Buy Shyam Metalics and Energy; target of Rs 690: ICICI Securities

ICICI Securities is bullish on Shyam Metalics and Energy recommended buy rating on the stock with a target price of Rs 690 in its research report dated August 12, 2023.

Broker Research

August 18, 2023 / 11:36 IST

Buy

26 Aug, 2025 12:21

Volume

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ICICI Securities research report on Shyam Metalics and Energy

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. In our view, the payback period of this capex is likely to be less than 4 years, even with our estimate of declining commodity prices and EBITDA margin persisting in the range of 12-13%. Considering the headroom in balance sheet, we believe the company has enough on the table to pursue further growth opportunities. Taking cognisance of prevailing commodity prices, we trim our FY24E/FY25E EBITDA by 6% and 8% respectively.

Outlook

However, based on the growth potential beyond FY25E, we raise our EV/EBITDA multiple to 6x (earlier: 4.5x). Our revised target price works out to INR 690 (earlier: INR 570). Maintain BUY.

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