VMS TMT Q1 FY27 earnings call

VMS TMT Limited reported a total income of ₹247.88 crores for Q1 FY27, marking a 16.16% year-on-year growth compared to ₹213.39 crores in Q1 FY26. This growth was primarily driven by an increase in TMT prices and sales volume. However, the company experienced significant margin compression, with EBITDA declining by 41% and Profit After Tax (PAT) falling to ₹2.45 crores. This profitability decline was largely attributed to a sharp increase in imported raw material (scrap) prices, exacerbated by the Iran conflict and adverse forex movements.

The company successfully commissioned its billet manufacturing facility, enhancing backward integration and providing better control over raw material sourcing and costs. A significant step towards sustainability and cost reduction is the 15-megawatt captive solar power plant, of which 12 MW has been operationalized since August 7th, 2026, with the remaining 3 MW expected within 1.5 months. This solar plant is projected to cover approximately 30% of the company's power requirements and generate annual savings of around ₹10 crores after debt repayment.

VMS TMT Limited announced the proposed amalgamation with Aditya Ultra Steel Limited, which has received approval and is awaiting necessary regulatory clearances. This merger is expected to significantly strengthen the company's manufacturing capabilities and expand its market presence, particularly by integrating the remaining Gujarat territories (Saurashtra and Kutch) and their dealer networks. The combined entity is projected to have a capacity of 3 lakh tons, leading to improved negotiation power with vendors and enhanced sales team capabilities, with full integration expected within six months.

The company maintains a strong distribution network, marketing its products under the Kamdhenu brand across Gujarat through 3 distributors and 227 dealers. Management aims to deepen this network and improve market reach, targeting an annual dealer network growth of 10% to 15%. The focus remains on tier 2, tier 3, and rural customers, where the company can charge a premium due to its service and dedicated transport network, rather than large institutional or infrastructure projects.

Inventory levels increased sharply to ₹228.35 crores as of FY26 due to the addition of higher-margin products and a minor monsoon impact in the June quarter, which led to slightly lower sales while production continued. Management expects inventory to normalize to below ₹200 crores after Diwali. The company anticipates margin improvement in Q3 or Q4 FY27, contingent on the stabilization of raw material prices and the full benefits of the solar power plant and operational efficiencies.