VMS TMT Q1 FY27 Revenue Up 16% YoY

Total income for Q1 FY27 stood at ₹247.88 crores, compared to ₹213.39 crores in Q1 FY26, representing a 16.16% year-on-year growth.
Profit After Tax (PAT) for the quarter was reported at ₹2.45 crores.
EBITDA declined by 41% year-on-year.

Manufacturing and Capacity:

The company's billet manufacturing facility is now commissioned, achieving full backward integration.
The integrated manufacturing setup has an annual capacity of 2 lakh metric tons for TMT bars and 2,16,000 tons for billets.
TMT production for Q1 FY27 was 34,400 metric tons.
Management stated that ideal capacity utilization is approximately 80% and they are working to improve it by 4-5% annually.

Solar Power Project:

A 15-megawatt captive solar power plant is under development.
12 MW of this capacity became operational on August 7, 2026.
The remaining 3 MW is expected to be operationalized within the next one and a half months.
This installation is expected to cover approximately 30% of the company's power requirement.
Management estimates annual savings of approximately ₹10 crores after repayment of interest and EMI to the bank, equating to a saving of ₹4 per unit on roughly 2.70 crore units generated annually.
Further expansion to 40 MW is planned for next year.

Distribution Network:

Products are marketed under the Kamdhenu brand across Gujarat through 3 distributors and 227 dealers.
The dealer network is growing at an annual rate of 10% to 15%.
The company's focus is on tier 2, tier 3, and rural (taluka level) customers, where it commands a premium of approximately ₹1500 per ton compared to local products.

Proposed Amalgamation:

The amalgamation of Aditya Ultra Steel Limited with VMS TMT Limited has been approved and is subject to necessary regulatory approvals.
This merger is expected to bring the Saurashtra and Kutch regions of Gujarat under VMS TMT's territory, along with Aditya's dealer network.
Post-merger, the combined entity will have a TMT capacity of 3 lakh tons (VMS: 2 lakh tons, Aditya: 1 lakh tons).
Management expects the operational merger to be completed within six months after regulatory approval, leading to benefits from a larger dealer network, better vendor negotiation, and dilution of duplicate expenses.

Margin Pressure in Q1:

The decline in profitability despite revenue growth was attributed primarily to a sharp increase in the cost of imported scrap, which constitutes 50-60% of raw material.
The Iran conflict was cited as a key reason for the spike in scrap prices.
A strengthening US Dollar (FOREX) during the quarter also increased the landed cost of imported materials.
Management expects margins to improve in Q3 and Q4 FY27, as Q2 is typically affected by the monsoon season. A resolution to the Iran conflict could lead to further improvement.

Inventory:

Inventory increased sharply to ₹228.35 crores as of FY26 year-end.
This was due to two factors: the addition of higher-margin products like 550D TMT bars, and a minor monsoon impact in the June quarter which slightly lowers sales while production continues.
Management expects inventory levels to normalize and fall below ₹200 crores after Diwali.

Growth Drivers and Targets:

Management is focused on improving capacity utilization, strengthening the dealer network, and enhancing operational efficiencies.
The company is debt-free after prepaying debts using IPO proceeds last year, leading to reduced finance costs.
The long-term target is to achieve a top line exceeding ₹2000 crores within the next 2-3 years, with corresponding improvements in bottom-line profitability.

50-60% of scrap requirement is met through imports, which management prefers for bulk buying, consistent quality, and fewer GST complications.
20-25% of requirement is met using sponge iron, sourced from Gujarat, Raipur, Jharkhand, Chhattisgarh, and Bihar.
20-25% is sourced locally from reliable vendors.