ICICI Securities's research report on Shyam Metalics and Energy
Shyam Metalics & Energy’s (SMEL) Q2FY26 EBITDA of INR 5.4bn was 6%/4% below our/consensus’ estimates. EBITDA surged 32.7% YoY, largely driven by strong growth in steel/semi sales volumes of 12%/44% to 544Kte/370Kte. SMEL is on track to increase capacities by c.50%, driving the volume-led earnings. Given the stiff competition, management has dropped the plan to add DI capacity, and thus, capex has been reduced by INR 6bn to INR 94bn (from INR 100bn). SEML is increasing its presence in flat and stainless-steel products to improve its overall EBITDA/te.
Outlook
Given the recent correction in the stock price, we upgrade it to BUY from Add with an unchanged TP of INR 1,000, based on 7.0x FY28E EV/EBITDA.
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