Shyam Metalics Shares Hit Life High After UBS Initiates Coverage With A 'Buy'

Shares of Shyam Metalics and Energy Ltd. surged over 10% after brokerage firm UBS initiated coverage on the company with a 'buy' rating and forecasted robust profit growth.

The brokerage has a target price of Rs 1,200 apiece on the stock, which is a 60% upside from the stock's current market price of Rs 763.80 per share. The price target is the highest among brokerages tracked by Bloomberg.

The company plans to invest Rs 10,000 crore from fiscal 2022 to fiscal 2027, funded by internal resources. The brokerage expects this investment to result in annual growth rates of 39% in Ebitda and 50% in profit from financial year 2024-27.

Despite being smaller than its rivals, the metal producer benefits from greater flexibility and efficiency, thanks to its backward integration, it said. "With more high-value products, we expect its return on capital to rise from 22% in fiscal 2024 to 28% in fiscal 2027," it said.

The scrip rose as much as 10.65%, to hit an all-time high, before paring gains to trade 7% higher at Rs 816.75 apiece, as of 9:23 a.m. This compares to a 0.16% advance in the NSE Nifty 50.

The stock has risen 30.28% year-to-date. Total traded volume so far in the day stood at 2.77 times its 30-day average. The relative strength index was at 69.73.

Out of six analysts tracking the company, five maintain a 'buy' rating, and one suggests 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 3.1%.