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Subscribe to Shyam Metalics and Energy: Mehta Equities

Mehta Equities has come out with its report on Shyam Metalics and Energy. The research firm has recommended to ''Subscribe'' the ipo in its research report as on June 11, 2021.

June 14, 2021 / 12:05 PM IST
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Mehta Equities IPO report on Shyam Metalics and Energy

Incorporated in 2002, Shyam Metalics and Energy Ltd (SMEL) is a Kolkata based leading integrated metal producing company with a focus on long steel products and ferro alloys. It is amongst the largest producers of ferro alloys in terms of installed capacity in India as on Feb 2021. SMEL produces intermediate and long products such as iron pellets, sponge iron, steel billets, TMT, structural products, wire rods and ferro alloys products with specific focus on high margin products such as customized billets and specialized ferro alloys for special steel applications. As of March 2020, SMEL was one of the leading players in terms of pellet capacity and the 4th largest player in the sponge iron industry in terms of sponge iron capacity in India. It has 3 manufacturing units with aggregate operating capacity of 5.70MTPA with 227MW of captive power plant. As on Dec 2020 SMEL have 42 distributors through which SMEL caters across 13 states and 1 union territory.

Valuation and Outlook

On valuations parse at upper price band (Rs 306/-), the issue is asking for a market cap of Rs 7805 Cr with PE (annualised FY21) ~12.86x and P/BV stands at ~1.81x which seems the issue is reasonably priced in line with industry average when compared to its listed peers. Hence, based on all the above aspects we advise investors to “SUBSCRIBE” Given the prospects of the metals sector and the ongoing momentum in the market, the issue seems to have come at the right time.

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