Diwali Samvat 2082 Stock Pick: Vesuvius India Ltd – MNCL’s Expert View

Vesuvius India is India’s largest manufacturer of flow control and advanced refractories for varied applications in steel and iron making process. The company has 13% market share in the domestic refractory market and a leading 40% market share in India’s flow control refractory market. The company operates under two main verticals - Flow control refractories and Advanced refractories. Vesuvius India commands industry-leading profitability driven by its high-margin flow control systems, which are critical to steelmaking and continuous casting, and supported by advanced refractories. The company also pioneered refractory management services, earning over 20% margins, with ongoing contract additions enhancing profitability. Margin expansion is expected from raw material cost correction and price hikes, likely visible from 2QFY26. Growth will further be supported by localization of mould flux powder and brownfield expansions in alumina and Si–Al bricks. With a strong presence across major integrated steel plants, including AM/NS, which is expanding capacity by 14 million tonnes over four years, Vesuvius is well positioned for sustained growth. Its strong cash flow conversion (>70% of EBITDA) and ₹5 billion net cash balance sheet provide ample funding capacity for upcoming expansions.

Source: ACE Equity, MNCL Research

Price Performance

Source: ACE Equity, MNCL Research

Shareholding Pattern

Source: ACE Equity, MNCL Research

Strong product portfolio driving profitability:

Vesuvius India’s business model is anchored around a high-margin and high replacement frequency product portfolio, led by its flow control systems that are critical to steelmaking and continuous casting processes. Complementing this is the advanced refractories segment, which also enjoys superior margins, together ensuring industry-leading profitability. Moreover, Vesuvius was the first to introduce refractory management services in India, earning over 20% margins on these contracts. The company continues to expand its service portfolio, further strengthening its margin profile.

Margin expansion and growth visibility:

We expect a double benefit from raw material cost correction and successful price hike negotiations, leading to margin expansion from 2QFY26 onwards. In addition, the localization of mould flux powder and brownfield expansions in alumina and Si-Al bricks provide strong volume growth levers. These initiatives not only enhance operating efficiency but also deepen Vesuvius’s domestic manufacturing footprint, improving cost competitiveness and supply reliability.

Robust industry positioning and financial strength:

Vesuvius enjoys a strong presence across all major integrated steel producers, including AM/NS, which is adding nearly 14 million tonnes of capacity over four years, offering multi-year demand visibility. The company’s focus on high-value, service-linked products which positions it well to capture incremental business from these expansions. Supported by its history of converting over 70% of EBITDA into cash and a healthy ₹5 billion net cash balance sheet, Vesuvius has ample internal resources to fund its expansions and sustain industry-leading returns.

Outlook & Valuation:

We expect 18%/18%/17% Revenue/EBITDA/PAT CAGR over FY25–FY28E and value the company at 35x Jun’27 PE, arriving at a target price of Rs 585.

Exhibit 1: Key Financials (Consolidated)

Exhibit 2: Key Indicators

Source: Company Vesuvius India Ltd, MNCL Research

STOCK PICKS FOR SAMVAT 2082

*Closing Price as on 10-10-2025

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