Vedanta Iron & Steel Ltd (VISL) Q2 FY27 Results Analysis: Swings to Rs. 324 Cr Loss, EBITDA Margin Collapses to 1.72%

Vedanta Iron & Steel Ltd reported Q2 FY27 numbers. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Q2 FY27 saw EBITDA margin collapse to 1.72% from 12.23% QoQ, driven by Steel segment EBITDA falling to Rs.3 Cr from Rs.336 Cr, and the company swung to a Rs.324 Cr loss from a Rs.121 Cr profit in Q1. Management missed its own prior guidance on steel margin (0.12% vs 12% target) and the ESL Bokaro Stage 2 forest clearance deadline passed without announcement. Offsets include Rs.10,500 Cr debt reduction, positive equity of Rs.5,971 Cr, and Rs.753 Cr H1 operating cash flow.

Key Investment Insights

Key Positives

• Operating cash flow swung to Rs.753 Cr in H1 FY27 from (Rs.622) Cr in H1 FY26, a Rs.1,375 Cr improvement
• Total borrowings reduced Rs.10,500 Cr; current borrowings fell from Rs.11,998 Cr to Rs.2,014 Cr
• Total equity turned positive at Rs.5,971 Cr from (Rs.6,531) Cr at Mar'26, aided by Rs.13,138 Cr debt waiver at Bloom Fountain Limited
• Iron Ore EBITDA margin improved QoQ to 16.77% from 15.04% despite a 46.4% QoQ revenue decline
• Steel revenue grew 17.1% YoY to Rs.2,488 Cr
• Free cash flow of Rs.422 Cr in H1 FY27 (CFO Rs.753 Cr less capex Rs.331 Cr)
• Losses narrowed 32% YoY (PAT loss Rs.324 Cr vs Rs.477 Cr in Q2 FY26)

Risk Factors

• Steel segment EBITDA collapsed to Rs.3 Cr (0.12% margin) from Rs.336 Cr (11.83% margin) QoQ
• Consolidated EBITDA margin fell from 12.23% in Q1 to 1.72% in Q2
• Revenue declined 23.9% QoQ to Rs.2,788 Cr; Iron Ore revenue fell 46.4% QoQ
• Company swung from Q1 PAT of Rs.121 Cr to a Q2 loss of Rs.324 Cr
• ESL Bokaro Stage 2 forest clearance deadline (end of Q2 FY27) passed without announcement
• Finance costs rose 19.6% YoY to Rs.171 Cr despite deleveraging; cash fell Rs.802 Cr to Rs.242 Cr