Buy Shyam Metalics and Energy; target of Rs 780: ICICI Securities

ICICI Securities is bullish on Shyam Metalics and Energy recommended buy rating on the stock with a target price of Rs 780 in its research report dated January 12, 2024.

Broker Research

January 12, 2024 / 12:22 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

ICICI Securities research report on Shyam Metalics and Energy

Shyam Metalics and Energy’s (SMEL) Dec’23 volume stayed robust on finished steel front with revenue rate picking up. Key points: 1) Rebar shipments at 130kt rose to their highest-ever level for any month; 2) pellet sales declined YoY and MoM, possibly due to lower spreads; 3) Mittal Corp stainless steel plants continue to ramp up; and 4) implied revenue rate is in excess of INR 12.2bn per month now. Going ahead, we believe revenue may be boosted by higher rebar sales (likely to stabilise at 1.8-2mtpa rate), ramp-up of stainless steel operations at Mittal Corp and (recently commissioned) sponge iron capacity. That said, we trim our FY24E/FY25E EBITDA by 20%/18%, taking cognisance of adverse pricecost spread. Rolling over to FY26E earnings, we raise our TP to INR 780 (earlier INR 690). Maintain BUY.

Outlook

SMEL has almost achieved our existing target price; however, we believe there is a further upside left in the stock driven by higher earnings base and commissioning of value-added capacities. We roll over the valuation to FY26E earnings. Our revised TP works out to INR 780 (earlier INR 690) with an unchanged 6x EBITDA. Better earnings growth compared to peers and net cash position remain key differentiators for SMEL, in our view. Key risks include: Higher-than-expected thermal coal prices, adverse pellet-iron ore price spread and delay in commissioning of capacities.

For all recommendations report, click here