Shyam Metalics - Gathering Steam: ICICI Securities

ICICI Securities Report

Shyam Metalics and Energy Ltd.’s December 2023 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 month-on-month, possibly due to lower spreads;

3. Mittal Corp stainless steel plants continue to ramp up; and

4. implied revenue rate is in excess of Rs 12.2 billion per month now.

Going ahead, we believe revenue may be boosted by higher rebar sales (likely to stabilise at 1.8-2 million tonnes per annum 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 target price to Rs 780 (earlier Rs 690). Maintain 'Buy'.

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