Buy Shyam Metalics and Energy; target of Rs 825: ICICI Securities

ICICI Securities's research report on Shyam Metalics and Energy

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; 3) EBITDA margin was stable QoQ at 12.2%; 4) further capex of INR 8.1bn was announced in aluminium (Al) and stainless steel; and 5) Board approved dividend of INR 2.7/share. Going ahead, we expect SMEL to deliver EBITDA CAGR of 46% through to FY26E led by capacity ramp-up in carbon steel and stainless segments. Besides, commissioning of colour-coated sheets and pig iron capacity is also on the anvil in FY25E.

Outlook

We maintain BUY on SMEL with an unchanged TP of INR 825 based on 6.5x FY26E EBITDA.