DIALWEALTH MULTIBAGGER

DATE :- 14/5/2024

NAME :- VARDHAMAN SPECIAL STEEL LTD (VSSL)

CMP :- 300

MCAP :- 2400

TARGET :- 3000 (10X IN 5 YEARS)

TIME FRAME :- 5 YEARS

BUYING RANGE :- 290-310

ALLOCATION :- ALLOCATE THAT MUCH WHICH YOU CAN HOLD FOR 5 YEARS.

COMPANY WOULD BECOME NO 1 SPECIAL STEEL AND GREEN STEEL PLAYER IN

INDIA IN NEXT 5 YEARS.

WHY VSSL ?

Vardhman Special Steels is engaged in manufacturing of Billets, Steel bars , Rods

and Bright Bars of various categories of special and alloy steels. In the year 2019 a
Japanese company Aichi steel which is a subsidiary of Toyota ltd bought 11.4%
stake. The aim of this company is to provide technical assistance to vssl to establish
world class socially and environmentally responsible steel company in india. Now
from 2019-2023 company made various changes in VSSL to improve quality and
make steel which can be supplied to Toyota for their cars. Now vssl has started mass
manufacturing for Aichi steel and export numbers will pick up from current financial
year.

Vssl is also doing a large capex of 435 crore which will not only improve quality but
will start making green steel and reduce carbon emission in a big way. Vssl has
already spent 82 crore out of 435 crore and increase billet manufacturing capacity
from 2,00,000 ton 2,60,000 ton and will further take it to 3,00,000 tons. Company is
also putting up 55MW solar plant which will start operations from December and will
save 12-15 crore from next financial year. Out of balance 350 cr company will
increase its rolling capacity from current 2,00,000 MT to 3,00,000 MT increase of
50% and start manufacturing high quality steel and green steel for EV and HYBRID
cars.

Game changer :-

Vardhaman steel is in talks with Aichi steel to put up a forging plant in

Thailand and a steel plant in india. Aichi steel is likely to increase its stake in
the company and infuse capital for the above plans in next few months.
Aichi steel is the sole supplier to Toyota for all steel it consumes across the world.
Partnership with Aichi steel will help VSSL to gain approval from other Japanese
players as well and they have already started sampling for players like Yamaha,
Mushashi, Jtekt Toyota,Aichi forge, Suzuki, Hino Motors.

In next 3 years Vardham steel has guided for production to increase to 3,00,000 MT
per annum and out of with minimum export will be 60,000 MT. Higher export means
higher realisation. We @Dialwealth expect VSSL to deliver strong topline and
bottomline growth in next 3 year. And once new capex plans are finalise with Aichi
steel earnings are like to grow multifold from current levels.

Valuation :-

For current year FY25 we @Dialwealth expect topline to be at 1850-1875 crore and
pat of 150-160 crore for FY26 we expect topline to be 2050-2100 core and pat of
190-200 which means company is trading at 12 times one year forward earnigs
which is very attractive. Once new capex plans are finalised for the forging and steel
plant with Aichi earnings can grow multifold times in next 5 years.
Vssl in partnership with Aichi steel will emerge as 1 special steel and green steel
player in india and will create wealth for shareholers in next 5. This stock is only
ment for investors who can hold the stock for next 5 years and not for very short term
players.

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