Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vardhman Special Steels Ltd (BOM:534392, Financial) reported a stable operational performance with sales volume crossing 50,000 tonnes in Q1 FY '25.
- Quarterly revenue increased to INR 410.78 crores, marking a nominal year-over-year growth of 1.80%.
- EBITDA saw a significant increase of 31.71%, reaching INR 48 crores.
- PAT also showed a double-digit increase, standing at INR 26.08 crores.
- The company is on track to achieve its annual target of 210,000 tonnes of steel, with ongoing capacity expansion projects like the KOCKS block and new heating furnace progressing as planned.
Negative Points
- The quarter experienced subdued marketing activities due to shutdowns and delayed OEM production, impacting immediate sales bookings.
- Raw material prices increased by 8% to 10% in Q1, which could potentially lead to inventory valuation losses if prices remain volatile.
- The company is planning major shutdowns for maintenance and expansion, which could temporarily affect production and sales.
- Inventory levels have increased by INR 62 crores, which might affect financials until the shutdowns are completed and inventory levels normalize.
- Discussions with OEMs regarding price adjustments are ongoing, creating uncertainty around future pricing and profitability.
Q & A Highlights
Q: What is the realization level for the current quarter?
A: Our realization level for the current quarter is INR 82,000 per tonne. (Sanjeev Singla, CFO)
Q: Can you quantify the benefit of using piped gas versus earlier sources?
A: The cost of gas from GAIL is currently lower by about 40-45% compared to previous sources. (Sanjeev Singla, CFO)
Q: What is the expected impact of the ongoing pricing discussions with OEMs?
A: It is difficult to predict the exact outcome, but we are working towards a mutually acceptable level with the OEMs. (Rajendar Rewari, CEO)
Q: Can you provide an update on the IC steel-related work?
A: The cooperation with IC steel is progressing well, with technical representatives stationed at our works and ongoing collaborative efforts. (Rajendar Rewari, CEO)
Q: How does the export market look, and have you made inroads in Southern Asia markets?
A: The export market, particularly in Thailand, Indonesia, and the Philippines, remains stable. We are also exploring potential growth in the European market. (Rajendar Rewari, CEO)
Q: What is the outlook for industry growth and Vardhman Special Steels' growth in FY '25?
A: We are optimistic about industry growth, driven by expansions from major automobile manufacturers. We have targeted a volume of 210,000 tonnes for FY '25. (Rajendar Rewari, CEO)
Q: How are you managing the planned shutdowns and their impact on production?
A: We have increased production and built up inventory to cater to customer needs during shutdowns. We are also outsourcing some rolling to mitigate the impact. (Rajendar Rewari, CEO)
Q: What are the key trends and demand outlook in the special steel market?
A: The demand for special alloy steel is closely linked to the automobile industry, which is expected to grow. We are well-positioned to capitalize on this trend. (Rajendar Rewari, CEO)
Q: How are you addressing the potential impact of EV penetration on steel demand?
A: While EV penetration is expected to be around 15%, the demand for internal combustion engine vehicles will remain strong, mitigating any major impact on steel demand. (Rajendar Rewari, CEO)
Q: What are your ESG initiatives and plans for green steel?
A: We are working on reducing our carbon footprint and have initiated a project to source 55 megawatts of solar power. We aim to lower our CO2 emissions significantly. (Rajendar Rewari, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
