Vardhman Special Steels grows FY25 revenue, sets sights on Rs 2,000cr greenfield plant

How Did Vardhman Special Steels Perform in FY25 Amidst Industry Volatility?

Vardhman Special Steels Limited, one of India’s leading producers of special and alloy steels, has reported steady financial results for the fiscal year ending March 31, 2025. Despite economic uncertainties and muted pricing power across the steel sector, the company delivered year-on-year growth in both volume and revenue. The Ludhiana-based manufacturer also took a decisive step toward future scalability by announcing a ₹2,000 crore greenfield investment in Punjab—its most ambitious expansion to date.

At a time when the global steel industry faces cyclical downturns and increased cost pressures, Vardhman Special Steels’ financials and expansion outlook present a case study in resilience and forward-looking strategy. The company, known for supplying high-grade steel to marquee automotive and engineering clients, continues to deepen its focus on operational efficiency while aligning itself with trends such as green steel, sustainability, and circular economy-driven manufacturing.

What Are the Key Financial Highlights of FY25 for VSSL?

The company’s revenue from operations reached ₹1,764.41 crore in FY25, marking a 6.20% increase compared to ₹1,661.36 crore in FY24. This growth was primarily driven by a 12.80% increase in total steel volumes, which rose to 2,19,996 metric tonnes—up from 1,95,024 MT in the previous year. Notably, the sales included 4,153 MT of billets, contributing to the overall uptick.

EBITDA (including other income) for the full year was ₹177.16 crore, a marginal increase of 2.84% compared to ₹172.26 crore in FY24. While operational volumes improved significantly, EBITDA per ton settled at ₹8,208, indicating tighter margins due to lower average realisations. Profit after tax stood at ₹93.09 crore, a 1.59% rise year-on-year, while EPS increased slightly to ₹11.40 from ₹11.26.

The Board of Directors recommended a dividend of ₹3 per share, an increase from ₹2 last year, reinforcing confidence in the company’s cash flow strength and future prospects.

How Did Vardhman Perform in Q4 FY25 Specifically?

The final quarter of FY25 posed operational challenges despite a moderate volume increase. Q4 sales volumes rose 3.29% year-on-year to 53,834 MT despite a 14-day shutdown of the rolling mill in March 2025. However, revenue from operations declined 2.59% to ₹428.04 crore due to weaker steel prices.

EBITDA for the quarter fell by 32.89% to ₹38.62 crore from ₹57.54 crore in Q4 FY24, reflecting a sharp drop in gross margins. Net profit declined 39.83% to ₹19.73 crore, while EPS dropped from ₹4.02 to ₹2.42 over the same period.

Management attributed the margin compression to price reductions and stable input costs, with inventory build-up contributing to higher working capital requirements. However, the company has started realigning inventory levels and reported successful commissioning of the Kocks Block facility, which is now in its stabilisation phase. This is expected to yield productivity improvements in upcoming quarters.

What Does the ₹2,000 Crore Greenfield Expansion Mean for VSSL’s Strategic Roadmap?

Vardhman Special Steels announced a landmark ₹2,000 crore investment in a greenfield steel plant in Punjab, aimed at producing 5,00,000 MT of billets annually. The plant will also house a rolling mill and testing units designed to cater to stringent quality norms, especially from OEMs in the auto and engineering sectors.

Expected to be commissioned by FY30, the new plant is poised to address the anticipated capacity crunch post-2028 and align the company with trends in green steel manufacturing. It will utilise Electric Arc Furnace (EAF) technology, allowing VSSL to cater to demand driven by sustainability goals and circular economy practices.

This forward-looking investment is projected to lower the cost of production, improve yield efficiency, and open up product diversification into wire rods, forging materials, and non-automotive applications. The capex will be financed through a mix of internal accruals, fresh equity, and debt, suggesting a well-balanced financial strategy.

How Is VSSL Positioned in Terms of Market Sentiment and Institutional Flows?

As of April 22, 2025, Vardhman Special Steels shares traded at ₹207.45, marking a 2.40% uptick from the prior session. The stock, however, remains about 39.5% below its 52-week high of ₹342.80 and is up 16.5% from its 52-week low of ₹178.00. This recovery trend aligns with investor optimism following the company’s expansion announcement.

Key valuation metrics reflect moderate pricing—its P/E ratio stands at 18.22, which is lower than the steel industry average of 22.82, indicating relative undervaluation. The stock’s P/B ratio of 2.25 and dividend yield of 0.98% further add to its attractiveness for value-oriented investors.

On the institutional front, promoter holding remains strong at 60.37%, with no pledged shares—a signal of internal confidence. Foreign Institutional Investors (FIIs) have marginally increased their stake from 0.58% to 0.64% over the March 2025 quarter, while Domestic Institutional Investors (DIIs) slightly reduced their holding from 4.51% to 4.17%. Mutual fund interest remains steady at 4.14%.

Should Investors Buy, Hold, or Sell VSSL Stock in 2025?

VSSL presents a mixed but compelling case for long-term investors. On one hand, the company’s recent performance shows earnings resilience amidst industry-wide pricing pressures. On the other, its ambitious ₹2,000 crore expansion, along with consistent dividend payouts, highlights a forward-looking strategy focused on sustainability and capacity enhancement.

While short-term headwinds such as demand softness and margin erosion may persist, long-term fundamentals appear intact. Analysts could interpret the greenfield announcement as a signal of confidence in structural steel demand recovery by the end of the decade. For investors with a medium to long-term outlook, VSSL may warrant a “Buy on Dips” stance, especially as green steel adoption gains pace.

Short-term traders, however, should remain cautious, tracking upcoming quarterly results and market developments before making aggressive moves.