Shyam Metalics and Energy Ltd. share price target

Shyam Metalics and Energy’s (SMEL) Q1FY25 EBITDA was 11% ahead of our estimates. Key points: Performance was aided by better prices QoQ. Ramp-up of stainless steel (SS) and Aluminum (Al) capacities aided earnings.

Shyam Metalics and Energy’s (SMEL) Q4FY24 EBITDA was 7% ahead of our estimates. Key points: 1) Rolled steel sales volume rose 12% YoY to the highest-ever level of 381.3kt; 2) realisation was down QoQ across all categories except pellets

Shyam Metalics and Energy’s (SMEL) Oct’23 operating numbers show robust volume growth. Key points: 1) Despite festive season in Oct’23, rebar sales volume rose 19.8% MoM; 2) ferrous alloys’ volume declined due to subdued export markets; and 3) implied revenue for Oct’23 was up 8.5% MoM (1.3% YoY) at INR 9.7bn mainly due to higher volume; 4) another 198kt sponge iron capacity commissioned at Sambalpur and Consent to Operate (CTO) has been applied.

We see Shyam Metalics and Energy (SMEL) effectively evolving on its 3C principle: Comprehensive products, Capex focus and Cost efficiencies. The recently announced capex plan of INR 39bn illustrates the company’s sharp focus on both scope and scale.

Shyam Metalics (SMEL) reported robust performance in Q1FY24. Key points: 1) QoQ drop in realisation was partially offset by lower thermal coal prices; 2) rolled products volume was up 36% YoY at 312.8kte; 3) EBITDA margin at 12.2% was at a similar level as Q4FY23; 4) company has announced its new capex plan envisaging INR39.2bn to further increase presence in downstream products.

The volume/realisation data of Shyam Metalics and Energy (SMEL) for May’23 has reinforced our conviction on company’s growth prospects. Key points: 1) Rebar volume rose despite overall weak demand; 2) volume ramp up of aluminium foils and LC ferrochrome may aid margins.

Shyam Metalics and Energy’s (SMEL) Q4FY23 performance was slightly lower than estimates. Key points: 1) EBITDA rebounded 86% QoQ to Rs4.1bn; 2) revenue contribution from finished steel products surged to an all-time high level of 53.5%; 3) pellet and sponge iron volume rose QoQ as capacities commissioned in Dec’22 ramped up.

The volume/realisation data of Shyam Metalics and Energy (SMEL) for Apr23’ reveals that the company has made a good start in FY24 despite price/demand headwinds, particularly in long products.

We perceive more than 100% upside in Shyam Metalics and Energy’s (SMEL) stock price from CMP on the back of: 1) ramp-up and stabilisation of existing capacities; 2) recent foray into stainless steel and colour-coated steel, which is likely to yield an additional EBITDA of Rs6bn by FY25E.

Shyam Metalics and Energy’s (SMEL) Q3FY23 performance met our estimates. Key points: 1) Lower contribution from pellets and ferroalloys impacted profitability. 2) Rolled products volume grew 49% YoY (33% QoQ); 3) higher interest cost owing to iron ore fines inventory accretion at lower cost.

Shyam Metalics and Energy’s (SMEL) Q2FY23 performance undershot street
estimates. Key points: 1) Sharp decline in pellet realisation (down 46% YoY; 27%
QoQ) weighed on profitability.

Shyam Metalics and Energy Ltd (SMEL) has announced additional capex of ~Rs9.9bn over and above the existing committed capex of ~Rs30bn to be incurred over 3-4 years.

Shyam Metalics & Energy (SMEL) is a leading integrated metal producing company based in India with a focus on long steel products and ferro alloys. They are amongst the largest producers of ferro alloys, one of the leading players in terms of pellet capacity and the fourth largest player in the sponge iron industry, in terms of capacity in India. They have a diversified product mix which enables them to sell both...

Shyam Metalics and Energy Limited (SMEL) is a leading integrated metal producing company based in India with a focus on long steel products and is one of the largest ferro alloys producer in terms of installed capacity. It has geographical advantages, is present across the value chain and has ability to alter its product mix.

Shyam Metalics & Energy Ltd. (SMEL) is a leading integrated metal producing company with a focus on long steel products and ferro alloys. It is amongst the largest producers of ferro alloys in terms of installed capacity in India, as of February 2021. SMEL has the sheer ability to sell intermediate and final products across the steel value chain. As of March 31, 2020, it is one of the leading players in terms of pellet capacity and the fourth largest player in the sponge iron industry in terms of sponge iron capacity in India. It is also one of the leading integrated steel and...

SMEL's Sambalpur and Jamuria plants operate as ore to metal' integrated steel manufacturing plants and comprise captive railway sidings, captive power plants, iron pellet, sponge iron, billet, thermo mechanically treated (TMT), wire rod and structural mills, and ferro alloy plants. The integrated nature (backward and forward integration) of the manufacturing plants has resulted in control over all aspects of the operations (with the exception of sourcing of primary raw materials) as well as operating margins, thereby enabling the company to focus more on quality and create multiple points...

IPO NOTE

Shyam Metalics and Energy Limited - IPO Note Issue Open: June 14 June 16, 2021 Price Band: Rs. 303 306 ( Discount of Rs 15 for eligible employees) *Issue Size: 29,705,882 eq shares (Fresh issue of 21,470,588 eq sh (Rs.657 cr) +offer for Sale of 8,235,294 eqs h ) Issue Size: Rs.909.0 cr Reservation for: QIB Upto 50% eq sh Non Institutional atleast 15% eq sh Retail Upto 35% eq sh