Vedanta Iron And Steel Ltd (VISL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Vedanta Iron and Steel Limited's second quarter and half year FY '26 '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. From the management side, we have Mr. Charanjit Singh, Group Head Investor Relations; Mr. Pankaj Sharma, CEO, VISL; and Mr. Naveen Jaju, CFO, VISL. I now hand the conference over to Mr. Pankaj Sharma for his opening remarks. Thank you and over to you, sir.
Pankaj Sharma (Vedanta Iron And Steel Ltd): Thank you. Thank you very much. And good day everyone, and thank you for joining us. I am Pankaj
Pankaj Sharma (Vedanta Iron And Steel Ltd): Sharma, CEO and whole-time Director of Vedanta Iron & Steel Limited. I'm here to take you through our performance for second quarter and the first half of FY '27. VISL run across the full value chain from mines in Odisha, Goa, Karnataka and Liberia to steel operations in Goa and Bokaro. This integration allows us to capture value at every stage. During the first quarter, steel production rose 4% year-on-year to 532 kt and to 1,114 kt in H1. We also undertook plant shutdown at Bokaro and Goa steel plants, supporting improved production stability in coming quarters. The first 2 months of Q2 witnessed subdued steel prices. However, we have seen a favorable reversal in steel prices from September onwards. On the other hand, rising coking coal price have adversely impacted cost, and the same may continue in coming quarters. We have also taken a step forward in our decarbonization journey by securing 21 megawatt of open access solar power at our ESL plant. Our aim is to be carbon neutral by 2050. On the mining side, Q2 is typically a softer quarter because of seasonality. Iron ore production was 1.5 million tonnes on dry metric tonne basis in Q2, and this is down by 13% year-on-year; and 4.2 million tonnes on dry metric basis in H1, down to 3% year-on-year. Revenue for the quarter was INR 2,788 crores, almost flat year-on-year, while EBITDA rose 56% year-on-year to INR 83 crores. For H1, revenue grew 8% to INR 6,450 crores, and EBITDA grew 54% to INR 598 crores. The balance sheet remains healthy, with net debt-to-EBITDA ratio of 1.3 and a credit rating of AA Stable by CRISIL. During the quarter, domestic steel demand for long products showed a quick reversal post-monsoon, supported by continued infrastructure and economic activity, while overall softer NSR and higher input cost exerted pressure on margins. In steel, H1 sales were 1,104 kt, and this is up 3% year-on-year, while Q2 sales were 532 kt. On profitability front, EBITDA margin in Q2 was INR 1,381 per tonne. For the half year, margin was INR 3,709 per tonne. In H1, pig iron production reached a record of 568 kt, a 4% increase over the same period last year. Then coming to iron ore, on the market front, iron ore realization remained under pressure during the quarter on account of drop in iron ore index and higher discounts for low-grade material. In H1, saleable production was 4.2 million tonnes, broadly stable against 4.3 million tonnes last year. With a growing contribution from Goa and Odisha, in Q2, the saleable production at at iron ore Goa increased 22% year-on-year. Total saleable production was 1.4 million 1.5 million tonnes. On the sales front, total iron ore sales in Q2 was 0.8 million tonnes. Q2 sales in Karnataka were impacted due to name change transfer post demerger, and sales resumed from September. In H1, total sales were 2.8 million tonnes compared to 3.2 million tonnes last year. Merchant margin for H1 was INR 960 per tonne, broadly in line with INR 967 per tonne last year. And Q2 margin was INR 198 per tonne, mainly because of seasonality and lower sales from Karnataka. On the growth front, we spent INR 231 crores during Q2. The ongoing investment across steel, DI pipes and mining remain on track and will progressively strengthen our capacity base, with key milestones planned across FY '27 and FY '28. Our community programs reached about 39,800 beneficiaries across 68 villages in 5 states in quarter 2. Key outcomes
Pankaj Sharma (Vedanta Iron And Steel Ltd): built stronger rural livelihood through project Gram Nirman, 100% placement at Sesa Technical School and continued recognition for our football development program. Now, I will now hand over to my CFO, Navin, to take you through the financial performance. Navin.
Navin Jaju (Vedanta Iron And Steel Ltd): Thank you, Pankaj. Hello everyone. Good evening once again, and thank you for joining us. Let me take you through the financials for the half year and the quarter. The quarter was characterized by seasonality, softer NSR, plant shutdowns, and elevated input costs, which weighed on sequential profitability. However, on year-on-year basis, the business continued to demonstrate a meaningful improvement in earnings. For the first half, revenue was Rs. 6,450 crores and EBITDA was 598 crores, up 54% YoY with margin at 9%. PAT loss narrowed to 203 crore from 622 crore last year. In Q2, revenue was 2,788 crores and EBITDA was at 83 crores, up 56% YoY. Our balance sheet remains strong, with net debt-to-EBITDA of 1.3x. Total net debt was 2,763 crore and cash and cash equivalents stood at 847 crore. Our credit rating remains AA Stable by CRISIL. Gross debt came down to 2,637 crore from 2,792 crores. Net debt was broadly stable at 2,763 crores in September against 2,733 crores in June. Working capital was down by 191 crore on account of release of inventory built ahead of monsoon. This largely offset 129 crore of growth capex during the quarter and 92 crore movement under the cash from operations. Over to you, Pankaj.
Pankaj Sharma (Vedanta Iron And Steel Ltd): Thank you, Navin. And finally, to conclude that H1 FY27 reflect steady progress across the business with a 4% increase in steel production and an EBITDA growth of 54%. With the annual shutdown completed and the market environment becoming more supportive, we enter H2 with stronger operational preparedness. H2 has historically been a stronger period for the business, and we remain focused on capturing this opportunity through higher operating stability, improved product mix, and disciplined execution of our growth plans. Now, I hand over to the moderator.
Moderator: Thank you very much. We will now begin with a question-and-answer session. Anyone who wishes to ask a question may press "*" and "1" on their touchtone phone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: Your first question comes from the line of Ashish with Leo Capital, please go ahead.
Ashish (Leo Capital): Hello, am I audible?
Moderator: Yes, are you audible. Please go ahead.
Ashish (Leo Capital): Yeah. Thank you, thank you for taking my question. So I have two questions. The first one would be, what is the status of regulatory approvals for the second phase of expansion and commercial for the steel plant? By when do we expect all the clearances to come in and where are things stuck? That would be my first question.
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