Vardhman Special Steel - On Track To Achieve Export Share Target By FY25: ICICI Direct

ICICI Direct Report

Vardhman Special Steel Ltd. is among India’s leading steel bar producers for automotive applications. It has specialised product offerings, which include steel bars, rods and bright bars of various categories of special and alloy steel.

Vardhman Special Steel has started mass production of steel for forging companies of Aichi Steel Corporation based in South East Asia for some grades for which the company has received the approvals. Sales of these products for FY24 will be ~10000 tonnes.

The volume is expected to further increase with more approvals being received in the next two to three years. This development has established Vardhman Special Steel as a supplier of high quality automotive steel. In general, going forward, the company has a target to increase the share of export volumes from currently ~5% in FY22 to ~20-25% by FY25.

Key triggers for future performance:

• Over FY22-25E, we expect the topline to grow at 15% compound annual growth rate while Ebitda, profit after tax are expected to register CAGR of 14%, 22%, respectively.

• Going forward, we assume Ebitda/tonne of Rs 8000/tonne for FY23E, Rs 10000/tonne for FY24E and Rs 11500/tonne for FY25E.

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