Vardhman Special shares up 20% despite weak results on Rs 2,000 crore capex plan

Vardhaman Special Steels stock hits upper circuit 20% with new projects outlook reveal in earnings

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Shares of Punjab-based special and alloy steels producer Vardhman Special Steels are locked at 20 percent upper circuit on April 23 after the company's announced significant capital expenditure plans, even though it reported a drop in the top and bottomline during its March quarterly results.

Vardhman plans to invest in a new Greenfield steel plant in Punjab with a planned billet production capacity of 5 lakh MT per annum, for which the total capital expenditure is estimated at Rs 2,000 crore, equivalent to its current market capitalization.

The proposed new plant will be funded through a mix of internal accruals and debt and is expected to be commissioned by the financial year 2029-30.

For the fourth quarter, Vardhman Special Steels reported a 3% drop in topline at Rs 428 crore, while its Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) fell to Rs 38.57 crore from Rs 57.15 crore last year. The net profit declined by 40 percent on-year, with EBITDA per tonne declining by 35 percent compared to last year, at Rs 7,165.

Sachit Jain, Vice Chairman & Managing Director of Vardhman Special Steels said, "In Q4FY25, our revenue remained flat on a year-on-year basis, on account of higher-than-expected price reduction."

"Looking ahead, market demand remains muted, and opportunities for price increases are limited. Raw material prices are relatively stable. Working capital borrowings increased due to inventory build-up in preparation for the planned shutdown. However, the process of the inventory going back to normal level has already started," Jain said.

Despite a 14-day plant shutdown, Vardhman's volumes rose by 3.29 percent year-on-year.

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