Shyam Metalics and Energy opened strong and closed at nearly 23 percent premium on June 24, the first day of trade on the bourses, supported by positive secondary market conditions and talk of a favourable commodity cycle ahead.
On the BSE, the stock climbed 22.83 percent to settle at Rs 375.85, with a volume of 19.74 lakh equity shares. It hit an intraday high of Rs 399.10 (up 30 percent) and a low of Rs 367, which was also the opening price.
On the National Stock Exchange, it closed 22.92 percent higher at Rs 376.15 after hitting an intraday high of Rs 399 and a low of Rs 370. It opened at Rs 380 against the issue price of Rs 306 and traded with a volume of 2.7 crore equity shares.
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"The valuations were reasonable for the stock and the sector is in midst of a favourable cycle. Investors can remain invested and ride the favourable metal cycle for the next few years, especially for a company like Shyam Metalics which has low leverage levels," Milan Desai, lead equity analyst at Angel Broking said.
"The company is undergoing capex and capacities will start coming on stream post FY23. which (will) help the company to cater to both domestic as well as export markets. The curbs placed on global steel capacities should benefit Indian steel producers," he said.
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Shyam Metalics, which primarily produces intermediate and long steel products such as iron pellets, sponge iron, steel billets, TMT, structural products, wire rods, and ferroalloy products, is in the process of increasing the capacities of its manufacturing plants and captive power plants to 11.60 million tonne per annum (MTPA) and 357 MW from current 5.71 MTPA and 227 MW respectively.
The proposed expansion is expected to become operational between FY22 and FY25.
The company raised Rs 909 crore from its public issue, which comprised a fresh issue of Rs 657 crore and an offer for sale of Rs 252 crore. The proceeds from the fresh issue will be used for repaying a debt of Rs 470 crore.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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