBITDA per ton improved, but with an important caveat. The company stated that EBITDA includes other income. For FY26, EBITDA per ton was INR 9,255. Excluding non-operational income, specifically interest on unutilized funds invested by Aichi Steel Corporation and interest on advance deposits with PSPCL, the company stated EBITDA per ton was INR 8,598.

The same pattern appears in Q4. EBITDA per ton in Q4 FY26 was INR 9,524, while the company stated the adjusted number excluding the same non-operational items was INR 8,711. This distinction matters because part of the year’s EBITDA expansion was supported by other income, not only shop-floor operating improvement.

Capacity and cost levers: Furnace, solar, and process upgrades

The operational backbone of the FY26 narrative was commissioning and productivity improvement.

Management stated that the reheating furnace was commissioned in March, and that it will improve rolling capacity to 270,000 tonnes of finished product. The company also indicated it may explore ways to tweak capacity further once it approaches that level.

Alongside the furnace, management said a new NDT line and a new peeling line are in progress. These projects are positioned as enablers for higher volumes and stronger quality outcomes.

Another key milestone was the solar power plant commissioning in Q4. Management said the plant should generate 9 crore units per year. While the company did not quantify savings from solar in the transcript, the CFO noted a second-order effect: Punjab incentives will reduce as the plant draws less grid power.

The company also highlighted steelmaking process upgrades to improve productivity and reduce rework. Management said a new 210x210 section has been introduced, which improves casting productivity and quality, and is expected to reduce rework and first rejections, especially for bigger diameter products. The heat size was increased from 37 tons to 40 tons, which management said should improve productivity and reduce costs.

Forward strategy: Forging, greenfield plant, and diversification roadmap

Vardhman Special Steels’ strategic agenda is expanding beyond rolled and bright bars into forward integration and a longer-cycle capacity buildout.

Forging and machining facility

Management discussed a forging facility project with a budgeted cost of INR 475 crore, and said the broader investment including associated work is budgeted at over INR 500 crore. On spend to date, management indicated around INR 50 to 80 crore may have been spent, including land and early commitments.

The forging business is expected to enter ring gears, and management said Aichi is a global leader in this method of gear making. Timelines given on the call imply commissioning around the end of Q3 FY28, with production expected in Jan to March 2028 and FY28-29 as the first meaningful year of performance.

Greenfield steel plant

The company also outlined progress on a greenfield plant planned in Punjab. Management stated the target is to start the plant in July 2029. The investor presentation described planned billet capacity of 500,000 MT per annum, with commissioning expected by FY 2029-30. On the call, management indicated discussions with suppliers suggest a possible increase toward 600,000 tons, though this was described as evolving.

Brownfield expansion subject to approvals

For the current plant, management discussed a plan to increase melting output beyond 300,000 tonnes to around 360,000 tonnes, subject to environmental approval. They said they plan to apply in about two months, around June, and expect clarity before March next year. They added that Ludhiana is in a critically polluted zone, which introduces uncertainty.

Guidance and how management wants the business tracked

For FY27, management guided that investors should keep 250,000 tonnes of sales in mind, with an aspiration to sell more. On profitability, management increased EBITDA per ton guidance to INR 8,000 to INR 11,000 for FY27, and stated a goal to raise that range to INR 9,000 to INR 12,000 two years later.

Notably, management emphasized that pricing is not treated like commodity steel. They said price resets typically follow scrap movements and the focus is on spreads, which is why they prefer communicating EBITDA per ton and volumes.

Balance sheet, incentives, and capital allocation signals

The balance sheet highlights show a sharp increase in equity as of March 31, 2026 to INR 1,277.32 crore from INR 797.91 crore a year earlier. Total assets increased to INR 1,633.12 crore. The company also reported borrowings as nil in non-current liabilities, while current borrowings stood at INR 92.65 crore.

On incentives, the CFO stated two key Punjab government incentives are in place: electricity duty exemption and GST refund. Electricity duty exemption continues until August 2029, while GST refund ends in August 2026. The CFO stated total incentives were INR 24 crore in FY26 and guided to INR 12 to 13 crore in FY27.

On shareholder returns, the Board recommended a dividend of INR 3.50 per share, subject to AGM approval.

Finally, on funding the large capex cycle, management stated it intends to keep peak debt-to-equity below 0.75 and is comfortable at 0.5. They also discussed a mix of equity infusion, including support from Aichi and the Vardhman Group, and potential external equity raising such as a QIP at a later stage.

Takeaways

FY26 shows Vardhman Special Steels delivering higher profitability even when revenue is constrained by price movements. The company’s near-term story is about sweating the upgraded rolling capacity after commissioning the reheating furnace and continuing efficiency work across casting and finishing.

The medium-term story is execution-heavy: commissioning and ramping the forging line and progressing a greenfield steel plant targeted for July 2029. Management’s disclosures also suggest that reported EBITDA should be read with care, as other income meaningfully influences per-ton metrics.

For investors, the next checkpoints are straightforward and measurable from management’s own framing: FY27 volume delivery toward 250,000 tonnes, EBITDA per ton within the INR 8,000 to INR 11,000 range, clarity on environmental approvals for brownfield expansion, and concrete capex scheduling updates as contracts are finalized.