Shyam Metalics has been on a meteoric rise of late and was up some 10.61% at ₹ 844.95 on the BSE today as against the previous close at ₹ 763.80. Last year, the stock had surged by 77% and by 28.25% since January 1, 2022. It assumes significance with a recent development in which the global brokerage firm UBS initiated coverage on the stock with a ‘buy’ rating and potential upsides of 57% with a target price of ₹ 1,200.
During the day, the market capitalization went as high as ₹22,976 crore. On the technical front, Shyam Metalics’ Relative Strength Index stands at 61.9, with no indication that the stock is overbought or oversold. The stock, known for its high volatile nature, maintains a beta of 1.3 over the last one year and is armed above its 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, and 200-day moving averages.
UBS values Shyam Metalics at 8 times EV/EBITDA FY26-27 estimates, which is towards the middle range for peers. The shift to value-added products, strong earning potential, and lesser cyclical risks in the diversified metal products portfolio justify this.
Shyam Metalics has laid out a ₹10,000 crore capital expenditure plan for FY22-27. Of this, ₹5,000 crore has already been incurred. On the books, however, only ₹2,600 crore has been capitalized to date; the rest are under ‘capital work in progress’. Management intends to capitalize close to ₹ 2,500 crore of capex in FY25 and further ₹ 4,900 crore in FY26-27, which would accrue to operating profits further. Importantly, this capex is almost entirely internally generated and doesn’t stress the balance sheet.
UBS feels sanguine with the outlook, poised as it is to win in new product categories. Exports would bolster its earnings risks, while its earnings are diversified in terms of projects, which means that even earnings risks get reduced in the event of delays.
The brokerage house currently expects these projects to add another ₹ 2,600 crore in EBITDA over FY24-27, which means the company can expect EBITDA and PBT growth rates of 39% and 50%, respectively.
Shyam Metalics and Energy Ltd manufactures an array of metal products, such as ferroalloys, iron, steel, and generation of power. Its product range comprises iron pellets, sponge iron, billets, TMT bars, structural steel, wire rods, power, ferroalloys, and aluminium.
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People May Ask
What is Shyam Metalics’ current stock price?
One can verify the current value of the stock either on financial news sites or on the BSE and NSE platforms directly.
What is the current price at which Shyam Metalic’s share is being traded in the market?
To get an estimate from the latest status, it was trading near ₹844.95. Global brokerage UBS has priced Shyam Metalics at an upside of 57% and a target price of ₹1,200. All this strong outlook is based on the company’s expansion strategies and strong financial metrics.
How does Shyam Metalics compare to its industry peers?
On the other side, Shyam Metalics seems like a better player among its peers in the industry, with a good appreciation of its stock price, and its product portfolio is diversified too. Also, the strategic investments in capex will make the business stronger compared to other competitors for value-added products.
What are Shyam Metalics’ main financial metrics?
Key financials showcase a 77% gain in stock during the last year; market capitalization stands at ₹22,976 crore, and strong performance metrics, which include an RSI of 61.9 and one-year beta at 1.3, thus indicating high volatility. The company is also aiming to raise ₹2,500 crore with respect to capex by FY25 and ₹4,900 crore by FY26-27.
What is Shyam Metalics’ capex plan, and how will it impact its future growth?
Shyam Metalics has laid out a plan of capex of ₹10,000 crores, and the bigger part of it has already trickled into capital expenses to improve the company’s growth further. Due to the addition of new product lines and enhancing the capacities of the company’s products, the EBITDA would grow by 39% and the PBT by 50% over the period FY24–27.
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